Rockowitz and other executives predict that the extremely high concentration of factories in southeastern China near Hong Kong will give way to a dispersal across the country in the next five years. Workers are becoming much more reluctant to spend up to three days on buses and trains from the interior to reach coastal factories, particularly when the growth of domestic spending in China is creating more jobs in the interior.
Even the recent opening of high-speed rail routes that cut travel times by up to 80 percent has not been enough to revive the flow of migrants.
“They don’t have to take a 1,000-mile trip to the coast — there’s a shortage of people, unbelievable,” said Douglas Hsu (徐旭東), the chairman and chief executive of the Far Eastern Group, a big Taiwanese multinational with extensive investments in China.
Meanwhile, wages in China’s interior have been rising even faster in percentage terms than in coastal provinces, steadily narrowing what was once a pattern of much higher wages in coastal export zones.
Many companies have another reason for staying in China these days: That is where their sales are growing fastest.
“If the market is in China, which in many cases it now is, there’s much less incentive to move,” said Charles Oliver, the senior partner of GCiS China, a market research company in Shanghai.
China has become the world’s largest market for a long list of products, from cars to steel. Producing in China protects companies from later facing “Buy Chinese” policies, anti-dumping cases or other Chinese import restrictions.
Manufacturing in China allows companies to incur costs in yuan, the same currency as a growing part of their sales. That insulates them from one kind of currency volatility even as the yuan fluctuates more against the US dollar and euro.
Rising wages and strengthening currencies in Asia are making it less attractive to move higher-value industries like auto manufacturing out of the West. However, little mentioned by almost anyone making or trading consumer goods in Asia these days is the possibility of moving these relatively labor-intensive manufacturing industries back to the US or Europe.
Rockowitz was dismissive of the idea in his remarks in Hong Kong on May 31 at the Foreign Correspondents’ Club.
“The Western world does not have the workforce to do this kind of business,” he said. “For ‘made in Italy,’ the workers are old now and there are no new workers coming in.”