promoting hi-tech and value-added
manufacturing to replace lower-value,
labor intensive manufacturing – in
particular, low-value export processing
manufacturing, such as garments and
disposable goods. There have also been
continuous efforts to encourage domestic consumption and entrepreneurship.
PMI Trends in China
Nowadays, hundreds and thousands of
factories are closing down and seeking
buyer or redevelopment opportunities.
Many companies have moved their manufacturing facilities to nearby Vietnam
or Cambodia, and in some cases India,
to take advantage of significant cost
benefits in labor-intensive production.
This includes both multinationals and
With land value continuing to surge,
factory owners have been coming to the
realization that oftentimes their prop-
erties are worth much more than their
businesses and production lines. Many
have sold up to cover increasing losses
in production, which has led to a record
high in the number of factories for sale
— in particular, in more mature manu-
facturing cities in Eastern and Southern
China, such as greater Shanghai,
greater Suzhou, greater Guangzhou,
and greater Shenzhen. However, the
resulting oversupply is limited largely to
multi-story factory buildings of former
low-value-product manufacturers, such
as electronics and garment companies.
There remains a shortage of single-sto-
ry manufacturing facilities for high-tech
and value-added products.
The shortage of single-story factories
boils down to government development
policies being misaligned with actual
demand. The government prefers
multi-story factories with a view to
generating more investment input and
production output on the same unit of
land. But this falls afoul of demand from
numerous industries, such as pharmaceuticals, with requirements for space,
ceiling height, and floor loading that
multi-story factories cannot provide.
As a result, the vacancy rate among
single-story factories in manufacturing centers is very low. In Shanghai,
Suzhou and Nanjing, vacancy rates for
single-story factories are 3 percent,
10 percent and 7 percent, respectively,
showing very few quality options for
high-tech value added manufacturers.
Source: Colliers International
Chart Source: Eastmoney.com