China could be falling out of favour among manufacturers

Factories are shutting in China as the economy slows and the country’s low-cost advantage
disappears.

Taiwan’s Want China Times reports that land and production costs in China, among the
reasons for many firms investing in factories there, are increasing.

Foreign
companies including Uniqlo, Nike and Samsung are establishing new factories in
India and south-east Asia and reducing their presence in China.

Among
the high-profile companies ending their manufacturing operations in China,
Japanese watchmaker Citizen closed a Guangdong factory earlier this month, with over
1,000 workers losing their jobs.

“In
addition, labor quality has been deteriorating, as many employers complain of
lack of professional skills and working ethics among young Chinese laborers
born after the 1980s or 1990s, a far cry from the industrious and obedient
labor force of earlier times,” reports Want China Times.

Business Spectator reports that in Dongguan alone, over 100 large factories closed
leading up to Chinese New Year.

The
official China PMI survey released at the beginning of the month showed the first sub-50 result in 27 months in January. Any result under 50 indicates
contraction.

China’s national GDP growth slowed to 7.4 per cent last year. Oxford Economics believes that GDP growth has been around 5 per cent for the last few months, reports Bloomberg

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