attracting foreign investments was reiterated in 2009 when Ministry of Commerce
spokesman Jian Yao said that “the
Ministry of Commerce will continue to
formulate and implement policies to optimize the industrial structure and improve
the quality of service and infrastructural
support so as to attract foreign investment and companies.” His remarks clearly signal the central government’s support
for further development of inland
regions, and they suggest that creative
measures will be permitted in order to
ensure that it achieves its objective of
improving the quality of life and access to
services within those areas.
Finally, the “Made in China, for China”
push to manufacture in-country for
domestic markets provides another reason for multinationals to shift operations
further into China’s heartland, where
niche markets are emerging and production costs are lower. The automotive sector has led this trend, with foreign and
Chinese automakers building plants and
establishing inland operations. The
opportunities are so substantial that
Changming Xu, senior economist at the
State Information Center, has predicted
that the growth of inland regions will lead
to overall auto sales growth averaging
about 20 percent a year.
TRANSPORTATION CONSIDERATIONS
Taken together, the rising costs and labor
shortages in the coastal manufacturing
centers plus the local government incentives and greater access to labor and land
in the Western provinces provide companies with strong reasons to consider
locating production in China’s hinterland. But it’s important that they factor in
the supply chain implications when they
conduct NPV (net present value) and
financial analyses of such an investment.
They are likely to find that manufacturing costs will decline, but an inland move
may have the opposite effect on logistics
costs.
China’s central government is certainly
aware that it can be difficult to efficiently
move goods in the nation’s interior. To
stimulate the inland regions’ competitiveness and ability to attract investment, the
National Development and Reform
Commission (NDRC) channeled
Ren Min Bi (RMB) yuan 1.09 trillion
(US $160 billion) in fixed-assets
funding to the Western regions from
January to April 2010—a 28.5-per-
cent increase over the same period
the previous year.
Such investment in infrastructure
offers reason for optimism about the
future of doing business in that part
of the country. But optimism must
be tempered by both an awareness of
the persistent risks and an under-
standing of the true costs and bene-
fits of going west. Manufacturers still
need to weigh the logistical barriers
Supercharge Your WMS With Premium Data
Your Warehouse Management System needs accurate data to give you the horsepower and performance you require. Precise cube information can help you optimize slotting and warehouse space, fine-tune carton selection, speed up order fulfillment and boost efficiency.
Win the Race—
Use CubiScan® Hi-Octane Data.
1-800-488-CUBE · www.CubiScan.com · Quantronix, Inc. · 380 South 200 West · P.O. Box 929
Farmington, Utah 84025 USA · (801) 451-7000 · Fax: (801) 451-0502
