Take the Money and Run: South Chinese Factory Closures
March 1st, 2008 | by This is China! |Rich over at All Roads Lead to China has a very nice analysis and commentary thread on the closings of thousands of factories in Guangdong. The commentary thread deepens thinking on just where exporters are going and why.
The International Tribune recently cited retailers are beginning to source…
“from inland cities like Luoyang and Wuhan, outside the traditional export zones of Guangdong and the Yangtze River Delta, near Shanghai. In inland China, wages still lag far behind the richer eastern and southern coastal areas.”
Ultimately though, a lot of these closings come down to Hong Kong and Taiwanese exploitation of Mainland workers (since the early 1980s); an over-burdened under-funded infrastructure; and the immaturity of political and legal structures nationally and regionally.
Or, as Rich put it in another post on the subject, “If you are underpaying your staff, and are not nice to them, they will leave you to find other sources of employment.”
Jonathon Woetzel, interviewed in the IHT article, makes the point about the companies, ‘There’s still quite a lot of opportunity to take cost out of the [purchasing] system. What we do see is supply chains extending inland, for example, going inland for final assembly.’”
Which essentially means, many of those South China companies have taken the money and run.
According to the Financial Times…
“Across town, Lu Yongyuan, a 32-year-old migrant labourer from Guizhou province, was not so lucky. The Taiwanese head of his company, Dongguan Hongsheng Mould Factory, simply absconded. The factory’s 300 workers returned from the traditional Chinese New Year holiday to find the factory gates locked and their salaries unpaid.”
