China’s mature supporting industry and cost-effective labor force accumulated over the years, combined with a relatively stable policy environment, is making some companies find it hard to move away

“3 years ago, Sumitomo Electric wanted to expand in China. However, as the cost is relative high, they shifted their investment to the Southeast Asia. But now this decision seems very unwise.” said Xu zhihong, General Manager of the E- Line Products Co., Ltd. of the Sumitomo Electric Industries( among the Global Top 500 Companies) in Suzhou. “The Southeast Asian workers’ productivity is not as good as the Chinese workers, combined with the instabilities in the local policies, now the Sumitomo Electric Industries value Chinese Market the most. “

Research found that despite there has always been news saying the traditional foreign trade orders and industries has been transferred to Southeast Asia, South America and even refluxed back to Europe and the United States, Chinese manufacturing industry, with mature supporting industry and cost-effective labor force accumulated over the years, combined with a relatively stable policy environment, is making some companies find it hard to move away

Because of rising labor and material costs , the Zhejiang New Jack Sewing Machine Co., Ltd., the largest sewing machine manufacturer in China, has considered for many times to relocate to foreign countries, but now the New Jack still has not set up factories abroad.

“In addition to low production efficiency, Southeast Asia almost has no supporting industries. And even some buttons and wirings would be transported from China, as a result, the project would be delayed.” said Qiu Yangyou, director of the international trade of the New Jack Sewing Machine Co. Ltd.

The latest foreign trade operation data shows that China’s foreign trade import and export situation is not optimistic. Despite the emergence from the shadow of the largest monthly deficit within this decade in February, the growth rate of the foreign export and import was only 7.3% in the first quarter. Even in the large foreign trade provinces such as Guangdong, Zhejiang, and Jiangsu, the foreign trade growth rates in the first quarter are all below the national average.

At the same time, the amount of utilized foreign capital is slightly lower. Commerce Department statistics show that in March, there were 2,374 newly established foreign invested enterprises, down by 6.5%. in the first quarter this year, the actual use of foreign investment nationwide amounted to $ 29.48 billion, down by 2.8 percent.

According to Zheng Jianrong, deputy director of the Guangdong Foreign Economic and Trade Office, the current situation of foreign trade and economic do experience difficulties. However, viewing from a variety of factors, China’s manufacturing advantage still exists, and the overall investment environment is still good. Therefore, it is no need to be over pessimistic.

Large amount of SMEs in the coastal provinces has always been the most active force in the manufacturing industry, however, the overall weakness in their anti-risk ability made them vulnerable to the impact of the economic crisis since last year. And it is reported that currently some of the leading companies are trying to stretch on the downstream chain, to create a “carrier effect” in order to improve the industries overall competitiveness.

The Zhejiang NINGBO BEIFA Group has the world’s largest single pen manufacturer room. Since the May last year, the group has cooperated with Chuzhou, Anhui Province to build a demonstration zone for the Chinese stationery industry. And the over 100 companies planning to move in includes all the supporting industries, product manufacturing, and logistics enterprises, and its influence has already radiated to Shandong and Jiangsu.

“Last year we began to build the China Stationery Commodity Center and turned ourselves from the original pen suppliers into integrated suppliers. The Wal-Mart headquartered in the United States had made orders worth more than 20 million U.S. dollars. And the effect of industry consolidation effect will soon show itself.” said the director of the Group.

Gu Bin, Director of Foreign Trade Department in the Suzhou Municipal Bureau of Commerce, said that at present in Suzhou there are two national export bases and 13 provincial export bases. And each base consists of about ten leading enterprises and supporting enterprises. Although the foreign trade situation is grim since last year, making the exports decline, the growth rate of export base is still above average.

Emerging industries has also accelerated the pace to participate in international competition and to seize industry opportunities. According to Wang Qiangxiang, general manager of the Jiangsu Gong Chuang Artificial Turf Co. Ltd, the cost of artificial turf is the only one tenth of the natural turf, but in the past the market and production are concentrated in Europe and the United States. Only since the 1990s, it began to enter China. And in 2005, Gong Chuang began to export artificial turf. Last year, the total areas of squares sold amounts to the top around the world..

However, the industry insider said that the insufficient industry cluster, lacking of protection of the IPR, and unclear competitive environment are still difficulties facing the “Made in China” products.

According to some foreign-invested enterprises, they are most concerned about whether the policy information is open and transparent, as well as whether the operating environment is legal or not.

Viewing from the initiatives and statements made by the Chinese government this year, the Chinese government has introduced a series of policies to guide capital flows to the real economic development in the manufacturing sector. Not long ago when the establishment of the Finance comprehensive reform pilot area in Wen Zhou City was approved, the State Council had put forth a requirement, that is, “to enhance the ability of financial services to the real economy”.