On top of the effects from the downturn in Europe, production is moving closer to market or to places with cheaper labor costs. I don't see this trend reversing. Boutique manufacturing will only expand and that functions best close to home, and for goods requiring high labor costs, China is too expensive now. Chinese Exporters Fear Grim Outlook
China’s exports rose almost 10 percent year-on-year in September, according to data released at the weekend. But speak to Chinese exporters and they say the economic doldrums in Europe mean many are facing more daunting challenges than they were during the 2008 heights of the global financial crisis.
Shannon O’Callaghan, an analyst at Nomura, said: “At the start of the year most U.S. companies were saying they thought China would get better in the second half. But by the summer, it was clear it was not getting better. If anything, it’s getting worse.”
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Economists say the seemingly buoyant trade numbers released on Saturday were skewed by seasonal factors such as the rush to get Christmas shipments out before week-long national holidays in early October.
Mr. Moore’s company has farmed out orders to Chinese-owned factories elsewhere in the country and opened a factory in Cambodia. Gross margins for the business bounced back from 6 percent in 2009 to 35 percent in 2010 “purely because I didn’t have this factory [near Shenzhen] sucking up all my wages,” Mr. Moore says. The move has given Scovill’s Asia business a new flexibility in managing costs.