China: The Difficult Transition from Low to High "Value Added"

7 October 2010. Companies in China’s industrial heartland are toiling to reinvent their businesses, fearing low-cost manufacturing that helped propel nation’s economic ascent fast becoming obsolete. “Many customers won’t be happy w decision to compete w them. But we have no choice” Economists consider such efforts necessary — & overdue. “It is my hope China’s comparative advantage as low-wage producer disappears — the sooner the better" says one, adding China needed to upgrade & embark on “the next stage of development” Seeking lower costs, some coastal factories relocating to poor inland regions where wages as much as 30% lower. Others moving to lower-wage countries like Bangladesh & Vietnam. But for companies that have invested bns in factories, simply packing up & pulling out not financially feasible, so many experimenting w other solutions. “We’ve decided we’re not going to be low end. A lot of companies don’t see a future here & feel pressure from govt to upgrade” If many companies reluctant to leave, local govt just as loath to lose jobs & tax revenue. “Every company now wants to be high-tech, & we want to encourage them”