Reduced overtime at Foxconn upsets migant workers

An unintended consequence of enforcing 'fair' worker treatment - reduced income for migrant workers more than willing to work excessive overtime!

From Wall Street Journal - via Foxconn Workers Say, 'Keep Our Overtime' - WSJ.com.

 "Nets to catch would-be jumpers still sag ominously from Hon Hai Precision Industry Co.'s  buildings.

But two years after a spate of suicides at the Apple Inc.  supplier's campus here, workers are more concerned about another measure designed to protect them: limits on overtime.

Hon Hai in March said it would change its workplace practices after an audit by a U.S.-based nonprofit worker-safety group found widespread breaches of Chinese law and Apple policies at three plants, including the excessive use of overtime. Hon Hai responded by pledging that it would bring its overtime policies into alignment with Chinese law by next year, allowing workers to work no more than nine hours of overtime a week. 

The Taiwan-based company, also known as Foxconn, pledged to improve health and safety conditions at its campuses across China as well.

But more than 15 workers on the Shenzhen campus said in interviews that they work more than the legal limit of nine overtime hours a week. A majority said they work 10 to 15 overtime hours and would prefer more, having left their distant homes to make money in this southern Chinese boomtown on the border of Hong Kong.

"I think a lot of the more experienced people from the technology production lines will leave" if the policy to limit overtime goes into effect, said a worker who asked to be identified only by his surname, Ma. "We don't know how much our salary will go up. But after being here three years, I don't have much incentive to stay, since my wage probably won't rise much."

Mr. Ma, who earned roughly 3,400 yuan ($540) a month including overtime when he arrived three years ago, said he now earns about 5,000 yuan. To make extra money, the 26-year-old buys used car parts cheaply on an e-commerce website and then resells them.

Basic pay at the Shenzhen Longhua plant is 2,200 yuan, before overtime.

Keeping Mr. Ma and its 1.5 million other Chinese workers satisfied, while manufacturing complex, time-sensitive consumer electronics profitably is becoming more challenging for Hon Hai. The company's labor costs will rise by roughly $1.4 billion when the new labor policies roll out next year, according to a Bernstein Research estimate. Hon Hai's operating profit margin had declined since the second quarter of 2010 because of rising wages. The figure rose to 3.4% in this year's third quarter from 2.2% a year earlier as the company raised what it charged customers, analysts said.

Hon Hai isn't alone in facing such challenges. Employee protests over working conditions and the willingness of staff to change employer for more pay have forced electronics manufacturers to raise wages throughout China. Hon Hai and other companies have moved some operations to countries such as Vietnam and Mexico, where costs for labor or transportation to end markets are lower."

Starbucks cuts staff benefits to fund avoided tax!

The Law of Unintended Consequences strikes again!

From the Guardian   - http://www.guardian.co.uk/business/2012/dec/03/starbucks-slash-lunch-breaks

"Starbucks is cutting paid lunch breaks, sick leave and maternity benefits for thousands of British workers, sparking fresh anger over its business practices.

On the day the House of Commons' public accounts committee branded the US coffee chain's tax avoidance practices "immoral", baristas arriving for work were told to sign revised employment terms, which include the removal of paid 30-minute lunch breaks and paid sick leave for the first day of illness. Some will also see pay increases frozen.

The changes affecting about 7,000 coffee shop staff emerged as thecompany tried to quell public and political outrage at its use of secretive company structures that has seen it pay just £8.6m in UK tax over the past 13 years on sales of £3.1bn.

On Saturday Starbucks announced it would open talks with the UK government that could lead to it paying more tax in future and on Monday it was reported that such an announcement could come on Wednesday. But at the same time it was telling workers it was removing benefits and changing employment arrangements.

The new contractual terms being circulated to staff across 750 stores include the removal of cash incentives for becoming manager or partner of the year in favour of the award of a plaque and the removal of a bonus scheme for women returning after they have had a baby because "it is not considered a valued benefit".

A worker who claimed he was told to sign the new contract last week or leave, told the Guardian colleagues were "really upset" at the changes and said it appeared relatively low-paid staff were being forced to help bear the cost of the company's potentially increased tax bill.

"It's really convenient for them to say we're going to pay more taxes, when they're going to save money with us, the staff," said the coffee shop worker on condition of anonymity. "It's convenient saying we'll pay more because they're going to save more – and the perfect excuse for them is to say to staff 'We're going to pay more taxes, so…'."

He said his manager explained Starbucks "is losing a lot of money in Europe, so they said they needed to make these changes to save the company money".

Even apparently minor benefits are being cut. Starbucks is ending the practice of giving hampers to new mothers in favour of "a card and Starbucks baby grow and bib". The new policy on staff birthdays orders: "Removal of birthday cards. Bakery good code to be issued in store for free birthday treat." Congratulations cards on the anniversary of the first four years of service are being withdrawn."

Mao's "Great Leap Forward" resulted in great famine

From - 

‘Tombstone’ by Yang Jisheng, translated from the Chinese by Stacy Mosher and Guo Jian - http://www.bostonglobe.com/arts/books/2012/11/03/review-tombstone-the-great-chinese-famine-yang-jisheng-translated-from-chinese-stacy-mosher-and-guo-jian/yuFFCEmLIxORRuesm3LjXI/story.html

"Mao’s Great Leap Forward, designed to make China the world’s leading communist state, generated the worst famine in history. Until recently, the West knew little about the causes and magnitude of the disaster, which killed tens of millions in four years.

As a veteran Chinese journalist, Yang Jisheng recounts in his book “Tombstone” how for decades officials blamed “natural calamity” for the massive population loss; references were made to epidemics, “and no mention of starvation was allowed.” Yang has conducted a sweeping investigation and amassed information from dozens of archives to produce a comprehensive history of the Great Chinese Famine. He intended his book as a monument to the millions of victims, including his own father.

The original two-volume version of “Tombstone,’’ double the size of the English edition, appeared in 2008 in Hong Kong and has already run to eight printings. The book is banned in mainland China where no full famine account has ever been published, “an offense to the memories of tens of millions,” writes Yang.

Frank Dikötter, a Hong Kong-based historian, was the first to disclose to the West the true dimensions of this man-made tragedy. In his 2010 award-winning “Mao’s Great Famine: The History of China’s Most Devastating Catastrophe, 1958-62’’ Dikötter holds Mao responsible for the deaths of 45 million people, who were starved and beaten to death in pursuit of a utopian paradise.

“The masses are slaves,” a party cadre was quoted as saying, “and they won’t do anything unless beaten, berated, or deprived of food.” Local cadres had unlimited power to rape, ransack homes, deny food, beat and kill those who stole out of hunger or those not blindly obeying. The draconian system generated waste and destruction. Peasants received inflexible commands about plowing depth for seeding and planting density, directives that lead to crop failure.An admirer of Stalin, Mao imposed collectivization and industrialization on backward China, emphasizing high production targets and speed. But unlike Stalin, he mobilized peasants to work in both agriculture and industry, turning the entire country into a vast gulag. Millions of private farms across China were forcibly consolidated into gigantic communes, the state seizing private land and assets without compensation; opponents were beaten and killed. Private property was seen as an impediment to communism; about 40 percent of all housing was destroyed. The regime sanctioned an unprecedented persecution of peasants across China, their lives sacrificed to unworkable goals dictated by the supreme leader.

Mao promoted people’s communes, which allowed for an extraordinary concentration of state power. By putting every aspect of peasant lives under the party’s control the system created conditions for the famine. By the end of 1958, 90 percent of the rural population was forced to take meals in communal canteens; cooking implements were confiscated. When supplies ran out and kitchens closed, peasants were left without the means to survive.

Unrealistically high production targets and procurement quotas were the key elements that generated the famine. Faced with political pressure, the cadres exaggerated crop yields. When the myth of peasants hiding grain was created, army detachments were sent to extort every kernel.

At the Lushan Conference of 1959 Mao was made aware that his economic policies had “descended into chaos,” causing starvation. Instead of changing direction, Mao defeated “the anti-party clique” and purged his prominent critic, China’s defense minister Peng Duhai. After the conference Mao’s policies were intensified, extending the impact of the Great Famine.

Party secretaries never traveled to the countryside where desperation was total and cannibalism rampant. To cover up evidence of the famine local cadres had mass graves stomped flat and crops planted on top. With millions dying, the cadres entertained at lavish feasts and had meals delivered to luxury hotels. Survivors remember: “We were swollen with starvation, while the cadres were swollen with overeating.” Officials responsible for millions of deaths were merely transferred to other bureaucracies — unfairly, as some of them judged, since they merely acted on party orders.

Yang’s book can be compared with Solzhenitsyn’s “The Gulag Archipelago,” since its evidence was also bravely collected under Communism with the goal of helping dismantle the totalitarian system that had sanctioned mass killings. This system has outlived itself, writes Yang, who believes China should disavow its Communist ideals and erect memorials to the victims of the Great Famine."

Nurse who took a prank phone call at hospital is found dead in suspected suicide

Some of my posts are about funny unintended consequences, others are about negative unintended consequences; but none - so far - are about tragic unintended consequences; until this one.

From The Independent - http://www.independent.co.uk/news/uk/home-news/nurse-jacintha-saldanha-who-took-a-prank-phone-call-at-duchess-of-cambridges-hospital-is-found-dead-in-suspected-suicide-8393289.html

"A nurse who was duped into transferring a prank call from two Australian radio presenters at the hospital treating the Duchess of Cambridge for severe morning sickness was found dead yesterday in a suspected suicide.

Jacintha Saldanha, 46, a nurse at the King Edward VII's Hospital in central London, answered the call at 5.30am on Tuesday from the Sydney-based 2Day FM station, whose DJs pretended to be the Queen and Prince Charles. Ms Saldanha put them through to a colleague who provided details of the Duchess's condition.

Ms Saldanha was found unconscious at a nurses' residence close to the private hospital in Marylebone at about 9.35am and despite the efforts of paramedics could not be revived. Police said the death was not being treated as suspicious, and a source said officers were investigating whether she had taken her own life. Mental health experts cautioned against any assumptions about factors contributing to her death. The nurse, a mother of two children, who started working at the hospital in 2008, is the first member of staff heard to answer on a recording of the hoax call from presenters Mel Greig and Michael Christian."

Chinese divorce epidemic triggered by change in local land regulation

From:  - London Times - http://www.thetimes.co.uk/tto/news/world/asia/article3620054.ece

"The registry office of a district in southwestern China has been forced to hire a platoon of extra security guards and commandeer the use of a large wedding hall to cope with a catastrophic surge in divorces.

Within the last fortnight, in a surprise blur of mass marital discord, the District Civil Affairs Bureau in Yunyan has been overwhelmed by a 500 per cent increase in apparent marriage breakdowns.

Many couples, citing “constant bickering” or “lack of mutual communication” on their divorce application forms, have been arriving at the registry office holding hands, laughing together and as visibly devoted to one another as the day they tied the knot. Without exception, the newly divorced couples return home together.

The 120 divorces now being processed every day in Yunyan included a 90-year-old couple who had been married for decades but were suddenly so eager to split that they went to the Civil Affairs Bureau in a pair of wheelchairs and joined the snaking queue for a divorce. Another elderly couple watched as their two sons and two daughters all got divorced on the same day.

The Qianling divorce epidemic is the unintended consequence of a recent change in local land regulation that makes it exceptionally disadvantageous to be married.

The new rule, imposed by the Guiyang municipal government, means that farming families from that region cannot have a home larger than 240sq m. For many farming families in Qianling, the new rule was a source of immediate panic — over the years, they have invested in their properties and built larger houses.

But the rule has a loophole whereby unmarried couples count as two families and the home and property rights can be twice that size. Because the regulation applies to some 1,300 other villages in the region, fears are mounting that local bureaucracies will be inundated with divorce requests as farmers abandon their marriage vows to retain their properties.

Once the loophole was discovered by the villagers of Qianling and the queues started forming, it was immediately clear that the existing facilities for handling divorces were not big enough. Some complained that they had had been thwarted on four consecutive days in their efforts to secure a divorce."

Less youth gets jobs with job scheme!

From - The Guardian - http://www.guardian.co.uk/politics/2012/nov/27/work-programme-long-term-jobs

"Only 3.5% of people referred to Work Programme find long-term jobs

None of welfare-to-work scheme's 18 contractors reached target of getting 5.5% of clients a job for at least six months


An analysis by the Guardian reveals that none of the 18 Work Programme contractors – 15 of which are private companies – managed to get 5.5% of unemployed people referred to the scheme a job for half a year in the 14 months until July 2012, despite the government having spent £435m on the scheme so far. Providers are paid for taking on a jobless person, finding them a job and then ensuring they keep it.

Ingeus, part of a multinational founded by the wife of the former Australian prime minister Kevin Rudd, is the biggest private contractor, winning seven franchises of the programme worth £727m over five years. In the north-east of England, Ingeus was referred almost 28,000 jobless people and got 920 into sustained employment, a success rate of 3.3% until July 2012. A4e, which is the second biggest contractor to the programme, with £438m of deals, found 490 jobs for 17,650 unemployed people in the south of England – a performance rate of 2.8%.

Mark Hoban, the employment minister, told a press conference he would be writing to companies to warn them they were falling short of the government's targets, and reminding them if they had not improved by next April he could begin to divert the jobless from poor performers to the best companies.

...

Hoban said the figures had to be considered "against the backdrop of much weaker than expected growth. We had been expecting growth of 2 or 2.5% a year by now."

The Department for Work and Pensions (DWP) had threatened to remove contracts from providers who failed to meet minimum performance levels, which look at the first 12 months of the Work Programme. If this measure is used then just 2.3% of jobseekers found sustained work compared with the 5.5% minimum expected by the DWP.

...

The Labour leader, Ed Miliband, pointed out that long-term unemployment had soared by more than 200,000 since the scheme began. He said the work programme was a "miserable failure. It's just not working because over the first year of the Work Programme just over two in every hundred people have been getting a job. And estimates are that if the Work Programme didn't exist five in every hundred would be getting a job."

Britain's millionaire tax backfires

From - The Telegraph - http://www.telegraph.co.uk/news/politics/9707029/Two-thirds-of-millionaires-left-Britain-to-avoid-50p-tax-rate.html

"Two-thirds of millionaires left Britain to avoid 50p tax rate

Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.  Photo: Getty

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In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Since the announcement, the number of people declaring annual incomes of more than £1 million has risen to 10,000.

However, the number of million-pound earners is still far below the level recorded even at the height of the recession and financial crisis.

Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue."

Japan flexes military muscle to counter Chinese attitude to territorial; disputes

Let us hope that one of the unintended consequences of China's attitude towards disputed territories in South China Sea is not going to reawaken Japan's past militarism.

From New York Times - http://www.nytimes.com/2012/11/27/world/asia/japan-expands-its-regional-military-role.html?ref=asia

"After years of watching its international influence eroded by a slow-motion economic decline, the pacifist nation of Japan is trying to raise its profile in a new way, offering military aid for the first time in decades and displaying its own armed forces in an effort to build regional alliances and shore up other countries’ defenses to counter a rising China.

Graphic

Territorial Disputes Involving Japan

And after stepping up civilian aid programs to train and equip the coast guards of other nations, Japanese defense officials and analysts say, Japan could soon reach another milestone: beginning sales in the region of military hardware like seaplanes, and perhaps eventually the stealthy diesel-powered submarines considered well suited to the shallow waters where China is making increasingly assertive territorial claims.

Taken together those steps, while modest, represent a significant shift for Japan, which had resisted repeated calls from the United States to become a true regional power for fear that doing so would move it too far from its postwar pacifism. The country’s quiet resolve to edge past that reluctance and become more of a player comes as the United States and China are staking their own claims to power in Asia, and as jitters over China’s ambitions appear to be softening bitterness toward Japan among some Southeast Asian countries trampled last century in its quest for colonial domination.

The driver for Japan’s shifting national security strategy is its tense dispute with China over uninhabited islands in the East China Sea that is feeding Japanese anxiety that the country’s relative decline — and the financial struggles of its traditional protector, the United States — are leaving Japan increasingly vulnerable.

“During the cold war, all Japan had to do was follow the U.S.,” said Keiro Kitagami, a special adviser on security issues to Prime Minister Yoshihiko Noda. “With China, it’s different. Japan has to take a stand on its own.”

Japan’s moves do not mean it might transform its military, which serves a purely defensive role, into an offensive force anytime soon. The public has resisted past efforts by some politicians to revamp Japan’s pacifist constitution, and the nation’s vast debt will limit how much military aid it can extend.

But it is also clear that attitudes in Japan are evolving as China continues its double-digit annual growth in military spending and asserts that it should be in charge of the islands that Japan claims, as well as vast swaths of the South China Sea that various Southeast Asian nations say are in their control.

Japanese leaders have met the Chinese challenge over the islands known as the Senkaku in Japan and the Diaoyu in China with an uncharacteristic willingness to push back, and polls show the public increasingly agrees. Both major political parties are also talking openly about instituting a more flexible reading of the constitution that would allow Japan to come to the defense of allies — shooting down any North Korean missile headed for the United States, for instance — blurring the line between an offensive and defensive force."

Putting disputed areas on maps in passport backfires

From -  BBC - http://www.bbc.co.uk/news/world-asia-20491426

"Vietnamese officials are refusing to stamp new Chinese passports bearing a map that lays claim to disputed areas.

Border authorities have instead been issuing visas on separate pieces of paper and stamping those issued previously as invalid.

Vietnam, the Philippines and Taiwan have objected to the map because it shows disputed islands in the South China Sea to be a part of China.

India is also embroiled a row over the map's inclusion of disputed areas.

Official Chinese maps have long shown Taiwan and the South China Sea to be part of its own territory despite ongoing disputes with its neighbours.

China's Communist party newspaper, The People's Daily, said that Vietnam and other neighbours were trying to contain China with help from the United States.

Vietnam, the Philippines, and Taiwan have already complained to China about the map on the new passport, which they say is an infringement of their sovereignty.

The potentially oil-rich Paracel islands, claimed by Vietnam and also claimed by Taiwan, appear on the map, as do the Spratly islands, part of which are claimed by the Philippines.

India, which disputes two Himalayan regions also claimed by China that is included on the map, is stamping its own map on visas it issues to Chinese citizens.

Meanwhile, the Philippines is still currently accepting the new Chinese passports while it considers its options, says Foreign Ministry spokesman Raul Hernandez.

Last week, a meeting of the Association of South East Asian (Asean) nations in Cambodia saw China and the Philippines openly clash over disputed islands.

Asean has been trying to reach consensus over how to resolve the various territorial disputes with China."

Columbus discovers America!

I was watching Marr's excellent "History of the World" on BBC tv - http://www.bbc.co.uk/iplayer/episode/p00xnrqg/Andrew_Marrs_History_of_the_World_Age_of_Plunder/, when it struck me that if ever there was a good example of the Law of Unintended Consequences, it was the so-called discovery of America by Christopher Columbus.  


Columbus was seeking the Far East by sailing west to cut short the multi-thousand mile land journey across deserts and mountains and through fierce-some tribes and brigands. Instead he found the new continent.  The unintended consequences go far beyond the mere discovery, it provide the 'old world' with staple foods like the potato and maize and the narcotic tobacco. It also meant over the next few century the devastation to the populations of South America, the Incas and the Mayans were wiped out by war and disease and the north American Indians met with no better fate. Followed by the enslavement of vast populations of east Africans.

LENIN AND GERMAN ASSISTANCE FOR THE BOLSHEVIK REVOLUTION

How the butterfly's wings change the course of history! If the Germans had not helped to move Lenin and his  team move from Switzerland into Petrograd and hence start the Russian Revolution, the first world war may have been shorter; but in all probability Russia may not have turned communist. What that would have meant for human history only a physicist who believes in alternative universes may be able to say; and maybe not even then!

From: http://reformed-theology.org/html/books/bolshevik_revolution/chapter_03.htm

"It was not until the Bolsheviks had received from us a steady flow of funds through various channels and under varying labels that they were in a position to be able to build up their main organ Pravda, to conduct energetic propaganda and appreciably to extend the originally narrow base of their party.

Von Kühlmann, minister of foreign affairs, to the kaiser, December 3, 1917

In April 1917 Lenin and a party of 32 Russian revolutionaries, mostly Bolsheviks, journeyed by train from Switzerland across Germany through Sweden to Petrograd, Russia. They were on their way to join Leon Trotsky to "complete the revolution." Their trans-Germany transit was approved, facilitated, and financed by the German General Staff. Lenin's transit to Russia was part of a plan approved by the German Supreme Command, apparently not immediately known to the kaiser, to aid in the disintegration of the Russian army and so eliminate Russia from World War I. The possibility that the Bolsheviks might be turned against Germany and Europe did not occur to the German General Staff. Major General Hoffman has written, "We neither knew nor foresaw the danger to humanity from the consequences of this journey of the Bolsheviks to Russia."¹

At the highest level the German political officer who approved Lenin's journey to Russia was Chancellor Theobald von Bethmann-Hollweg, a descendant of the Frankfurt banking family Bethmann, which achieved great prosperity in the nineteenth century. Bethmann-Hollweg was appointed chancellor in 1909 and in November 1913 became the subject of the first vote of censure ever passed by the German Reichstag on a chancellor. It was Bethmann-Hollweg who in 1914 told the world that the German guarantee to Belgium was a mere "scrap of paper." Yet on other war matters — such as the use of unrestricted submarine warfare — Bethmann-Hollweg was ambivalent; in January 1917 he told the kaiser, "I can give Your Majesty neither my assent to the unrestricted submarine warfare nor my refusal." By 1917 Bethmann-Hollweg had lost the Reichstag's support and resigned — but not before approving transit of Bolshevik revolutionaries to Russia. The transit instructions from Bethmann-Hollweg went through the state secretary Arthur Zimmermann — who was immediately under Bethmann-Hollweg and who handled day-to-day operational details with the German ministers in both Bern and Copenhagen — to the German minister to Bern in early April 1917. The kaiser himself was not aware of the revolutionary movement until after Lenin had passed into Russia."

Telegram proposing proposing military alliance against the United States triggers US entry into WW I

Arthur Zimmerman, Germany's foreign secretary in 1917, inadvertently drew the US into WW1 when his intention was to cause such a diversion in North America that the US would be too preoccupied to intervene in Europe's war. http://www.ourdocuments.gov/doc.php?flash=true&doc=60


How did I come across this gem? By watching Marr's excellent World History series on BBC television - http://www.bbc.co.uk/programmes/p00xnr43

"This telegram, written by German Foreign Secretary Arthur Zimmermann, is a coded message sent to Mexico, proposing a military alliance against the United States. The obvious threats to the United States contained in the telegram inflamed American public opinion against Germany and helped convince Congress to declare war against Germany in 1917.

Between 1914 and the spring of 1917, the European nations engaged in a conflict that became known as World War I. While armies battled in Europe, the United States remained neutral. In 1916 Woodrow Wilson was elected President for a second term, largely because of the slogan "He kept us out of war." Events in early 1917 would change that hope.

In January of 1917, British cryptographers deciphered a telegram from German Foreign Minister Arthur Zimmermann to the German Minister to Mexico, von Eckhardt, offering United States territory to Mexico in return for joining the German cause. To protect their intelligence from detection and to capitalize on growing anti-German sentiment in the United States, the British waited to present the telegram to President Wilson. Meanwhile, frustration over the effective British naval blockade caused Germany to break its pledge to limit submarine warfare. In response, the United States severed diplomatic relations with Germany in February.

On February 24 Britain released the Zimmerman telegram to Wilson, and news of the telegram was published widely in the American press on March 1. The telegram had such an impact on American opinion that, according to David Kahn, author of The Codebreakers, "No other single cryptanalysis has had such enormous consequences." It is his opinion that "never before or since has so much turned upon the solution of a secret message." On April 6, 1917, the United States Congress formally declared war on Germany and its allies. The Zimmerman telegram clearly had helped draw the United States into the war and thus changed the course of history."

As China tensions simmer, Japan pulls back from "world's factory"

China may have encouraged its citizens to protest against perceived Japanese incursions into Chinese maritme territory. These protests resulted in burnt Japanese car showrooms in China nd other acts of violence. The unintended consequence may be a speeding up of Japanese investment away from China to more peaceful and increasingly less costly countries.

From Reuters - http://www.reuters.com/article/2012/10/23/us-japan-china-firms-idUSBRE89M1GS20121023



"Almost a quarter of Japanese manufacturers are rethinking their investment plans in China and some may shift future production elsewhere after the spike in tensions between Asia's two largest economies."

The sentiments were expressed in a Reuters Corporate Survey released on Wednesday and in interviews conducted in recent weeks with executives in industries ranging from electronics to apparel manufacturing.

The concerns suggest the recent rift between China and Japan over disputed islands in the East China Sea could mark the end of a boom that has played out over two decades in which Japanese companies have emerged as the most active source of outside direct investment in China after Hong Kong and Taiwan.

Since 1990, Japanese companies led by electronics makers like Panasonic Corp (6752.T) and followed by a wave of automakers like Nissan Motor Corp (7201.T) and Toyota Motor Corp (7203.T) and their suppliers have poured almost $1 trillion into Chinese factories, Japanese government statistics show.

The investment by over 20,000 firms created over 1.6 million jobs as Japanese companies looked to take advantage of low production costs and then China's potential as a surging market for everything from cars to cosmetics.

Now, sentiment has turned. When asked if their attitude toward using China as a production hub over the medium term had changed, 37 percent of Japanese companies surveyed said they had grown more cautious.

Almost half of Japanese manufacturers said they expected to see lower sales in the current fiscal year. In response to a separate question, 24 percent said they were considering delaying or reducing planned investment in China. Eighteen percent said they were considering shifting production to other countries.

The survey allowed companies responding to pick more than one choice to describe the impact of the China dispute on their business, meaning there could be some overlap between the group of manufacturers considering cutting investment and those looking to other markets outside China as future production hubs.

"China is very convenient, but gradually that convenience has been fading," Yoshihisa Ejiri, 65, president of clothing chain Honeys Co (2792.T) told Reuters.

The Reuters survey of 400 Japanese companies took place between October 1 and October 17. A month earlier, almost 60 percent of firms in a Reuters survey said they expected little to no fallout from the strains with China. Companies were not asked if they were considering delaying or reducing planned investment in China in that poll.

"The level of the anti-Japan demonstrations was different this time and I think that will make it harder for companies that have been successful in China to continue operating there," said Hisayoshi Hashimoto, a professor at Japan's National Graduate Institute for Policy Studies."