Flextronics International, the world's second-biggest electronics manufacturing services provider, expects China to remain its industry's preferred base of production despite rising labour costs. Reinforcing its own commitment to the country, the Singapore-based firm plans to hire about 20,000 mainland workers next year after this week opening a one million-square-foot power components manufacturing complex in Ganzhou in Jiangxi province. It is also on track to launch its main computer products development centre in the Wuzhong district of Suzhou, in Jiangsu province, by the end of the year. Chief executive Mike McNamara said Flextronics, which plans up to US$400 million in capital spending worldwide this year, had also made Shenzhen the site of a large production facility for advanced medical devices. 'Despite the fact that wages have risen about 25 per cent, China still provides lower cost [for contract electronics manufacturers] than other places,' McNamara said. Flextronics operates in 30 countries and employs more than 200,000 workers, half of them on the mainland. Its large global customers include networking equipment giant Cisco Systems, BlackBerry handset maker Research In Motion and major personal computer brands Hewlett-Packard, Dell and Lenovo Group. McNamara said last month that there had been renewed interest from the firm's customers to explore supply-chain solutions outside the mainland due to escalating domestic labour wages. 'The way we look at it, there is a continuous rebalancing of the supply chain,' McNamara said this week. 'A good example is Lenovo, which uses our facility in Hungary. If the euro kept going up, they might have abandoned that factory and just shipped direct out of China. When the euro's value went down, it kind of reinforced [contract manufacturing in Eastern Europe] as a good strategy for Lenovo. 'China probably remains my favourite place to manufacture in the world because of the good work ethic, a very sizeable labour force, a lot of know-how, all components suppliers are there, and it has a great distribution system that reaches markets around the world.' Flextronics rival Hon Hai Precision Industry, the world's leading electronics manufacturing services provider, is apparently banking on those advantages to meet its growing production portfolio. The Taiwanese maker of iPods, iPhones and iPads, more known under its Foxconn Technology Group brand name, reportedly aims to hire 400,000 workers on the mainland next year. 'Over time, as costs increase in China, the way currency and the price of oil move, and things like green manufacturing initiatives all end up going into the equation of where you should build,' McNamara said. 'But I think this will be a tweak because companies set up their supply chain with sub-supply chains of component suppliers and to meet their commitment to customers to deliver products. It's not as if you can just pick up all that stuff and move it to another place.' There are more reasons at present to be optimistic about electronics manufacturing growth on the mainland. Market research firm iSuppli forecast the worldwide contract manufacturing business would rise 7.8 per cent to US$280.8 billion this year, compared with US$260.5 billion last year when orders declined due to the global recession. Casting its net wider to reach the mainland's future leaders, Flextronics is funding the development of a corporate social and environmental responsibility curriculum in the School of Economics of Tsinghua University. 'We believe that leaders must have a well-rounded understanding of the sustainability issues that affect our communities,' McNamara said, noting the funds would help the school conduct collaborative research, course development and lectures on current and emerging social, ethical and environmental concerns.