David Farr

Analysis: China costs start to worry U.S. multinationals

By Nick ZieminskiNEW YORK (Reuters) - For years, low prices on China-sourced goods helped dampen inflation in the United States.

Now China's efforts to boost domestic consumer spending, reducing reliance on exports, are leading to higher costs for multinationals that manufacture goods there.Eventually, China could export its inflation.Conglomerates ranging from Emerson Electric <EMR.N> to Honeywell International <HON.N> feel pressure on margins from double-digit wage increases in China. So have toymaker Mattel <MAT.O>, fast-food chain Yum! Brands <YUM.N> and computer maker Dell <DELL.O>, analysts and investors say.Yum, the No. 1 Western restaurant brand in the world's fastest-growing major economy, generates a third of its profit from China. It said its full-year margins will dip this year, citing labor inflation in the mid-to-high teens."I do believe that labor inflation will continue high for quite a while," Yum CFO Rick Carucci said on the company's earnings conference call. He call...

Read More ›