Manufacturers are beginning to relocate further inland to reduce production costs, a concerned Guangdong official says.
For many years, machinery and electronics manufacturers have moved from the Shenzhen special economic zone to lower-cost cities in the province, Guangdong Electronic and Machinery Bureau vice-director Luo Jiansheng said.
'More manufacturers are moving further north, including to Hunan and Jiangxi, the two provinces north of Guangdong,' he said. 'Some have even moved to inland provinces such as Henan.' The rising costs of labour, raw materials and electricity were the main factors involved in soaring production costs, he said. 'The number of manufacturing plants moving inland is not that large at present.
'Manufacturers in Guangdong need to shift to hi-tech products. It is not that cost-effective to engage in labour-intensive production only.' Guangdong province was a major base for the electronics industry and took up about 25 per cent of the production in China, he said.
The province accounted for a fraction of total machinery production in China.
Speaking after the opening of the Asian Industrial Expo 96, Mr Luo said Guangdong had yet to feel the impact of the abolition of tariff exemptions given to foreign-invested enterprises on imported machinery because they were given a grace period of one to two years.
