German Companies Starting to Move Out of China
Businessweek reports:
Citing fast-climbing labor costs and pesky production quality problems, a growing number of German companies are doing an about face and pulling their manufacturing operations out of China. Some are searching for countries with lower wages while others are returning production to Germany.
The Association of German Engineers (VDI) estimates that one in five of the approximately 1,600 German companies with presences in China is planning to pull out of the market, the Tagesspiegel am Sonntag newspaper reported. "Many, many firms are naïve when they enter into the Chinese market and don't even think about the fact that wages are increasing there," VDI spokesman Sven Renkel told the newspaper.
Rising energy costs, stricter environmental rules, the elimination of many tax incentives, a dearth of skilled workers and the increasing strength of the yuan against the dollar have all pushed production costs up in China.
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