Companies Look to China's Heartland

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Workers at a textile factory in eastern China. AFP-Getty Images

Over the past year, China has seen a rash of labor disputes, as employees of state- and foreign-owned factories have begun to clamor for better working conditions and higher wages. That’s led some to speculate that the Middle Kingdom will begin losing basic manufacturing jobs to nations like Bangladesh and Vietnam, which produce goods more cheaply. Already, some factories that churn out low-end items like shoes or garments are looking for cheaper pastures.

Yet, rather than fleeing the country, companies hoping to cut labor costs may instead move to China’s heartland. And with good reason. According to a recent paper by the Economist Intelligence Unit, more than half of China’s -fastest-growing cities with populations above 850,000 are located in its central region. These cities offer manufacturers a steady supply of low-cost workers, an ideal location to transport goods both east and west, and a foothold in a fast-growing region with long-term growth potential. Foxconn, an electronics company that raised wages earlier this year after a spate of employee suicides, plans to recruit 200,000 employees to work in its new factory in Zhengzhou; the city is located in the country’s most populous province and serves as a major transportation hub. With Chinese authorities encouraging a new class of consumers throughout the heartland as well as along the coast, the country may soon lay claim to being the world’s market as well as the world’s factory.