Don Lee at the LA Times reports on a growing trend in China: Some owners deserting factories in China
First, Tao Shoulong burned his company's financial books. He then sold his private golf club memberships and disposed of his Mercedes S-600 sedan.Back in March, I spoke with an executive of a U.S. company, and he told me his company was scaling back their Chinese operations because their manufacturing costs in China had increased by 30%. This was due to a combination of the new Chinese labor laws, higher currency exchange, higher material costs and other factors.
And then he was gone.
And just like that, China's biggest textile dye operation -- with four factories, a campus the size of 31 football fields, 4,000 workers and debts of at least $200 million -- was history.
...
Toy makers are among the hardest hit. More than 3,600 such factories have closed -- about half the industry's total, government figures show. Most were small operations, but last month Smart Union Group's three huge factories stopped production, leaving more than 8,700 workers jobless.
Now a global slowdown and the credit crisis has led to a contraction in the Chinese manufacturing sector. China will probably be forced to stimulate their economy - and, as I speculated this weekend, this could lead to higher intermediate and long term interest rates in the U.S.
At least 'decoupling' is officially dead.
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