Date
29 May 2017
Losing out to rivals in Southeast Asia in terms of cost competitiveness, more Guangdong makers are considering moving there themselves. Photo: Bloomberg
Losing out to rivals in Southeast Asia in terms of cost competitiveness, more Guangdong makers are considering moving there themselves. Photo: Bloomberg

Guangdong factory owners go from one headache to the next

Factory owners in Guangdong used to worry about their workers not returning after the New Year holiday.

Now their biggest headache is finding enough orders to keep them employed.

Cheap labor and production costs are diverting orders to China’s Southeast Asian rivals.

Labor-intensive sectors such as textiles, electrical appliances, toys and furniture in the southern China manufacturing hub are facing the most pressure.

Not only are orders flowing elsewhere, Chinese entrepreneurs are also reportedly leaving for cheaper production bases abroad.

“As far as I know, about 40 percent of furniture makers in Guangdong have moved to Southeast Asia to take advantage of the lower wages and cheaper material costs,” an export-oriented maker told National Business Daily.

The average monthly wage in Guangdong in 2012 was about US$654, against US$181 in Vietnam, US$357 in Thailand and US$174 in Indonesia, it said, citing a 2014 survey.

Moving up the value chain seems to be the only way out but for most factories making low-end to mid-range products, the transformation will be tough and will take time.

Meanwhile, shops in Guangdong’s industrial towns such as Panyu and Dongguan could see a major market — factory workers — vanish.

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RA

EJ Insight writer

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