Read The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World for Free Online

and bedroom sets destined for middle-American homes, the kind with gnomes on the lawn and collectibles over fake fireplaces.
    The factory was worlds apart from the sweatshop image many Americans have of Chinese factories, and 180 degrees different from the factories I visited when I first arrived in China over a decade earlier. There were no disgusting fumes swamping the work area or unsecured pipes dangling from the ceilings; no slave-driving managers swaggering around, prodding workers to move faster; no chains and bars locking the windows and doors.
    Laura’s factory looked more like a giant, modern sports stadium or one of the dazzling airports opening up all over the country. In contrast to the outdoors, where my car was steadily accumulating an extra coating or two of dirt, the work areas were clean and brightly lit. The air was fine to breathe, and didn’t make me cough or cause my throat burn. Workers varnishing wood pieces wore facemasks and were in well-fumigated areas away from the tailors. While the workers were largely silent, it was not because they were afraid to talk; rather, they were intent on doing their jobs and hitting performance targets to get bonuses.
    Bob is a real salt-of-the-earth guy. He looks at you straight in the eye when talking. You could easily picture him as the head coach of your child’s Little League baseball team, or maybe as president of your local Kiwanis Club.
    As I made my way across the factory floor, still dazzled by the sheer size of the place, Bob pointed out the red safety lights at the top of each workstation. If a problem occurred on the production line, he said, a worker would hit a switch to flick on the red light, and one of the supervisors, clad in an orange smock, would come right over. Production in that work area would stop until the potential hazard was fixed satisfactorily.
    Line workers and supervisors were paid not just by how much they produced, Bob told me, but also for the prevention of workplace accidents. Not only was this the right thing to do, he said, but it also met increasing worker and government demand for safer work environments via more-expensive technology and best-practice management methods. It was important for Laura that workers in China felt like they were part of the Laura family, so they brought the same codes of conduct (no swearing, for instance) and regulations from their American operations to China.
    Other companies across China were also installing top-notch production lines in their factories, much as Laura had done. In 2008, Aircraft maker Airbus opened a giant plant in Tianjin, its most state-of-the-art factory and its first final-assembly line outside of Europe. Luxury auto firm Mercedes-Benz announced in 2011 that it would invest a further 30 billion renminbi (almost $5 billion) to produce more cars for sale in China, because it could no longer keep up with demand through imports alone.
    New factories being erected across the country resulted in an employee’s labor market, because the factories being built needed a dependable workforce. They were offering huge salary increases and bonuses. Bob told me his biggest nightmare was recruiting and retaining talent. Unlike a decade before, when workers seemed to beg for jobs, and lines of them huddled at the factory gates looking for work, he now faced too many disruptions in production because he could not find enough skilled workers. Higher costs were becoming a serious issue, because salaries were going up as Laura had to fend off poaching from other factories nearby. Bob estimated that total labor costs might double by 2015; no longer were they a small part of the operating expense of running a factory in China.
    Perhaps counterintuitively, the labor pool actually dried up during the great financial crisis, as Americans and Europeans increased investment in China to offset flagging sales in their home markets. The tight labor pool was evident not just at the low end in factories,