Word: shenzhen
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...rising cost of property, lofty electricity prices, water and power shortages and stricter environmental regulations, and Shenzhen has become one of the most expensive places in the country for factory operations. Adaptation is the order of the day. For example, Hong Kong-based Top Form, the world's largest bra maker, has transferred much of the manufacturing of basic bras from its Shenzhen factory to other facilities such as its plant at Long Nan in Jiangxi province, where labor costs (including benefits) are 60% lower. Top Form's Shenzhen factory is now focused on manufacturing high-fashion bras featuring delicate...
...then, do city officials feel a pressing need for a new economic vision? Because Shenzhen is discovering that the same forces of globalization that made it successful can also work against it. As the city prospered, wages went up, along with a host of other expenses. According to Chinese government statistics, the average annual salary in Shenzhen has surged by about 40% since 2000 to more than $4,000 last year. That's twice the average wage in other major cities like Chongqing. Higher costs are undercutting the profit margins of labor-intensive industries that have been the backbone...
...Plenty of factory owners feel less constrained. Garment makers and other low-tech manufacturers are increasingly shifting production from Shenzhen to cheaper locales, often the poor provinces of western China or, on occasion, other Asian countries like Indonesia and Vietnam. When companies moved into Shenzhen, "they never thought they'd have to leave a few years later," says Ruby Zhu, senior China economist for the Hong Kong General Chamber of Commerce...
...reason for Shenzhen's rapidly rising labor costs is a shortage of workers. Millions of poor Chinese who in the past sought work in southern China's factories can now find jobs closer to home, and Shenzhen is becoming less of a migrant-worker magnet. That means there are fewer workers to fill the lowliest jobs, and employers must pay more to attract them. At a large job market in downtown Shenzhen, hundreds of positions are posted on bulletin boards and rows of recruiters wait to collect applications, but the trail of employment seekers is frustratingly short. At one booth...
...Shenzhen's manufacturers are facing many of the same problems that bedevil South Korea and Taiwan, where makers of low-end products, beset by competition and eroding margins, have in recent years been trying to make the transition to more sophisticated products. Shenzhen is trying to jump-start that transition by removing obstacles facing inventive startups. Six years ago, Xian-Ping Lu left his job as director of research at an R&D center for a pharmaceutical firm in the U.S. and, with other researchers, planned to set up their own company in China. Although they considered cities like Shanghai...