Guangdong's economic shift spurs search for alternative hubs After considering Guangdong's unyielding march from an industrial hub into a service-led economy three years ago, entrepreneur Ling Kwok-cheung left the province and searched extensively for a site for a third production base of his family-owned moulding company. Mr Ling, the managing director of Lintall International Holdings, chose Ningbo, an emerging economic and seaport hub in the Yangtze River Delta where the firm earmarked about HK$600 million for the construction of a factory. The 80,000 square metre plant due to operate later this year is three times the size of its existing plant in Dongguan and will produce and supply higher-end precision moulds for handsets, audio players and car parts for Japanese and European labels. 'Guangdong has limited room for expansion as you can see from the economic transformation, continuous labour shortages and expensive land,' Mr Ling said. 'Anyhow, we want to be closer to our customers because many of them have set up factories in the Yangtze River Delta.' Funding for the massive expansion plan is to come from a planned HK$1 billion listing on the Hong Kong stock exchange next year. Lintall appears to be a pioneer among tens of thousands of Hong Kong capitalists left stranded in the crossroads as Guangdong beefs up its economic transformation by pushing producers to climb the value chain and technology ladder or relocate to remote parts of the province or in the central and western regions. On the other hand, the Yangtze River region has seen its supply chain rapidly evolving as a result of better infrastructure such as the new Hangzhou Bay bridge, a widened expressway from Shanghai to Ningbo through Nanjing and Ningbo's deep water port. 'The supply chain is much more sophisticated now than it was three years ago,' Lintall general manager Simon Yim Chi-loi said. 'We hope the availability of more convenient transportation and the proximity to our customers will help offset a sharp rise in labour and raw material costs.' The company, however, had to contend with power rationing in the Yangtze River Delta, Mr Yim said. The new labour law boosted the group's labour costs by 20 per cent, Mr Ling said, while increases in raw material and fuel prices, the strengthening yuan and rising environmental protection expenses continued to punish profit margins. Mr Yim pointed out that the supply of skilled and educated labour was more stable in the Yangtze River Delta, even though wages were comparable with those in the south. The Ningbo plant is hiring 4,000 workers, raising its total payroll to 9,500, including those in the Dongguan and Shenzhen plants.