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Higher costs forcing firms to relocate   2012-10-22 15:51:00

  Rising wages and shrinking export demand are forcing manufacturers to relocate to neighboring Southeast Asian nations and many that remain are seriously considering moving, a foreign trade official from the Ministry of Commerce said.

  The official, who declined to be named, said that "nearly one-third of Chinese manufacturers of textiles, garments, shoes and hats "are now working" under growing pressure" and have moved all, or part of their production, outside China in what he called the great industrial transfer.

  Favored destinations are usually members of the Association of Southeast Asian Nations, especially Vietnam, Indonesia and Malaysia.

  And in all likelihood, "the trend will continue" with more traditional labor-intensive manufacturers transferring production, he told China Daily.

  Liang Shiyu, director of the administrative office at the China Chamber of Commerce for the Import and Export of Textiles, confirmed that a slew of manufacturers have moved part or all of their business abroad.

  But the foreign trade official said that while some job losses occurred during the transfer, the phenomenon is "basically positive," and is "in line with" government commitments to upgrade China's industrial power and change its model of economic growth.

  The 12th Five-Year Plan (2011-15) urges exporters to produce more high-end goods.

  Exporters are also actively seeking new ways to conduct business as export momentum declines due to a combination of negative factors at home and abroad, from higher labor costs to sluggish demand from the European Union and the United States.

  China's labor costs have surged recently by 15 to 20 percent annually, squeezing margins and driving some companies to bankruptcy.

  According to the Ministry of Human Resources and Social Security, from January to June this year, the minimum wage was raised, on average, by 20 percent in 16 provinces.

  The minimum wage in Shenzhen now stands at 1,500 yuan ($238) per month, setting the highest standard for the whole Chinese mainland.

  Many developing countries in Southeast Asia have lower labor costs.

  The monthly wage for manufacturing jobs in Vietnam was, on average, 600 yuan in 2011, equivalent to the level of 10 years ago in Dongguan, an industrial town in South China's Pearl River Delta.

source : China Daily     editor:: Zhang Yan
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