Asked if China is still a deal for companies looking for low-cost manufacturing and sourcing, Auret van Heerden, CEO of the Fair Labor Association, said the situation is fluid and changing incredibly fast.
"Labor markets which we previously thought were inexhaustible, like China and India, have actually tightened up quite dramatically. Employers can't get workers. Wages have gone up. Add to that the energy cost increases, and the factories, the contract manufacturers, are now suddenly squeezed. So they're turning around to their buyers -- to the retailers or the brands -- and they're saying, 'Hey, my prices need to go up.' And the brands are saying, 'Whoa! We don't think we can pass those prices on to the consumer.' There's something of a train smash looming."
