On the green northern rim of Guangdong, beyond the mountains and into the land-locked region of Ganzhou in Jiangxi province, LED factory owner Kong Xiangzhong is one of the new breed of industrialists who have staked a future away from the cluttered expensive coastal manufacturing regions of China.
A minnow compared with Foxconn with around 100 workers, Kong has nevertheless positioned his inland factory as a potential gateway to the mainland China market, spurning the usual export track. Almost all his energy-efficient LED lighting products will be trucked and sold entirely within China from Ganzhou.
"For us factories doing domestic demand, we hope that we can expand everywhere in China, to the west, the centre and the east," said Kong, a self-made businessman who started out as a production line worker in a Guangdong factory nearly 20 years ago.
Around 400 km (250 miles) north of the Pearl River Delta, Ganzhou sits at the crossroads of three of southern China's most economically vibrant provinces; Guangdong, Fujian and Hunan. Besides its relative coastal proximity, Ganzhou's surrounding counties are home to nearly 8 million residents with minimum wage levels around 40 percent cheaper than in Guangdong, making it a natural manufacturing spillover region for factories from the Pearl River Delta.
"The geographic location is good here," said Kong, who recently set up his LED lights factory in Ganzhou. "We can get to the Yantian port (in Shenzhen) for shipping in about four hours. It's also quite close to Shanghai," added Kong, speaking slightly accented Mandarin Chinese in a sign of his provincial roots.
Like many ambitious inland areas, Ganzhou has invested millions in new infrastructure, including a new airport, highways and railways to bolster the transport and logistics infrastructure so crucial to businesses.
This region, too, has attracted a dragon head company -- Nasdaq-listed contract manufacturer Flextronics. It will soon open a factory employing 11,000 in one of Ganzhou's new industrial estates to make transformers and power adaptors.
Rob Roohparvar, president of the Flextronics unit running the plant, estimates costs will be at least 10 to 15 percent cheaper in Ganzhou than the southern coast where the conglomerate and key rival of Foxconn runs its flagship China facility.
In the next five years, Zeng Weilin, vice director of the Ganzhou Development Zone, expects the region's GDP to quadruple and the number of factories to rise from 300 to over a thousand. Focusing on domestic buyers can help producers mitigate another risk: the appreciating yuan.
"The exchange rate has no effect on us, because our main market is 100 percent focused in mainland China," said Simon Lu Xingping, the head of Maniform, a fast-growing Chinese lingerie manufacturer headquartered in Shenzhen, which is building a 6,000-worker factory in Ganzhou.
Maniform is one of a batch of emerging Chinese manufacturers that started off as exporters or producers for overseas brands, picking up skills and know-how until they reached a point where they felt they could develop a brand themselves.
These Chinese competitors, often nimbler, highly entrepreneurial and more flexible than multinationals, have almost all targeted their lucrative home markets and have begun to set up vast retail networks and factories across the country.
Notable examples include those in the sportswear industry including Li Ning, Anta and Hongxing Sports. Global brands like Spanish clothing giant Zara -- famed for the success of its rapid product development cycles -- and sportswear firm Puma are reportedly planning huge expansion plans to target China's future middle class consumers.
"The internal business of consumption is competing now with the export business for space, for people, and it's driving the costs up in China. So that party (of cheap labour and exports) that we've had in the last 15 years is going away," said Rockowitz of Li & Fung.
From:The People's Government of Jiangxi Province
A minnow compared with Foxconn with around 100 workers, Kong has nevertheless positioned his inland factory as a potential gateway to the mainland China market, spurning the usual export track. Almost all his energy-efficient LED lighting products will be trucked and sold entirely within China from Ganzhou.
"For us factories doing domestic demand, we hope that we can expand everywhere in China, to the west, the centre and the east," said Kong, a self-made businessman who started out as a production line worker in a Guangdong factory nearly 20 years ago.
Around 400 km (250 miles) north of the Pearl River Delta, Ganzhou sits at the crossroads of three of southern China's most economically vibrant provinces; Guangdong, Fujian and Hunan. Besides its relative coastal proximity, Ganzhou's surrounding counties are home to nearly 8 million residents with minimum wage levels around 40 percent cheaper than in Guangdong, making it a natural manufacturing spillover region for factories from the Pearl River Delta.
"The geographic location is good here," said Kong, who recently set up his LED lights factory in Ganzhou. "We can get to the Yantian port (in Shenzhen) for shipping in about four hours. It's also quite close to Shanghai," added Kong, speaking slightly accented Mandarin Chinese in a sign of his provincial roots.
Like many ambitious inland areas, Ganzhou has invested millions in new infrastructure, including a new airport, highways and railways to bolster the transport and logistics infrastructure so crucial to businesses.
This region, too, has attracted a dragon head company -- Nasdaq-listed contract manufacturer Flextronics. It will soon open a factory employing 11,000 in one of Ganzhou's new industrial estates to make transformers and power adaptors.
Rob Roohparvar, president of the Flextronics unit running the plant, estimates costs will be at least 10 to 15 percent cheaper in Ganzhou than the southern coast where the conglomerate and key rival of Foxconn runs its flagship China facility.
In the next five years, Zeng Weilin, vice director of the Ganzhou Development Zone, expects the region's GDP to quadruple and the number of factories to rise from 300 to over a thousand. Focusing on domestic buyers can help producers mitigate another risk: the appreciating yuan.
"The exchange rate has no effect on us, because our main market is 100 percent focused in mainland China," said Simon Lu Xingping, the head of Maniform, a fast-growing Chinese lingerie manufacturer headquartered in Shenzhen, which is building a 6,000-worker factory in Ganzhou.
Maniform is one of a batch of emerging Chinese manufacturers that started off as exporters or producers for overseas brands, picking up skills and know-how until they reached a point where they felt they could develop a brand themselves.
These Chinese competitors, often nimbler, highly entrepreneurial and more flexible than multinationals, have almost all targeted their lucrative home markets and have begun to set up vast retail networks and factories across the country.
Notable examples include those in the sportswear industry including Li Ning, Anta and Hongxing Sports. Global brands like Spanish clothing giant Zara -- famed for the success of its rapid product development cycles -- and sportswear firm Puma are reportedly planning huge expansion plans to target China's future middle class consumers.
"The internal business of consumption is competing now with the export business for space, for people, and it's driving the costs up in China. So that party (of cheap labour and exports) that we've had in the last 15 years is going away," said Rockowitz of Li & Fung.
From:The People's Government of Jiangxi Province
