Evidence of an investor exodus from China is mounting. Some 200 Taiwanese firms have left the city of Dongguan, says a Taiwan trade group. The Federation of Hong Kong Industries predicts 6,000 to 7,000 of its factories in the Pearl River Delta will shut down this year. The Korea Chamber of Commerce and Industry says 5 percent of Korean firms in China are preparing to leave; an additional 25 percent are considering it. A recent Seoul headline read: FROM CHINA DREAM TO CHINA NIGHTMARE.
Why? New labor rules requiring firms to hire staff long term, the rising yuan, tougher environmental laws and higher taxes are raising business costs. Half the Korean firms in China say they're in the red. Japanese investment in China has declined 44 percent since 2005, while increasing by 150 percent in Vietnam. Others are shifting to India, even North Korea, or just going home.