BEIJING, July 23 /Xinhua-PRNewswire/ -- CCID Consulting, China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released an article on the industrial transformation in the Pearl River Delta region.
Following a report on the closing down of thousand of shoe factories Dongguan, many similar reports appear with focuses on outside migration and failure of enterprises, and gliding of some industries in Pearl River Delta. This phenomenon attracts public and institutional attention, with worries building up on the development of processing manufacturing industry in Pearl River Delta and even in China.
Electronic manufacturing industry is also part of this. Except for some small and medium electronic enterprises, OEMs such as Foxconn, and large scale household appliance enterprises such as Midea, Konka, Kelon, and Galanz begin to move their main production base away to inland areas.
A survey on migrated enterprises, carried out by the Shenzhen government, shows that 57.8% of participating enterprises select ‘workshop rent too expensive’ as top reason on why they are moving away from the region; 53.3% select ‘high labor cost (including wages, welfare, and social charity)’, and 45.6% select ‘unsatisfied land demands’.
Most migrated enterprises transfer to other inland regions or Vietnam and other Southeast Asia countries and regions. In a word, enterprises select to migrate to places with lower costs on rent, electricity, water, and labor cost.
Why Pearl River Delta faces more cost pressure? Dose enterprise migration imply the need for industrial transformation?
Over the past thirty years of China’s economic reform, high rate of industrialization in Pearl River Delta has the following two characteristics. One is export-oriented economy based on comparative advantages. The other is extensive development based on low cost ins resources. However, the second driving force is restricted by resource providing and environment limitation.
In order to ensure sustainable development, China government must insist on a 180 million hectare of cultivated land holding red line. Land resource in Pearl River Delta is almost exhausted which leaves limited room for extension.. Shenzhen is now facing compact land resource constraint. In ‘11th five-year-plan’, industrial land-use plans show a zero growth.
At the same time, as Pearl River Delta experiencing a more rapid growth in economy development, labor cost increases quickly. ‘Peasant worker shortage’ is more prominent in Pearl River Delta.
Zero growth in industrial land-use and peasant worker shortage shows that development of Pearl River Delta based on resource consumption is strongly restricted by resource and environment issues. Continuously increasing land, labor and other resource costs result in the migration and failure of enterprises that cannot overcome cost pressure.
Enterprises’ migration triggers experts’ anxiety of ‘Industrial Hollowing’ in Pearl River Delta. But where is the way of walking out of ‘Industrial Hollowing’? China begins to discuss problems of industrial structure adjustment and economic growth pattern transition in 1980s but with few achievements. Backflush appears in Pearl River Delta now and industrial structure adjustment and economic growth pattern transition is inevitable.
CCID Consulting believes that industrial restructuring and industry upgrading are two ways of walking out of industrial hollowing. For industrial structure, a way out is to develop modern service industry and lifting the share of the tertiary industry in Pearl River Delta national economy. Concrete to information industry, digital content industry is a major development direction. For industry upgrading, R&D and brand marketing are still ‘soft spots’ in the development of Pearl River Delta information industry. It is necessary to strengthen R&D and improve brand marketing to control the high end of industrial value chain in Pearl River Delta.
The strategies of ‘Industry Vacating and Changing into a New One’ and ‘double transfer’ are positive measures for industrial structure adjustment and industry upgrading. Whether modern information service industry, flat display industry, and other new industries can achieve fast growth has been the key issue for Pearl River Delta. On the other hand, independent innovation ability should be receiving more attention as to ensuring sustainable competitiveness.
As resource and environment has been the bottleneck of economy development in whole China, in the foreseeable that in the near future, it is likely that similar enterprise migration and even failure will appear in regions where process manufacturing industries transfer to.
About CCID Consulting
CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: 8235.HK), is directly affiliated with China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, with over 300 professional consultants after many years of development. The company’s business scope has covered over 200 large and medium-sized cities in China.
Based on major areas of competitiveness: industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrading, development strategy and planning, marketing strategy and research, HR management, IT programming and management. CCID Consulting’s customers range from industrial users in electronics, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to becoming the No. 1 advisor for enterprise management, the No. 1 consultancy for government decisions and the No. 1 brand for informatization consulting.
For more information, please contact:
Cynthia Liu
Coordinating Manager
CCID Consulting Co., Ltd.
Tel: +86-10-8855-9080
Email: liuyan@ccidconsulting.com
