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No More Bargain Manufacturing Prices in China As Nation’s Economy Undergoes Changes

Not too long ago the world’s manufacturers flocked to China to have their goods made because production costs were low and turnaround time was quick. [L1]

But data now shows that China has lost its pricing advantage and manufacturers — ever in quest of lower costs — moved their foreign operations to other, less expensive Asian venues such as Vietnam, Taiwan, Thailand, Cambodia and Indonesia. [L1] [L3]

As China’s once pricing advantage slips away, foreign direct investment (FDI), which once flowed abundantly into the country, is now moving elsewhere, along with many apparel and textile operations that previously were based in China. [L4]

For the first time since 2009, (FDI) in China declined, falling 3.7 percent to US$111.7 billion for the year, according to the Chinese Ministry of Commerce. [L4]

At the same time, FDI in Thailand in 2012 increased by 63 percent, and rose from January through September by 27 percent in Indonesia. Similar increases were seen in other Southeast Asian countries. [L1]

As foreign investment shifts away from China, industries once operating in or near Chinese coastal cities are relocating to the country’s interior and western provinces.
Inland roads and transportation modes have improved while labor and production costs have remained relatively low – two major factors driving the move away from coastal sites