Fewer MNCs change their locations out of China
According to a survey, in spite of higher operational costs brought by the financial crisis, there are fewer multinational companies focusing on manufacturing planning to relocate their manufacturing facilities out of China.
China is considered by the global business community as an indispensable player in an eventual economic turnaround as multinational manufacturers are strengthening their commitment to China which is probably a vital base of operations for Asia.
Compared with 17 percent of the 108 multinational companies (MNCs) expressing interests in relocating their manufacturing plants outside of China last year, the figure declined to 10 percent this year, according to the survey, jointly conducted by the American Chamber of Commerce in Shanghai and management consulting firm Booz & Company.
The number of companies that concern over China losing its competitive edge to lower-cost countries such as India and Vietnam dropped by more than half.
Assumptions related to future business strategies for virtually every manufacturer operating in China has been changed by the global financial crisis. On the whole, multinational companies said they are suffering difficult times in China.
Companies were facing bigger challenges which included higher material and compensation costs as well as the appreciation of the yuan before the recession. But now declining rates of domestic growth, weaker demand for Chinese exports and tight credit are becoming more and more important problems.
Near half of the MNC manufacturers complained about suffering a fourth-quarter export decline of more than 10 percent year-on-year. Meanwhile 13 percent said they experienced sharp export shortfalls of 30-49 percent.
In spite of all the difficulties of the downturn, most MNCs said they were still confident with China’s efforts to position itself as a world-class manufacturing center.
At the same time, the economic recession has forced multinational manufacturing businesses to pay more attention to “how we manufacture” in China rather than the mass quantity of products they made here.
As China is continuing its way to become a higher-value global manufacturing center, nearly 25 percent of the respondents were promoting their production facilities in China with the best technologies they had, with the Chinese government sparing more efforts to improve industrial infrastructure.
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