International Finance News, a daily newspaper under Chinese state media People’s Daily, recently published a comprehensive report on the fact that manufacturing work is moving out of China. The report referred to Nike’s data as an example. Since the year 2010, Vietnam, instead of China, has been the biggest shoe manufacturer for Nike. China is losing competitiveness due to the increase in labor costs, the RMB exchange rate, and the rate of inflation. The report suggested that China is experiencing “industrial transformation.” Cheap labor centers are being replaced by research centers. However, experts believe that small manufacturing businesses will face a new wave of bankruptcies. Small businesses represent 80% of the job market and 50% of the nation’s tax income.
Source: International Finance News, June 30, 2011