People’s Daily recently reported that China’s Ministry of Commerce suggested that the so called “phenomenon” of foreign investments fleeing China for Southeast Asia is just a few OEM (Original Equipment Manufacturer) factories leaving for neighboring countries. The minor scale does not constitute a trend. However the Chinese government does recommend that investors move to the Western region inside China where they can realize the same benefits. Starting with the end of year 2011, the actual foreign investment level has been on the decline. Observers expressed the belief that investors were moving their money to Southeast Asia where they found the lower labor costs more attractive. The government found there was a 9.18 percent decline in the number of new companies founded based on foreign investment. As an answer to this decline, in the first half of this year, the Chinese government simplified the process of approving foreign investments.
Source: People’s Daily, July 27, 2013