But even without the currency fight, the economics of sock-making here are shifting. This year, labor shortages in China’s booming coastal factory towns have pushed up factory wages. And skyrocketing cotton prices, propelled by bad weather in cotton-producing regions, have been an even sharper blow.
During a tour of his factory last week, Mr. Yang said the prospect of a strengthening renminbi and a weakening dollar would create more hardship. Most Chinese factories sign long-term contracts in dollars; and if the dollar slides, factories here lose.
“It’s unfair,” Mr. Yang says.
Not surprisingly, Shuangjin’s recent negotiation with PS Brands, its biggest American customer, was tense. Mr. Levy warned that big retailers back home were pressing him to hold down costs in China because of weak spending by American consumers. Mr. Yang countered that he was strained by the soaring cotton prices.
After the talks ended, Mr. Yang walked into a conference room and exhaled. He declined to divulge details, saying only that a deal had been struck.
“That was tough,” he said, noting that currency was a major sticking point. “I told my clients today, ‘If you want to order, do it today, because if you wait the price will be different.’ ”
One thing Mr. Levy and Mr. Yang agree about: it is only a matter of time before pricing pressures in factories like Shuangjin’s result in higher consumer prices for Americans.
The mood is distinctly different at Staco Systems’ factory in Irvine, where Staco is building airplane cockpit gear for a state-owned Chinese company named Avic.
The United States long ago surrendered most low-skill manufacturing and assembly to China. But many higher-technology components, like microchips and specialized tools, are still made in the United States.
At Staco’s factory, workers blend precious metals, like gold and silver, with complex plastics to create button and switches for plane makers like Boeing and Airbus. The switches, which must be durable enough to withstand military demands and have special optics for all types of lighting conditions, are often priced as high as $500 each.
In the last two years Staco has expand its payroll, to about 100 employees now, and it is selling to China’s fast-growing aviation industry. And with the dollar’s value declining against other currencies, Chinese buyers can afford more of Staco’s gear, as its prices are increasingly competitive with European companies’ products. “China will be our fastest-growing market over the next few years,” said Jason Childs, vice president for sales and marketing at Staco Systems, which is privately held and had revenue of about $20 million last year.
That, in microcosm, is what American officials want from a stronger renminbi relative to the dollar: more exports and job creation.
But Mr. Levy at PS Brands says the rise of the renminbi is going to have cruel side effects: job losses in America’s retail sector and higher prices for consumers.
“This is hurting the U.S. consumer who can afford it the least,” Mr. Levy said. “If people are struggling, how are they going to pay more for socks?”