Domestic Shoe Companies Are Rising In Cost, Will International Investors "Rock No Shift"?

The rapid growth of wage level is threatening China's competitiveness, but the improvement of production efficiency and other advantages mean that China will continue to attract investors.

A report by the people's Bank of Nantes last month predicted that China's labor costs will catch up with the United States in 4 years, within 5 years, and even within 7 years. "In view of the strong growth of production costs, China will soon be no longer a competitive producer." This view is supported by the Boston Consulting Group, which says that by 2015, manufacturing costs in some parts of the United States will be the same as that in China.

Many large manufacturers are leaving China. Boston consulting group said that the national cash register has transferred the manufacture of ATM to a factory in Georgia. Adidas has recently announced that it will close its only factory in China. The company says production. Gym shoes Chinese workers earn at least 2000 yuan a month, while Kampuchea workers only earn 107 euros.

In the first half of 2012, the wages of Chinese urban residents increased by 13% over the same period last year. As a low-income group, the wages of migrant workers also rose by 14.9%. Nantes's people's Bank of China said that wage increases would encourage manufacturers to move to South Asia and Southeast Asia with lower labor costs. Egypt and Morocco, and even European countries such as Romania and Bulgaria, could benefit.

However, not all economists believe that China will lose the advantage of manufacturing industry. Luis Kujis, chief executive of Hongkong Institute of international economics, said: "most of the impact of wage increases has been offset by the substantial increase in productivity." According to a survey conducted by Standard Chartered Bank earlier this year on 200 companies, the productivity of workers in the Pearl River Delta, the core of China's shoes and clothing manufacturing industry, has increased faster than the rate of wage increase.

Wang Qinwei, a Chinese economist at Kaye investment, said: "with the rapid growth of wages and land costs and the appreciation of the renminbi, China's share of the world's low-end exports has begun to decline. But the growth of market share of high-end products has offset this. Compared with a few years ago, the overall competitiveness of China's export industry has not declined. Because of the rapid increase in productivity, the average profit of light industry has been increasing over the past 3 years.

Alistair Thornton, an economist at IHS global perspective, said that China's coastal areas have an efficient business environment, which will continue to attract investors. These advantages will restrict the transfer of manufacturing to Vietnam, Bangladesh, Pakistan and Indonesia. "In the efficient supply chain, economies of scale and reliable business environment, China's Guangdong and other coastal provinces have great advantages over most countries in Southeast Asia and South Asia. The manufacturers who left China's coastal areas not only focus on Southeast Asia and Eastern Europe, but also aim at the mainland of China, where land, wages and energy costs are much cheaper.