MADE IN CHINA Rubber StampFor some dealers, it’s a religious debate.  They wouldn’t dream of selling an import line.  For other dealers, it’s just another business opportunity for the lower end of the market.  And for even other dealers, the investment never really panned out, and they’re in the process of exiting the Chinese gold rush as the realities of lower than anticipated profit margins hit their books.

But regardless of what has happened, what does the future of China look like?  Not very promising, as it turns out.

The real problems with china

The larger problems with China have little to do with cabinetry and more to do with birth rates.  Here’s the scoop: a healthy country has a balanced mix between the older generation (who needs caring), the working class (who pays for the caring) and immigrants.  This creates a healthy ecosystem where economies can grow, the elderly can receive care and the working class can, well, have babies.  A healthy target birth rate is 2.1 children per household.

Unhealthy birthrates wreak havoc on a country’s ability to keep everything running smoothly – emotionally and financially.  Birth rates at 1.3 or lower are called “suicide rates.”  For example, Japan, as well as an estimated 17 other countries in Europe, are already in their suicide rate.  In Japan, they are closing schools and obstetrician facilities at an alarming rate.  It’s called the suicide rate because as the infrastructure around the country’s citizens implodes, it creates accelerated problems.  For example, if the closest obstetrician facility is 160 miles away, even a fertile Japanese woman isn’t going to find having babies very practical.

As the birth rate declines below 2.1, it can have a toilet bowl effect – especially on the middle class.  Growing numbers of elderly create economic pressures on the middle class.  With more financial pressures, the middle class has kids later than anticipated.  Women that have kids later have fewer kids, and so the world turns (and the toilet bowl effect continues).

China’s Birth Rate: 1.1

Estimates put China as the most rapidly aging population on the planet.  In the next 40 years they will lose 30% of their population.  As their labor force dwindles, demand will outweigh supply and labor rates will rise.

In 2012, China’s workforce shrunk and wages rose 13%.  So much for all that cheap labor surplus.  Companies are already moving to Bangladesh, Vietnam and elsewhere.

As China has modernized, so have its citizens’ expectations.  It’s no longer okay for the government to raze a neighborhood just to put up a manufacturing facility.  People are educated and they demand a civilized culture.  That’s why there is more revolt and upheaval in China today than there was in Russia before the collapse of the Berlin wall.

But that’s not all…stay tuned for more in Part 2 of this post!