Growing Pains: More and More Companies Plan to Transfer Their Factories out of China

China is known as the world factory because of the labor force advantage. But the situation is changing gradually. Many companies plan to transfer their factories to Vietnam and other Southeast Asia countries.

In Dongguan, the most famous Chinese city with a large concentration of labor-intensive factories, many companies consider that they should move their factories to Vietnam where the labor cost is now lower than China. In an industrial zone of Dongguan the road is empty and the roadside business such as shops and the net cafés are at a low stand.

Dongguan has been trying to boost industrial upgrade. But the outmigration of factories has had Dongguan faced with dilemmas. On one side the government worries that the outmigration of factories many lead to manufacturer industry hollowing-out, on the other side it want to seize this opportunity to boost industrial upgrade.

In any case against the background of Chinese RMB rate revaluation and the difficulty of recruitment industry shift is an inevitable choice for Chinese export-oriented enterprises. Also the Sino-ASEAN Free Trade Area operation and zero tariffs make many factories in Dongguan consider about the industry shift.

However it would be a slow process because of the low capacity of Southeast Asia countries to receive the industry shift from China. And also we doubt that if China can become the source of creation and innovation like Japan or America.

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