Just who are these manufacturers who keep moving inland to chase cheap labor? Global Sources Security Products answers this question in their May 11 article , at least with regards to LED and security devices.
First, a look at who isn’t moving away from the PRD and why?
Despite the promise of lower production costs, many China manufacturers hesitate at moving inland because most of these provinces still lack a developed supply chain. Companies are taking a wait-and-see stance to ensure inland providers can meet material and component requirements before relocating.
This is particularly true among SMEs offering high-value products that are already based in the Pearl River Delta region and other traditional hubs. The Pearl River Delta region, for example, boasts complete resources for LED production, from upstream substrate materials and wafers, and midstream chips and packaging to downstream applications and supporting materials. Processing and testing equipment are on hand as well.
Companies leverage abundant materials and components in these manufacturing centers, and the resultant lower shipping costs, to balance out higher land, living and labor expenditure.
Who are moving?
- Tier one enterprises moving to more effectively service inland markets.
- SMEs manufacturing the most labor-intensive product (like shoes).
I’m finding as time goes on, the media is finally starting to understand and report on the nuances behind the trends it perceives.