China: Low Cost No More

I recently came across this post on The China Sourcing Blog. It highlights an ideal example of why China is no longer a low-cost provider and is rapidly moving up the manufacturing food chain. According to the post, "Chen Weiliang, President of Foxconn International, Taiwan's biggest company and the largest contract manufacturer of electronics worldwide, announced last week that the company will be moving its factories from Shenzhen to northern Chinese provinces such as Hebei and Shanxi, where the average salary is more than 60% lower than in Shenzhen. In addition, Chen said Foxconn will be opening new factories in low-cost markets like Hungary and India to reduce the pressure caused by cost increases." It's usually quite difficult to compare Central European pricing to China's, so that last line took me a bit by surprise. Though not surprising given the increased cost of doing business in China from higher energy and wage rates to changing tax structures.

- Jason Busch

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