THIS IS THE TIME of year when many of China's estimated 114 million migrant workers return home to help with the autumn harvest. But this year the exodus from the Pearl River Delta began months ago, and has less to do with ripening crops than with the growing number of employment opportunities closer to home. Spurred by improved infrastructure links, manufacturers are shunning spiralling energy, land and labour costs in China's coastal regions to set up factories inland. For many migrant workers, returning home no longer means returning to work on the farm. Jiangxi is one province benefiting from manufacturers' expansion beyond the PRD's established industrial zones. Transporting goods to China's southern ports from the province previously required several days, but a new expressway will cut journey times from the provincial capital of Nanchang to Shenzhen to just 10 hours from next year. Jiangxi can now market itself as a viable link between the Pearl and Yangtze river deltas, and manufacturers are responding. Jiangxi's GDP grew 13 per cent last year on the back of strong investment growth. Top Form International, the world's largest contract manufacturer of brassieres, is one company making its mark in the province. Eager to boost mainland production after export quotas governed by the Multi-fibre Agreement expire next year, the company chose to double its workforce in Jiangxi rather than Guangdong factories due to labour shortages and rising production costs there. The spread of wealth from China's booming coastal provinces to the long-suffering interior is long overdue, and coincides with power shortages that have periodically halted production in Guangdong's factories over the summer. This has provided much fodder for the region's doom merchants, who fear the Pearl River Delta is destined to lose out to its Yangtze rivals and other emerging centres. That the PRD's factories are short of up to 2 million pairs of hands is at odds with the belief that the supply of cheap labour from inland provinces is infinite. But a ready stream of labourers has historically been but one of the region's advantages. Proximity to Hong Kong and its container port also made the PRD's growth possible after it became the focal point of Deng Xiaoping's 1970 economic reforms But as China's infrastructure improves and distance becomes less of an issue for manufacturers, so the PRD's raison d'etre is being called into question. Why build a factory in Shenzhen when land prices are high, blackouts rampant and migrant labour scarce, especially when it takes just five hours to ship products from a new factory in Longnan, Jiangxi province, along a brand-new expressway? Such is the logic driving manufacturers further inland. But those who believe that new highways will bring the PRD's manufacturing dominance to an end may be ignoring the region's capacity for reinvention. After starting as a light industrial manufacturing centre in the 1980s, the region has continuously shifted towards high technology products to stave off shrinking profit margins and competition. With low-end manufacturing making further inroads inland, the PRD's status as the world's factory looks precarious. But Guangzhou's new international airport may be pointing the way to the future; by 2010 Baiyun International Airport will have annual capacity for 2.5 million tonnes of cargo. Meanwhile, plans are also in place to increase railways in the pan-Pearl River Delta region to 29,000km from 19,000km by 2020, reducing travel time from Sichuan, Yunnan and Guizhou to one day. Though the PRD looks set to lose its manufacturing dominance in the longer term as companies chase cheaper fixed costs inland, the region's top brass appears to be planning the delta's reincarnation as a logistics hub for the south of the country. The strategy is similar to Hong Kong's own progression up the value chain from textile manufacturer to logistics and financial services provider. Inevitably, success will depend on China's ongoing emergence as the world's production centre, and on the region's ability to outperform rivals. In that regard, little has changed. Given that manufacturing faces imminent decline, the PRD's leaders are relying on the region's capacity to adapt to ensure growth long after Guangdong's factories have closed.
