Two decades of very low labour cost
Business owners willing to take a fair risk have enjoyed two decades of spectacular development in China’s urban areas since the early 1990-ies. Most companies spent the better part of the first decade to build quality and profitability, then they had a decade to harvest good results.
Too many companies rushed into China either too late, or choosing a location too close to a metropolis. They are now facing numerous challenges:
- Escalating labour cost
- Shortage of skilled labour
- Labour migration from blue collar to white collar
- Escalating cost of operation
Too often you will find a low tech Western company located in a high tech Chinese environment, left with very few options but to move again.
The second wave in China
After the initial euphoria in board rooms across the world, they now have to start the hard work: Where to move next? And way too often that is followed by an even more important question: After having scaled down our HQ – Who should be doing the next move?
Make sure your company does not get trapped in this dead-end road, where bridges have been burnt making your next move really challenging.
Companies still having their joystick connected now move in two directions;
- Further inland in China
- Out of China and into: Philippines, Vietnam, India and Indonesia
Which of these two ways depend on their first experience in China. If well established, and been able to build a profitable business, a move further inland might be a good option. Companies that came too late, or never where able to get real control of their Chinese subsidiary, often choose to move out.
If you want to discuss your strategy in China, in Asia or globally, do not hesitate to contact us:
Anders, from a wet Norwegian summer, Gjøvik, Norway