Business / Economy

Companies going overseas turning to widening world of opportunities

By Yu Ran and Shi Jing (China Daily) Updated: 2014-03-07 08:17

There's probably more domestic competition, too.

"Both the Chinese government and Chinese manufacturers are definitely trying hard to move up the value chain," Wang said.

The China Filament Weaving Association said the average wage for a filament weaving worker rose 7 percent in 2013 alone.

"Foreign companies that have chosen to reshore operations to their home countries are changing their strategies and moving labor-intensive work out of China, as labor costs are increased rapidly," said Sun Lijian, vice-dean of the school of economics at Fudan University in Shanghai.

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Sun said that reshoring won't increase much, though, because foreign companies are adjusting by centralizing even more of their operations in China-sales departments, R&D centers and the like.

The strategy of moving facilities overseas isn't unique to foreign companies.

Driven by rising labor costs in China, textile and garment producer Youngor Group, Hong Kong Union Times Group Ltd and an industrial park operator in Guangdong province have jointly invested in an industrial park valued at some 1 billion yuan ($165 million) in Vietnam.

Youngor attempted to transfer its production base three years ago. It acquired a shirt factory in Hanoi for more than $4 million in 2011. Li Rucheng, chairman of Youngor Group, said in a previous news report that the investment environment is getting better in Vietnam.

Launched in Wenzhou, Zhejiang province, in 1991, Hazan Shoe Co Ltd was once a small factory with one production line, where several dozen workers made about 300 pairs of shoes per day by hand.

"We focused on being the original equipment manufacturer for international brands for the first three years. I decided to bring Hazan as a Chinese brand to Italy as the first step out of China in 2004," said Chairman Wang Jianping.

Wang bought a 90 percent stake in the brand Wilson Shoes Srl, a manufacturer based in Milan, to acquire its design expertise.

Hazan now has a research center in Italy to make sure the design of the shoes always stays ahead of the market. It also has two modern production lines in Nigeria that turn out 3,000 pairs of shoes a day.

Having operated a factory in Vietnam for five years, Ningbo Powerway Group retained its research and design center, sales department, major production lines and management teams in China.