China Shifts From Emphasis on Low-Cost Factories (with Video)
For years, factories here in the Pearl River Delta region have served as the low-cost workshops for global brands, turning this part of China into the nation’s biggest export zone. The city of Dongguan, about 35 miles northwest of Hong Kong, has long churned out toys, textiles, furniture and sports shoes — including hundreds of millions of sneakers a year for companies like Nike and Adidas.
But now, with manufacturing costs rising and China looking to create a consumer middle class, experts say the revamping of this region’s industries could help reduce the nation’s wide income gap and encourage more balanced and sustainable economic growth.
“It is my hope that China’s comparative advantage as a low-wage producer does disappear — the sooner the better,” Fan Gang, an economics professor at Peking University, wrote in a recent essay, adding that China needs to upgrade and embark on “the next stage of development.”
Manufacturing costs have risen rapidly here in response to nagging labor shortages and worker demands for higher wages to help offset soaring food and property prices.