Manufacturers Struggle In The South China Industrial Belt

Manufacturers struggled in the South China industrial belt in early February, when migrant workers returned to China after the Spring Festival. At the beginning, the factory directors in Guangdong thought that the snow was not smooth enough due to the delay of the railway and power failure caused by the snowstorm. But now that chaos has been cleared up, it is clear that a huge 20 million population movement is disappearing every year. It is precisely in the past 20 years that they have ensured the flourishing development of South China's manufacturing industry. Guangdong's labor department admitted that 11% of the workers did not return to work after the Spring Festival, and some even estimated that the rate was 30%. No matter what the exact number is, many factories are beginning to worry. Wages have risen, and now they must increase as the cost of rising loans, raw materials, energy, environmental protection and medical insurance increases. At the same time, because of the reduced demand from the United States and pressure from other countries, forced to cut prices, the total factory revenue declined under the complex export quota system in China. After the new year, a survey was conducted among 162 members of the Hongkong Federation of industry in Southern China. Members estimate that 10-20% in Guangdong's 7 factories closed last year. 2/3 the surveyed members said they were not sure whether to invest in the area or not, and 1/3 plan to cut investment. Only one reaction is more optimistic. To some extent, the great change in South China is closely following the government's plan to force the polluting factories to close or migrate to the poor mainland, which are forgotten by China's growing industrial wealth. Such vacancies in Guangdong are expected to fill up more high-end and higher value added enterprises, and their products are greener and more energy efficient. There are signs that this is actually happening. The factory was built in the mainland of China to provide jobs closer to home in the remote areas, rather than leaving home for a whole year. This may explain the decrease of migrant workers' mobility. At the same time, discrimination against industrial parks is prevailing. In Guangdong and Suzhou, it is more prominent than elsewhere. It only allows the manufacture of high-end electronic products and medical devices. The most troublesome businesses are those with low income and low technology, such as toys, plastic, shoes and clothes. Many are sweatshops in a very bad working environment. Those factories that offer relatively high wages and good working conditions do not seem to be too much of a problem in hiring convenience. Nike's sports shoe factory in Dongguan has 27 thousand workers, 4500 of whom returned last year and 40% stayed here for 3 years at least. The workers earn 1400 yuan (US $200) a month, much higher than the average. There are welfare lunches and clean dormitories (for 7500 live factory workers). Nike does not compete in the low-end market. The shoes produced by Nike Guangdong factory cost up to 185 dollars per pair. But Nike gradually moved the factory from South China to other parts of China, even to other Southeast Asian countries. Actually, there is no shortage of followers to remove the factory from China. More than half of foreign companies believe that China is losing its edge compared with other low-cost Asian countries, and 17% have a relocation plan, according to a survey conducted by the BoozAllenHamilton in Shanghai for the US Chamber of Commerce in Shanghai. This change will be a good thing, as products are transferred to Bangladesh, Indonesia, Malaysia and even Africa, bringing wealth and production technology to the past. Although China has relied heavily on export development, it is now starting to develop its own economy, and there are other ways to develop it besides making cheap goods. But these transfers still cause little confusion. Thousands of unskilled workers still live on low-cost factories in southern China. With the fact that Western rusty factory warehouses are faxing, it is difficult to transform high value-added products. Clement Chen, chairman of the Hongkong Federation of industry, said that the Chinese government has put pressure on many heavy polluting industries, such as leather tanning, dyeing, finishing, electroplating and other similar industries. This is understandable, but it will disrupt the wider production supply chain, including the industries that China hopes to develop. The business environment is as fragile as the ecological environment. Once it is lost, the competitive advantage can not be recaptured, even if it can be very difficult.