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more investors to flee the greenback and switch their investment portfolios to commodities or foreign markets, where there were greater possibilities to receive higher returns, and which further increased Bob’s input prices. He did not see commodity prices stabilizing in the near future until the greenback regained its strength and the debt situation in the eurozone stabilized.
    Breaking it down further, Bob showed how an appreciating renminbi cut into his company’s profits. If salaries, rents, and commodity prices went up at a conservative 10 percent a year, and the renminbi appreciated 5 percent annually, that meant his overall costs would rise 15 percent a year. Rising costs would not be a big problem if he could raise prices in America, but he worried about doing so, with American unemployment still hovering close to 10 percent and consumer confidence at decade lows.
    For Bob, the combination of the depreciating dollar and rising costs in China is eroding margins, which means lowering bonuses, salaries, and dividends for American senior management. He told me the problem he was facing was also happening to most of his peers in the American business community who had already shifted production to China.
    Once I got Bob going about the state of the global economy, he couldn’t stop. An appreciating renminbi wouldn’t save American jobs either, as economist Paul Krugman had been saying it would on the New York Times op-ed page. “That ‘saving American jobs’ argument is ridiculous,” Bob said. “How many firms realistically will go back to America? They’re going to look for even cheaper production locales. Krugman doesn’t understand business, just theory.” As labor costs rose, Laura Furniture had opened factories in cheaper countries like Vietnam and Indonesia, but certainly not America.
    Relocating to Vietnam and leaving China completely is not a solution, Bob admitted, frustration creeping into his voice. He said Chinese workers overall have more experienced line managers, and more drive and ability to produce more sophisticated products. “Our Chinese workers produce more pieces with far superior quality, given the same amount of time, than our workers in Vietnam,” he said. “In China, it seems like they know if they do well, they can get promoted and make a lot of money in the future. In Vietnam and Indonesia, the workers do not seem to see that they can go up and make a lot of money eventually, so they move at a more measured pace.”
    Equally important, the level of infrastructure development in Vietnam and Indonesia was 30 years behind China’s. “Vietnam just doesn’t have the roads and shipping facilities that China has,” Bob said. He told me Vietnam and Indonesia are efficient markets for relatively simple manufacturing, like apparel or athletic shoes, but not for more complicated or time-sensitive pieces like bedroom sets or the latest electronic gadgets. As a result, Bob was forced to keep all of his higher-end production in China, despite the rising costs, and was planning to raise end prices to American consumers as soon as he could or else take reduced margins. He was now using his factories in Vietnam and Indonesia to reduce costs at the lower end of the production scale.
    The shortage of skilled Chinese laborers and subsequent rising costs made me wonder exactly how much the factory workers in China were making now. A senior Chinese seamstress—typically a 22-year-old with four or five years’ experience—earned about $800 a month—three or four times the wages in Vietnam, Bob told me. That is an astounding number, I thought. I recalled from an internal study a colleague of mine had done to benchmark my firm’s starting salaries that entry-level, university-educated workers at white-collar firms like Deloitte and Citigroup made similar wages. I wondered how young Chinese auditors and investment bank analysts and their parents felt when they found out that factory workers sewing