Chinese labor strife and the toy industry

The world’s toy industry is so tied to China that any disruption in the flow of goods bears close watching. Conflict between workers and the police at the port of Shanghai therefore demands that we pay attention.

The Chinese people are experiencing an astonishing remaking of their lives as their expectations for a better life seem to coincide with an increase in the costs of pretty much everything. In short, the price the country is paying for its new found prosperity and world influence is a continuing bout of inflation exacerbated by demands for lower prices and higher wages.

The Chinese government has responded by arresting certain Chinese intellectuals and social critics like Ai Weiwei ; closing some religious institutions; shutting down some art shows and concerts and even the venerable Confucius has been not immune. A thirty foot bronze statue of the Chinese philosopher which was placed on Tiananmen Square only four months ago mysteriously vanished yesterday. As the guard assigned to the statue put it: ““All I can tell you is that I came to work in the morning and it was gone.”

All of this seems kind of feeble when compared to the real threat which is a continuing rise in worker unrest. Here is the opening line from an April 22, 2011 New York Times article entitled: “Truckers Protest, Adding to Chinese Fears of Unrest:” "Truck drivers disrupted operations at Shanghai’s seaport on Friday, the third day of a violence-marred protest that underscores the growing anger among Chinese over rising inflation.” The article goes on to state that: “The drivers were protesting low wages, increased fuel prices — the government recently raised diesel prices by five percent — and higher fees imposed by port operators.”

Chinese inflation was 5.4% last month which annualizes to 64.8%. U.S. inflation, as a comparison, was up .05% in March which annualizes out to 6%. Chinese inflation was 10 times higher than in the US for March.

Don’t expect anything major to happen any time soon. The Chinese government is ahead of the curve in stifling dissent. Do, however, look for a continuing rise in prices and disturbances in logistics and operations as continuingly more restive Chinese labor uses disruption as a means of protest.

As goes China, so goes the toy industry.