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China not just export base, says AmCham
By Wang Yanlin |
March 31, 2010, Wednesday
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Print Edition
Print Edition
MULTINATIONAL manufacturing companies are increasingly focusing on accessing the Chinese market while the number of companies viewing China purely as an export base continues to decline, according to a survey released yesterday by the American Chamber of Commerce in Shanghai.
The survey, conducted by AmCham Shanghai and Booz & Co, included 1,430 plants of 202 member firms. It found 83 percent of respondents said their primary motive for locating manufacturing operations in China is to access the marketplace here, up from 71 percent two years ago. Meanwhile, the percentage of companies planning to use China primarily as a base to supply other Asian markets has slipped to 50.5 percent from 54.6 percent in 2008.
"Multinationals are shifting their China strategy as the country's manufacturing sector matures," said Joni Bessler, a partner of Booz & Co. "China can no longer be viewed solely as a hub for low-cost exports. The growing domestic market in China offers rich opportunities to foreign-invested manufacturers."
However, more challenges have emerged due to rising labor and materials costs, propelling some firms to look for lower-cost locations, both inside and outside of China.
The survey found half of the respondents have relocation or expansion plans - almost twice as many as in 2008 - and 42 percent of them plan to relocate or expand within China.
"There has been a dramatic increase in the percentage of respondents that are considering relocation and/or expansion," the report said. "The costs of labor and logistics, as well as labor availability, are viewed as less competitive in China than they were in 2008."
The survey, conducted by AmCham Shanghai and Booz & Co, included 1,430 plants of 202 member firms. It found 83 percent of respondents said their primary motive for locating manufacturing operations in China is to access the marketplace here, up from 71 percent two years ago. Meanwhile, the percentage of companies planning to use China primarily as a base to supply other Asian markets has slipped to 50.5 percent from 54.6 percent in 2008.
"Multinationals are shifting their China strategy as the country's manufacturing sector matures," said Joni Bessler, a partner of Booz & Co. "China can no longer be viewed solely as a hub for low-cost exports. The growing domestic market in China offers rich opportunities to foreign-invested manufacturers."
However, more challenges have emerged due to rising labor and materials costs, propelling some firms to look for lower-cost locations, both inside and outside of China.
The survey found half of the respondents have relocation or expansion plans - almost twice as many as in 2008 - and 42 percent of them plan to relocate or expand within China.
"There has been a dramatic increase in the percentage of respondents that are considering relocation and/or expansion," the report said. "The costs of labor and logistics, as well as labor availability, are viewed as less competitive in China than they were in 2008."
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