If you find yourself in Asia looking for business opportunities, stay away from China. High labor costs over the last few years have pushed up the price of doing business in Shenzhen, a major business metropolis in the southern Guangdong province that links Hong Kong to China’s mainland, and thousands of factories owned by Hong Kong companies in the area have closed their doors. According to an analysis by one Hong Kong trade group, the number of manufacturing plants in the area has dropped by one third to 32,000 in 2013 from a 2006 peak.

Those that remain standing are moving towards new methods of production that involve the use of advanced automation and higher technologies that rely less and less on human assistance.

As a result of these changes, thousands of foreign as well as local workers are being pushed out of their jobs and are seeing their dreams for economic security fade into oblivion.

Over thirty years ago, American apparel companies were acting fast and furious in moving their production plants to China to take advantage of cheaper workforce. Levi Strauss & Co. was one of the first clothing manufacturers to relocate their facility to China where their iconic jeans could be sewn be an endless stream of workers willing to stitch for a few dimes an hour. Hundreds of other companies followed Levi’s lead.

High labor costs over the last few years have pushed up the price of doing business in Shenzhen… and thousands of factories owned by Hong Kong companies in the are have enclosed their doors. 

Big Changes

The Chinese economy is the 2nd largest in the world but the global environment is changing dramatically and Chinese workers are no longer willing to scrounge for their money. Many foreign workers who have left their farms and families behind and have settled in the major cities where job offerings were plenty are now out of work and their frustrations are obvious.

While China’s some factories are willing to pay more and keep their good workers happy, many show no remorse for the plight of their employees and don’t give them any forewarning of an impending decision to restructure or close down. This has lead thousands of out-of-job workers to take to the streets.