International manufacturing companies active in China are increasingly focused on accessing growing Chinese mainland markets, rather than using the country as an export base, according to a new report.
The 2009/10 China Manufacturing Competitiveness report, co-produced by the American Chamber of Commerce in Shanghai and Boo z & Co, reveals that 83 per cent (up from 71 per cent two years ago) of surveyed companies said their primary objective for locating manufacturing operations in China was to access the rapidly diversifying Chinese marketplace.
As cost and wage differentials in inland areas of China become more attractive compared to the higher rates in coastal areas, 28 per cent of respondents are considering relocating production facilities to central and southwest China. This serves two functions, helping to reduce factor costs and locating facilities closer to rapidly growing markets across China.
“This report is a snapshot in time of a picture that is rapidly moving,” said Ron Haddock, co-author of the report, “but the old paradigm that China is just a place for cheap labour is changing.”
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