Relocating a Business From China To India Or Vietnam
One of the issues that crops up time and again in China is of course the labor law
, which has had the effect of marginally increasing salaries, but more importantly, locking businesses in to retaining their workers. That's a typical socialist political move workers rights, and also suits the one-party State system keeping people employed keeps them busy.The general opinion is that as a result of the impact of labor law, it is expensive to terminate staff. However, is this really true? The answer to that question lies not so much as the current incurred cost, but in the comparison of that with the salary expectations in other markets. Then, a benchmark can be drawn and sensible comparisons made.
In attempting to demonstrate this on a basic level, we have compared the basic expenses (salary, welfare and factory rental) of a typical Chinese factory in Dongguan in southern China with similar factories in Chennai in southeast India and Ho Chi Minh City in southern Vietnam. These particular cities were chosen as they each attract similar investments in small-medium scale manufacturing, have relatively well developed infrastructure, and are all proven export focused locations for foreign investment.
Individual businesses differ so much however that it would be foolish for us to try and calculate the precise costs of relocating an entire factory, but we can look at the differences in wage structures between China, India and Vietnam and work out a financial scenario as concerns a plausible relocation from China to these other markets. I've assumed a medium sized factory of 300 workers.
Relocating a Business From China To India Or Vietnam
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