China is experiencing economic conditions which many industrialized nations have faced: raising wages, factory shut downs, labor shortages, higher taxes and the cost of land and energy.
A Honda plant in mainland China was closed recently due to a worker’s strike over low wages. Labor costs in China are rising 10 – 15% per year as most of the educated work force is employed and hence a shortage of qualified workers. The cost of land and I assume real estate taxes are far greater on the East Coast of China than the interior. Using facilities in the interior may mean having to educate from scratch a work force and having time issues moving goods to the ports., all adding cost.
The Chinese Government raised taxes last year in an attempt to tamper down growth which added to the cost of exports. To these problems we can add the rising cost of transport and lead times for goods arriving here.
We recently read several articles stating by 2014 – 2015 many companies will have brought their manufacturing back to Mexico and the USA due to all of the above factors.
Also, there is the problem of the Chinese Dollar, the Yuan, rising against our dollar.