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VOA: High Cost Drives Chinese Exporters to Leave Coastal Provinces

Voice of America (VOA) recently reported that Chinese export businesses are planning to leave coastal provinces for inland locations or other countries. The report gave the example of the Apple iPhone OEM (Original Equipment Manufacturer) vendor FoxConn’s plan to invest US$12 billion to open new plants in Brazil. With salary increases, raw material price increases, and currency appreciation, the exporters’ production costs are growing steadily. A global supplier in Hong Kong estimates there will be a 15% increase in the price of Chinese exports. Although the government is encouraging the businesses to move their plants to inland provinces, the concern is that the increase in transportation costs to access sea ports will eat up the savings. Moving manufacturing lines to locations in nearby countries like Vietnam and Indonesia may become easier choices for their existing infrastructures.

Source: Voice of America, April 20, 2011