High-end manufacturing holds the key

For foreign manufacturers who have a huge workforce, rising wages are not necessarily a lead sinker that would threaten their survival, if managed smartly, experts say.

Tan Chow Khong, managing director of AMD Technologies' Suzhou plant and vice-president of the company's manufacturing operations, says his plant has seen the fastest growth in wages among all AMD operations around the world.

"Wage rises and high employee turnout rate did put some pressure on us. But our business is a capital-intensive one and labor cost is showing an increasing trend, which must be offset with productivity gain," says Tan.

Another trend that is slowly shaping among Chinese manufacturers is that many are now setting up offices and shops in developed markets. Communicating directly with local consumers helps them better understand their needs, while an increasing number of mergers and acquisitions have helped them gain access to advanced technology, management and marketing skills.

When asked about the reason for moving his business overseas, Zhang Yu, vice-president of a Guangdong-based audio equipment maker who is now doing business in California, says: "Our sales rose in recent years, but profits dropped significantly. We'll die if we don't expand. We have no choice."

zhengyangpeng@chinadaily.com.cn

(China Daily 03/01/2013 page4)