The China Train May Have Already Left the Station

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If you have thought that taking advantage of China's low costs might be the answer to all your problems -- better look again. The game is getting much more complex.

While in Australia I met a businessman based in Hong Kong whose company makes plastic baby products in China. He is looking to open a manufacturing plant in -- of all places -- the U.S. What gives? It turns out that a leading European retailer has indicated that it intends to include a carbon tag on all of its products. According to this businessman, a product made in China might have a carbon tag of 18 (due to China's heavy use of coal) -- compared to a two for the same product made in some locations in the U.S. The retailer has indicated it will give preference to the product with the lower carbon tag (the one that has the least negative impact on the environment) -- passing along the additional costs to European consumers who will reportedly pay the extra 10 percent cost.