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Breaking News – Foreign investors withdraw from China

Hundreds of South Korean factories which have invested in China have begun closing doors and withdrawing with no warning since the second half of 2007. Analysts point out that the advantage of low cost production in China is gradually disappearing, prompting the exit by foreign investors. SOH Special reporter Fen Xuebing gives an in depth report of China’s current economic status.
Shandong province is the main destination for foreign investors from South Korea. However, since the end of last year, incidents of groups of South Korean investors withdrawing from China have been occurring. The main cause of this is the enactment of labor agreements, which have impacted heavily on businesses. In addition, the steady increase of labor costs; international commodity prices and the rising Chinese RMB have put unbearable pressure on foreign investors engaging in exporting activities. South Korean officials say that in just Qingdao alone, at least 200 South Korean small & medium enterprises have closed up their factories with no prior warning, owing salaries to Chinese employees as well as unpaid taxes.

Chinese issue expert Professor Chen Xiaonong from Princeton University believes that despite the effort by the Chinese Communist Regime to relieve the pressure, the Chinese economy has none the less entered a period of difficulties.

Professor Chen says that “The Chinese export market has already passed its prime and is now entering more difficult times. In addition, the collapse of the domestic share market and housing market have confirmed that the so called golden age of the CCP reform and the path of relying on the export market to the US is unlikely to continue its success. Because there are still foreign investors who are watching and struggling to find opportunities, what we will see is a process of painful struggles by foreign investors in China.

According to sources, many multinational business including Intel, Acer, Canon and Sony have increased their operations in Vietnam. Many car parts manufacturers have shifted from China to set up in the Middle East and Eastern Europe while the apparels industry are choosing Bangladesh and India

An official from Hong Kong Economic and Trade Office in Guangdong says that out of the 50,000 ~ 60,000 Hong Kong factories that have established in Guangdong Province, around 14,000 are considering closing up within a few months. A report by the Association of China Light Industry reveals that 300 of the 1000 shoe factories in Dongguan have already closed up. The announcement on February 29 of the collapse of just one textile print factory in Dongguan meant that 3400 employees are now out of work.

The above news is brought to you by special reporter Fen Xuebing and Daniel Teng for Breaking News on SOH Radio Network.

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