mercredi 27 août 2014

Relocation of Chinese Factories !

Relocation of Chinese Factories ! 

 Watch Manufacturing Company is one of the companies that contributed to the southeast coast of China move Switzerland as a center of the world watch industry. But now Renley, like many watchmakers, is mulling whether to move further into the interior of China.

Last week, representatives of Chongqing, a sprawling metropolis in western China, met with a group of leaders of the watch industry and offers an attractive package for them to move their factories there, said Stanley Lau, CEO Renley. Measures included very small land, less intrusive and lower wages environmental inspections.

When some leaders expressed concern about moving expenses, the answer came immediately. "The government of Chongqing said," Do not worry. If you agree to move your plant in Chongqing, I will pay your moving expenses, "says Lau, adding that at least 10 plants watches were already preparing to move.

Many inland provinces successfully attract migrants from coastal manufacturing centers, raising fears of a severe shortage of labor in the coming years.

A worker who has found new life at home is Ren Min, who had worked in the factories of toys and clothes in Guangdong province for seven years before returning to his hometown of Nanchong in Sichuan Province in 2009 . In 2005, Ren married a woman who also worked in Guangdong. The couple had a baby next year. When he was 1 year, they sent the boy to Sichuan to be taken care of by his grandparents.

She is , 32, now works for a supplier of bottled Carlsberg Jialing Industrial Park in Nanchong. "We miss our son very well after we sent the baby home, we decided to go back and find a job close to home," he said. "I earn about the same salary which I did in Guangdong. I am satisfied with my life now because I can stay with my family and take care of them. "

Another former migrant worker , went to work in a factory tap in Shenzhen Guangdong after he graduated from a technical school in Nanchong in 2004. Luo could save at most about 10,000 yuan ($ 1,600) per year during his four-year stay in Shenzhen because of the high cost of living. Luo returned to Nanchong and found a job in the industrial park in 2009. see also this article

A Chinese Worker situation

"Now I earn more than 3,000 yuan, 4,000 yuan sometimes even a month and I can save about 20,000 yuan a year," the 25-year-old said. "I earn about the same or even higher at the house of the amount I earned in Shenzhen, so why should not I pay back?" Jialing Industrial Park was built in 2007 and houses about 100 cars and clothing manufacturing and food processing enterprises, employing over 30,000 workers. Wang Zhengsong, entitled to hold jobs outside of Guangzhou. Blue-collar jobs are plentiful in China, but many graduates are reluctant to pursue Regarding Education Revolution: Graduates increasing in China, Employment Office not fail to take Upján. 24, 2013 The Education Revolution: the ambitious goal of China to Boom College GraduatesJAN. 16, 2013 Centuries ago, the cargo on the Silk Road through Asia included spices and precious stones. Today there may be computers and other electronic devices carried by rail along a 7,000-mile often sorry route.Hauling long treasure of the New Silk RoadJULY 20, 2013 These meetings are becoming more common as the Chinese economy slows down gradually.

Foreign investment down, the interior provinces are in a fierce competition to attract domestic industries competitive by offering significant financial incentives for businesses and even undercutting another in critical areas such as environmental regulations. Companies, under pressure to reduce costs, take offers seriously.

The turf war echoes the efforts of state governments in the United States, who have long used the tax sweeteners to convince companies to relocate. And the trend in China's coastal provinces exasperating, who argue that companies should be able to decide the location of factories based on the economic merits as the quality of ports and roads. "It's really a problem. I think governments should not give money to companies to relocate," said Li Chunhong, the maker of the top economic policy in the southeastern province of Guangdong. "It violates the transparency of the market." More than 2,000 people have returned and found employment in the industrial park in 2012, said Luo. CHinese said that as an increasing number of migrants returning home for Spring Festival, his office received more than 100 calls a day to inquire about employment opportunities. he said one reason many returnees is that all companies in the park are asked to pay the social security premiums for employees, while many small businesses in coastal areas have no such mandatory premiums.

Spring festival changement

Chinese official said his farm has about 2,000 vacancies after the Spring Festival.

"We plan to organize a job fair during the Spring Festival, and we distribute brochures providing information work in every town and village in the district of Jialing hopes of attracting more workers to stay and work at home, "he said.

Chong-qing Southwest China, a major source of employment, is expected to see 300,000 migrant workers to return to work this year, according to city authorities. Approximately 410,000 workers returned to the city in the first 11 months of 2012, according to Wang Caizhi, a labor officer from Human Resources and Social Security Bureau of Chongqing. Among the returnees, 368,000 were employed and 43,000 have started their own business, he said.

"Chongqing attracts more world-class companies to set up factories, so there are many job opportunities for migrants," he said.

In addition to differences in wages between contraction Chongqing and coastal provinces that attract locals back, the government is also making efforts to attract and retain workers.

Pause during an interview to derive great Samsung smartphone from his pocket suit, Mr. Li described how 90 percent of the components of the phone was manufactured in a 60-mile wide circle near Hong Kong which includes cities such as Shenzhen, Dongguan and Zhuhai. "If a plant needs components, they can make a call, and within an hour the components are sent to the factory," he said. Guangdong Province has led China to embrace capitalism in the late 1970s and continues to compete with the Shanghai area as one of the two main export centers in the country. Tens of millions of migrant workers have poured in from all over China to fulfill Guangdong factories, many of them built by investors from Hong Kong. More recently, Guangdong has been a leader in China in an attempt to fight against pollution by forcing many factories to install new equipment, settle in remote areas to population centers or even close completely.

Guangdong is losing jobs 

Now, Guangdong is losing jobs to low-wage inland provinces. Blue-collar workers are rare across China, and their salaries are much higher, because college enrollment has increased fivefold in the last decade and some graduates consider factory work. With maneuvers on employment, many migrant workers have to stop taking bus and travel 30 hours being the coastal provinces and find a job close to home - leaving the factories in Guangdong in particular, interference for people to work on the assembly lines.

New ways of Railway of China west to Europe and sprawling new airports with freight terminals built deep into the interior of China, also make it possible to ship goods directly domestic factories in foreign markets without relying on giant ports in Guangdong, Shanghai and other coastal areas.

"More and more manufacturers are considering moving their production operations in Guangdong more inside China, or even to other countries," said Lau, who is also the president of the Federation Hong Kong Industries, a broad coalition of trade groups with factories across China's southeast. The city offers vocational training for workers and offers affordable housing, which costs about 10 yuan per square meter per month

Chinese Boss predicted that Guangdong would take to better paid jobs, especially in the areas of electronics, design and software. Enough already of high tech companies are moving engineers and other staff in Shenzhen the city easily has the commercial real estate market strong in China, with office space in short supply, said  CEO  a real estate control company.

The company Mr. Lau, which he founded in Hong Kong in 1983, is currently watch components and assembles watches cheaper in Dongguan, in Guangdong Province. Renley also assembles watches middle market at a factory in Hong Kong and luxury watches in La Chaux-de-Fonds, Switzerland. Renley owns brands like Buler, Timeout, Sultana and Jean d'Eve, but most of the production is sold under other brands for retailers that do not have operations in watchmaking.

Sitting in the conference room of his company, lined with windows that glow with expensive watches, Mr. Lau checked the pros and cons of moving its factory in Dongguan 630 miles northwest of Chongqing. With an urban population of 17.3 million, Chongqing is building a "Jewelry City" and trying to persuade manufacturers to settle there.

The call begins with lower wages. Although the fees within China is growing rapidly, it has not quite caught up. Chongqing watchmakers ensured an adequate supply of workers, and Mr. Lau felt that they would be paid $ 375 to $ 405 per month, charges imposed by the government to employers such as basic health insurance, pensions and housing allowances. This compares to $ 490 per month in Dongguan - where manufacturers can find employees. "There is a shortage of workers in all sectors," said Mr. Lau. Chongqing also has an abundance of land. The city blames a third less than Dongguan, and the land is close to major highways and shopping areas. Dongguan is so constructed that the only new sites tend to drive several hours in the peripheral regions.

Environnemtal regulation in China

Environmental regulation is one of the most difficult questions. Mr. Lau said that Chongqing required new plants to install modern pollution control equipment and adopt certain procedures, but then I had quite a few follow-up inspections. Four Chongqing municipal agencies declined to comment on their activities.

Guangdong was gradually reduced air pollution in recent years, in part by closing older plants and requiring new equipment and procedures for other sites. But for many industries with a history of pollution problems, such as metal plating - an important part of the watch - Guangdong also requires that plants move some designated industrial zones. Chongqing is also an emerging hub for rail shipments through Central Asia to Europe, said several executives who have operations in the city or are considering doing so. Hewlett-Packard already ships trains along the entire route of "New Silk Road" computers. In a speech on Wednesday, Mr Li, the manufacturer of the economic policy of Guangdong, called for a renewed focus on "Maritime Silk Road", the ships still carry the bulk of the Chinese trade. Many executives are skeptical that freight routes transcontinental railway across Asia and Europe supplant container ships. "We do not see this as a replacement or alternative bumps the status of the shipment of the ocean as the main mode of transportation between the two continents," said Jens Eskelund, general manager of the China division of AP Moller Maersk, the largest container shipping company in the world.

Chinese Industry

Mr. Lau said that the watch industry continues to be used almost entirely on air shipments so that rail services are not relevant. Each bulk buyer of watches in Europe and elsewhere generally holds its own shipping from the factory, and the result is a lot of small items, none of which is large enough for rail, which works best with full container. Renley Watch has not made ​​a decision on whether to move. Chongqing has offered this year to 2 million renminbi, or $ 325,000 in moving expenses for each of the first 20 plants in Guangdong watches willing to relocate.

Other countries may not be viable alternatives for manufacturing. Workers in Vietnam and Indonesia are paid less than half as much as their Chinese counterparts. But interest in investment in South-East has temporarily slowed due to a spasm of anti-Chinese violence in Vietnam last spring, when the rioters have destroyed hundreds of factories after a company controlled by the Company Chinese state began drilling for oil off the coast of Vietnam. You need to get good relationship with everybody in China...

"It's one of the problems that we never expected," said Lau. "Nowhere in the world is safe - wherever you go, you must take a risk."

Another factor may also cause manufacturers as Mr. Lau to stay in Guangdong

Sources :

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lundi 11 août 2014

What I think about China stock market

What I think about China stock market

A-share of China jumped nearly 10% since late July, with the recent rise in blue chips.
In addition, an investment initiative in both directions between the stock exchanges in Shanghai and Hong Kong set to begin operations in October, the change in the central bank to "targeted easing" policies, especially economic stimulus China since the second quarter of this year should all support a rising stock market.
If the stock markets of China could turn bullish depend on the effectiveness of the government's economic reforms.More information about marketing in China here


The performance of the stock market is usually related to economic growth. In fact, a falling stock market can not be fully attributed to a down economy. Similarly, a rebounding economy does not necessarily mean a booming stock market. This is illustrated by the two experiences of China and the United States.
Since 2007, China has maintained an average growth rate of 9% annual economic, fastest among all economies in the world, but its shares continued their downward trend. For example, the Shanghai Composite Index fell to a low of 1,664 points from a record high of 6124 and hovered below 2000 for the last two years, showing a bear market more than five years.

In an essay published in 2001, Warren Buffett divided the 34 years between 1964 and 1998 in two equal periods.
In the first 17 years, the American economy experienced a cumulative increase of 373%, while the Dow Jones Industry benchmark finished dish, mainly hovering around 875 points in this period. But yields on long-term government bonds surged to gross domestic product, up 13.65% from 4.2% on the back of inflation.

 economy grew a more modest 177%

In the second 17-year period, the economy grew a more modest 177%, but the Dow Jones organized a 10-fold increase (from 875 points in 9181).
Bond yields have fallen steadily, from 13.7% to 5.09%, due to the difficult monetary policy of the Federal Reserve that brought down inflation.
Buffett does not seek to prove that GDP is negatively correlated with equity returns but simply that in the long run, the inflation rate (and thus nominal interest rates) that matter most to valuations actions and investor returns.source
Looking back on the economy of China, the broadest measure of China's money supply, M2, in the last eight years has increased by almost three times. Presumably, higher M2 should have reduced the interest rate charged to borrowers and increased the stock market. What ended up happening is that higher interest rates were charged for loans and credit to businesses and shares were down.

Increase in the money supply

This is because the increase in the money supply could lead to an increase in loans and corporate loans, resulting in increased production and more economic activity which will then stimulate production costs and increase the demand for capital. Consequently, M2 plus lowers the higher interest rates charged to borrowers and shortages of money even caused.
Read also Tourism market
In addition, the policy of low interest of China in recent years rates have also unwittingly encouraged inefficiency and privileged investors to invest in making good use of the resources of cheap credit, resulting in a waste of capital and exacerbate shortages of capital in the market, while increasing funding costs for business and the conduct of higher interest rates.

A prerequisite for the stock market to turn bullish China is that the government should abandon its policy to boost economic growth based on printing more money and avoid low-yield investments that could wasteful of capital resources and reduce the real interest rate charged to businesses.
In addition, the government should help reduce the costs of doing business and increase profitability by reducing taxes.