Facilities hinder mainland plants

CONCERNS are mounting about the inadequacy of transport facilities, electricity and water supply in China which is affecting the mainland operations of Hongkong manufacturers.

In a recent survey conducted by the Chinese Manufacturers' Association of Hongkong (CMA), inadequate infrastructure was singled out as a major problem.

Many of those responding said the existing road and telecommunications networks and other weak infrastructure could hinder production and delay delivery.

They are urging the Chinese Government to improve the situation as quickly as possible.

Besides inefficient infrastructure, responding manufacturers pointed to red tape as another major obstacle.

Manufacturers appear confused by the complicated relationship among the various Chinese government departments, their working procedures and restrictive measures.

''They hope that the Chinese Government could explain regulations and working procedures to investors explicitly and that economic activities could be carried out under minimum of red tape,'' the survey says.

The Chinese Government is also urged to speed up customs clearance to ensure that overseas manufacturers receive and process their raw materials promptly and ship out the finished products without delay.

Hongkong manufacturers are also concerned about the lack of skilled mainland workers.

''Though labour in China is cheap and easily available, the labour force is mostly unskilled with a low educational level,'' the CMA survey says.

''Special training must be arranged to upgrade their technical level.'' One responding manufacturer, who produces electronic products, said Chinese workers lacked appreciation of the need for quality, resulting in substandard products, increased costs and poor productivity.

Despite their concerns, about 83 per cent of the manufacturers responding said they had plans to expand their production facilities in China.

Many are interested in entering the growing retail business, but they again expressed concern that they were unfamiliar with the regulations and application procedures.

Only 180 - or five per cent - of the CMA's 3,600 members responded, but the association says the data collected are sufficient to reflect their views on investments in China.

The respondents came from a variety of industrial sectors including electronics, knitwear and garments, toys, metals, shoes, plastics, electrical appliances, machinery, food and printing.

More than half have shifted all production facilities from Hongkong to China, with the territory being the transshipment port for their products.

While most of their operations are located in cities near the Pearl River delta, some manufacturers have established facilities in the north and inland regions, including Beijing, Tianjin, Sichuan, Xian, Suzhou, Ningbo, Shandong and even Inner Mongolia.

The CMA survey confirms that Hongkong manufacturers are taking advantages of the cheap labour force in China.

About half of the responding manufacturers said wages in China were 10 to 15 per cent of those in the territory.

That means that for the price of one Hongkong worker, manufacturers can employ seven to 10 workers in China.

Most manufacturers said they had not collaborated with research institutes in China.

The lack of co-operation was attributed to the fact that manufacturers were unaware what the institutes were doing, and that they lacked confidence in mainland product design.