Category Manufacturing & Industry

Wuxi is ready to become a ‘little India’

Wuxi, a picturesque city that lies along the Taihu Lake resort, is planning to build a “little India” in years to come.

Wuxi is traditionally a manufacturing city. But with more focus on environmental protection, especially after a serious blue-green algae outbreak in Taihu Lake that triggered a clean water crisis in mid-2007, city leaders started to study how to transform the city’s development.

Wuxi decided to replace manufacturing with the service outsourcing industry, which has far less pollution and consumes much less energy.

According to its ambitious development plan, the city is expected to attract $30 billion to $40 billion in service outsourcing business and help create service outsourcing jobs for 1 million people by 2020 – equivalent to that of India as a whole in 2007.

The advancement of the service outsourcing industry cannot survive without a large talent pool.

But the city three years ago learned that fewer than 2,000 students in the city were studying software and information technology fields.

As a result, Wuxi established a goal to build a total area of 6 million sq m for software service outsourcing within three years, and encouraged enterprises to cultivate and import skilled workers.

These policies were well received. In 2008, Wuxi’s service outsourcing business accounted for 39.2 percent of companies in Jiangsu province, and the city employed 28.5 percent of Jiangsu province’s service industry employees, according to Fang Wei, deputy mayor of Wuxi.

Growing jobs

This year, the Wuxi government launched a new program to train university graduates. Outsourcing companies will receive a rebate of 4,000 yuan ($586) for hiring a graduate, and every graduate of the training program will receive 1,000 yuan as a subsidy.

The city’s financial sector is also actively providing financial support to enterprises in the service outsourcing industry.

In February, Wuxi became one of 20 cities approved by the General Office of the State Council to build a service outsourcing demonstration city.

In June, 15 banks provided a credit line of more than 4 billion yuan for the city’s 115 service outsourcing enterprises.

The local government joined India’s National Institute of Information Technologies (NIIT), the world’s second-largest educational institution, to establish the NIIT (China) Outsourcing College in Wuxi as a training base for the city’s outsourcing businesses.

While the domestic macro-economy continues to be affected by the global financial crisis, outsourcing is maintaining robust growth in Wuxi.

The city signed $1.14 billion in contracts from January to July, up 110 percent year-on-year.

Experts estimated that by 2010, there will be as many as 100 international service outsourcing and software exports enterprises with annual export values of as much as $30 million.

So far, Wuxi has attracted 22 investment projects from leading multinational service outsourcing corporations and 50 domestic industry heavyweights. Half of China’s top 10 industry heavyweights have established headquarters in Wuxi.

But Fang is looking at bigger goals. “Wuxi is on its way to becoming a ‘little India’,” he said.

After India matured as the world’s largest service-outsourcing base, many East Asian countries – including the Philippines, Singapore and Vietnam – began competing for more market share.

“Enterprises from the Chinese mainland haven’t had much advantage in competing with these countries, but the cooperation across the Straits should bring some opportunities,” said Zhou Ming, deputy director of the China Council for International Investment Promotion (CCIIP).

The service sector accounts for more than 70 percent of the island province’s total GDP.

Zhou said Taiwan’s industrial development experience, technology and branding, along with a massive market and substantial human resources on the Chinese mainland, will greatly enhance the international competitiveness of both regions.

In spite of the financial crisis, the global service outsourcing industry posted a growth rate of 6.3 percent in 2008 – a strong performance in comparison to the world’s average GDP of 2.5 percent.

Many developing countries see the outsourcing industry as an opportunity to survive the international economic downturn, experts said.

China manufacturing steady in September: index

SHANGHAI — China’s manufacturing activity continued to expand at a steady rate in September, as domestic and overseas demand continued to improve, an independent survey published Wednesday indicated.

The HSBC China Manufacturing PMI, or purchasing managers index, fell slightly to 55.0 in September, from 55.1 in August.

A reading above 50 nevertheless means the sector is expanding, while a reading below 50 indicates an overall decline.

“Although the headline PMI remained broadly unchanged from the previous month, there was a marked expansion of manufacturing employment in September,” the bank’s chief China economist Hongbin Qu said.

Manufacturers were hiring in September at the fastest rate in 25 months to keep up with rising sales volumes, HSBC said in a research note.

Foreign order levels rose for a fourth straight month, but the increase in total new orders outpaced export sales, suggesting domestic demand was driving the overall improvement, the bank said.

China’s economy expanded by 7.9 percent in the second quarter of the year, up from 6.1 percent in the first quarter, mainly as a result of massive government spending amid the global downturn.

Beijing announced a four-trillion-yuan (585-billion-dollar) stimulus package last year in a bid to prop up growth in the country by boosting investment in infrastructure and other government-backed projects.

The PMI sank to a record low of 38.8 in November as the global financial crisis took hold, but improved continuously in the following months, moving above 50 in March.

Manufacturing accounted for more than 40 percent of China’s economic output last year, which has been hit hard by evaporating demand for its products in key export markets such as the United States and Europe.

Flextronics to hire 7,000

HONG KONG – ELECTRONICS manufacturing giant Flextronics International said on Tuesday it will hire more than 6,000 migrant workers in mainland China this month because of a rise in demand ahead of Christmas.

The company will also take on an additional 1,000 workers in the next two months, Valerie Kurniawan, senior communications director for Flextronics Asia, told AFP.

‘The demand is coming from all over the group, it’s all segments and industries,’ Ms Kurniawan said.

Flextronics makes parts and equipment for the automotive and mobile phone industries among others and its clients include Hewlett-Packard, Motorola and Microsoft Corp. The company’s latest hiring spree has focused on its Zhuhai Industrial Park in the Pearl River Delta in the south of the country.

Chinese factories have been rushing to hire migrant workers laid off during the global crisis as they ramp up production but analysts have warned that the labour shortage stems from a short-term rise in demand from Christmas orders rather than a recovery in China’s key export sector.

Nearly 20 million migrant workers lost their jobs at the start of the year as factories closed or slashed production in response to plummeting export orders from key markets in Europe and the United States.

Taiwan’s Hon Hai increases workforce in China

TAIPEI, March 4 (Reuters) – Taiwan electronics giant Hon Hai (2317.TW) said on Wednesday it had recently increased its number of employees in China by 5 percent despite the global downturn.

“In the short term, things are not as bad as they are made out to be,” Chairman Terry Gou said at a signing ceremony between the company and IBM (IBM.N) on using green technology.

Gou did not specify when the company had increased its China workforce.

Hon Hai is a contract manufacturer that makes some of the world’s most famous gadgets, including Apple’s (AAPL.O) iPhone, Nokia (NOK1V.HE) cellphones and Nintendo’s (7974.OS) Wii game console.

(Reporting by Kelvin Soh; Editing by Jonathan Hopfner)

GM’s Biggest Growth Market Is Now China

Since the days when Henry Ford set up his first factory, the United States of America has been the single largest market for automobiles in the world. With America facing a deep recession, US auto sales have fallen by as much as 37% this past month compared to year ago numbers resulting in the US, for the first time, losing its position as the world’s number one car market. For the month of January, more cars were sold in China than in the United States. Japan’s auto market ranks third in size behind the US and China.

In part that’s due to the Chinese government cutting the tax rate on new car purchases, previously at 10%, in half. Although still lower than China’s January 2008 sales totals, January 2009 saw relatively strong auto sales performance once the tax cut was announced. The Associated Press reports that General Motors (GM) expects Chinese auto sales for all of 2009 to eclipse US sales by more than a million vehicles. If those numbers prove accurate, it is not likely that the US will ever regain the lead since the market penetration of automobiles in China is still very small.

China, of course, has a total population that is more than four times greater than the population of the US and has been executing a long term economic policy encouraging domestic consumption. China would like to rely less on its foreign exports for its continued economic growth and more on its own domestic markets. Yet its auto industry is still largely reliant on technology borrowed from western companies. General Motors has invested heavily in China and sold over a million vehicles in that country in 2008. The Chinese government is, however, intent upon developing its own auto technology infrastructure and is committing billions of Yuan toward technology modernization efforts in the industry this year.

China has also made huge investments in roads and highways in its major industrial areas in the last decade and modern highways, even by US standards, now lay waiting for increased traffic. A visit to the industrial areas in the countries south, however, finds a mish mash of old and new, with overloaded bicycles and scooters weaving in and out between compact cars, large trucks, and stripped down tractors as the agrarian economy gives way to industry.

China to be 2nd in Bosch´s headcount

BEIJING, Aug. 10 — The world’s leading auto parts maker Bosch said China would represent some 40 percent of its total workforce in the Asia-Pacific by the end of 2008, placing the region’s workforce second only to Germany in terms of numbers.

“China is a main contributor to the increase of the Bosch business in Asia. We attach a special importance to the recruiting, training and retaining of skilled associates,” said Uwe Raschke, who has just taken charge of Bosch’s Asia-Pacific business.

Raschke is the successor to Rudolf Colm, who has taken up a new role within the Bosch board of management, steering the worldwide activities in the consumer goods and building technology business sectors.

The Stuttgart-based company announced that it would invest 1.9 billion euros ($2.85 billion) in the Asia-Pacific region from 2008 to 2010.

By the end of 2007, Bosch had invested around 1 billion euros in China, and it will invest a further 850 million euros in the country between 2008 and 2010.

“We see great growth potential in Asia for all our business sectors especially as it relates to green technologies to conserve resources and protect the environment,” said Rudolf Colm.

He said Bosch drive systems for the car are geared to lower consumption and emissions, both in the diesel and the gasoline engines. The company continues to develop automotive technologies that are safe, clean and economical with a special focus on innovation and localized solutions for Asian manufacturers, including low price vehicle applications.

Chrysler keeps new Chinese partner “confidential”

Though it is troubled by the financial crisis, U.S. auto giant Chrysler LLC has not stopped looking for new partners in China since its dropped out of Daimler AG’s joint venture (BBDC) with Beijing Auto. However, Chrysler keeps its potential new Chinese partner(s) “highly confidential” for the moment, said sina.com today citing Chrylser’s China sales unit.

Chrysler has proceeded with production of the Chrysler 300C and Sebring in Beijing Auto, and Chrysler’s some Dodge-brand models will be made in Southeast Motor, a Chinese partner of Mitsubishi Motors. Chrysler’s Jeep-brand Compass, Grand Cherokee, and Commander have been sold in China as imported cars. Since it withdrew from BBDC a few months ago, Chrysler has talked with several Chinese automakers, including Chery Auto, for the partnership.

However, Chrysler LLC has not decided yet on which local automaker to team up with in China, the world’s second largest auto market. Recently the U.S. auto company announced that its deal with Chery Auto has been put on hold until the two sides sort out their individual financial futures. And Chery has said that its talks and discussions with Chrysler are still going according to plan.

Great Wall Motor is developing an A-class car along with Chrysler. In mid-August, Great Wall revealed that the company’s cooperation with Chrysler was making progress. Since then, Chrysler has sent dozens of technicians to assist Great Wall Motor in developing the new car model. The latter’s former designs have been given up or totally changed.

Sooner or later, Chrysler will form its joint venture in China for its expansion in this fast-growing market. The company has been recruiting auto professionals in the country for this purpose. Chrysler has planned an extensive product lineup for the Chinese buyers and more positive operation pattern for its recovery in the China market by 2010.

By George Gao

China’s domestic auto sales set to grow

China’s domestic automobile sales are expected to grow 15 percent to hit 10 million units this year, backed by strong demand for passenger cars, an official with the China Association of Automobile Manufacturers said on Saturday.

China’s fast-growing economy has created a sound environment for the development of the automobile industry, Dong Yang, vice chairman of the association, said at an industry meeting held in the coastal city of Yantai in eastern Shandong Province.

Despite slower growth in business vehicles sales, demand for passenger cars remained robust, he said.

The government will speed up restructuring the industry by detailing standards on security, environment protection and energy saving, Dong said.

He noted the declining trend in auto prices will be reversed as a result of the sharp rise in prices of raw materials such as iron and steel.

The association’s latest data showed that more than 4.3 million vehicles were sold in the first five months of this year, a jump of 17 percent from the same period last year.

Chinese factories face survival of the fittest

Higher costs and new labour laws are forcing plants in Guangdong to close or relocate farther inland, leaving previously bustling factory compounds empty like ghost towns with little investment interest or prospective buyers.

At its height, the Changdeng Shoe Company employed 7,000 workers in the eastern district of Dongguan, a manufacturing centre in China’s southern Guangdong province. Today the company’s factory compound is a ghost town, populated by only a few dozen bored security guards, ground keepers and technical personnel overseeing the dismemberment of its assembly lines.

In a communal area surrounded by Changdeng’s abandoned worker dormitories, a beauty salon, table-tennis room and medical clinic have been stripped bare. A notice for an auction, held last December, invites anyone interested in the factory’s five cars to come and bid.

“The Taiwan boss was in his 70s and wanted to get out of the business,” said Pang Wei, as he gave the Financial Times a tour of the compound. “He has gone back to Taiwan.”

Mr Pang, an entrepreneur based in the nearby provincial capital of Guangzhou, paid Rmb10m (EUR943,000) for Changdeng’s capital equipment and is re-selling it to other manufacturers. At the factory, technicians supervised the removal of sewing tables and other machinery from upper floors to ground level, for easier inspection by potential buyers.

Equipment is not the only thing to have been scavenged at Changdeng. “Most of the workers here were hired by other factories in the area,” says Chen Qingwen, who also runs a business selling shoe manufacturing equipment. “They were very happy to take them.”

Basic monthly salaries have doubled

According to Zhang Huarong, chairman of both the Asia Footwear Association and the Huajian group, one of China’s largest shoe companies, basic monthly salaries in the industry have doubled to $200 since 2006.

However, the difficulties encountered by Changdeng and thousands of other factories across the Pearl River Delta, where Guangdong’s manufacturing industries are concentrated, do not suggest that China’s export engine is facing crisis. Guangdong’s exports grew 22.3 per cent to $369.3bn last year, accounting for 30 per cent of the national total.

The indistrial struggle in Guangdong has been compared to survival of the fittestWhat is happening is a survival-of-the-fittest struggle affecting primarily smaller factories in relatively low-tech, labour-intensive industries. In other cases, companies are redistributing some lower value, less time-sensitive tasks to new production facilities in cheaper inland areas. Reflecting China’s resilience, in January the country’s national trade surplus surged 23 per cent year on year to $19.5bn.

Large factories that have shifted some of their operations to China’s interior, as Huajian has done, usually retain sizeable facilities in Guangdong, which are better at turning around higher value orders with shorter lead times. “I never think about closing our factories in Dongguan,” Mr Zhang said. “We want to upgrade them by focusing more on research and development, new fabrics and new manufacturing techniques.”

Mr Pang’s buyers provide a glimpse into the industrial migration that is occurring as higher costs take their toll on factories such as Changdeng. One of them, Chi Shiqing, runs a small, 300-worker shoe factory in Shaoguan, a city in northern Guangdong near the border with Hunan province.

Another factor behind recent company closures in Guangdong has been the implementation of a new contract labour law”It’s not easy to get workers in Shaoguan either,” Mr Chi says. “Nobody wants to move there so I have to hire the locals.”

He adds: “Wages in Shaoguan are not much lower than those in Dongguan now.”His workers earn Rmb1,200 ($170) a month.

Mr Chi can take some comfort from the fact that he manufactures for the domestic market only. That means he is not exposed to another key cost pressure – the rising value of the renminbi, which has appreciated about 15 per cent against the dollar since mid-2005.

Another factor behind recent company closures in Guangdong has been the implementation of China’s new contract labour law. By closing before January 1, factory owners could avoid having to pay higher compensation costs mandated by the new law.

Changdeng at least did the right thing, folding up its operations in an orderly manner and in compliance with Chinese law before the end of 2007. According to local media reports, the company paid some Rmb40m in worker compensation.

Across town, Lu Yongyuan, a 32-year-old migrant labourer from Guizhou province, was not so lucky. The Taiwanese head of his company, Dongguan Hongsheng Mould Factory, simply absconded. The factory’s 300 workers returned from the traditional Chinese New Year holiday to find the factory gates locked and their salaries unpaid.

“Most of us found out on February 14,” said Mr Lu, who had worked for Hong-sheng for 10 years. “The government will auction the assets. Costs were just too high.”

A notice posted on Hongsheng’s gate instructs workers to contact the local village government office to collect one month’s basic salary. Under the new contract labour law, Mr Lu should have received the equivalent of 10 months’ wages in compensation.

Atkins to recruit from China

Atkins has started recruiting in Mandarin to attract Chinese engineering undergraduates studying in the UK

The country’s biggest consultant takes on nearly 400 graduates a year – a third of them civil engineers.

Now Atkins head of recruitment Karen Wallbridge said the company had hit on the idea of recruiting directly in Mandarin to make sure it was reaching the widest possible audience.

Atkins has decided to use native Mandarin-speaking recent graduates within the company to address students from China who are studying for engineering degrees in the UK.

Wallbridge told a skills conference organised by Construction News: “Many people in India and China view engineering as a blue riband qualification, the way it used to be viewed in the UK. There are a lot of good young people coming to this country that we would like to bring on board.”

She said the events had been extremely popular among Chinese students pleased to be addressed in their first language and that rooms had been filled with undergraduates keen to find a high-profile job.

She said: “It’s made us review our policy on communication altogether. We look at recruiting good communicators.

“But now we are re-thinking whether this is the same thing as being able to speak good English.”

The firm has already held a number of events at UCL in London and one in Manchester, the largest centre for Chinese students in the UK. It is planning more events at other universities.

Wallbridge said the Chinese recruits would be used not just in the UK but back in their native China where Atkins employs several hundred consultants.

She added the company had not ruled out expanding the plan to cover speakers of other languages.

Sourced from Construction News