Factory Migration Fever yet to Hit East and North China
In view of rising land and labour costs in the Pearl River Delta region, many factories have been relocating to lower-cost areas within Guangdong province. This relocation trend has caused suppliers and customers along their value chains to adjust their business strategies accordingly.
Elsewhere in China, such as East and North China, operational costs have also been rising significantly. Even with this cost pressure however, less than 10% plan to relocate in the next three years (8% in East and 4% in North China), according to a GIA Asia Pacific survey of over 130 manufacturers in the two regions.
While the majority of the companies in the survey cited the inconvenience or costs as a key deterrent to moving location, 6% indicated that they have just relocated from another area and therefore will not move in the short to mid term. The most important catalysts for relocation are changes in government regulations and policies and a change in business environment.
Although relocation is not yet a main trend in East and North China, policy makers will need to keep tabs on major shifts in the business environment that may set off an exodus.
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