Labor-intensive enterprises should move to Africa
Chinese labor-intensive enterprises should relocate to Africa with its abundant young workforce, former chief economist and senior president at the World Bank Justin Yifu Lin said during the 17th China International Fair for Investment and Trade.
Rising labor costs are pinching businesses that relied on China's cheap workforce for years. Many labor-intensive businesses have already relocated to Vietnam, Cambodia, Myanmar and other South Asian nations.
In Lin's view, Africa is the obvious choice. "Africa has about 1 billion people and very young labor force. It's just like China in the 1980s. There is substantial room in Africa to accommodate China's labor intensive manufacturing," he said.
In contrast, the population of South Asian countries is relatively small, and the wages will go up soon, Lin said.
Although some argued that costal factories could move to China's hinterland rather than moving overseas, Lin said the country's central and western regions are already expensive.
While moving low-margin manufacturing to Africa, businesses can put more focus on the two ends of the "smiling curve", which depicts value-added in the industrial value chain, in China, he added.
In 2012, trade between China and Africa totaled $198.49 billion, up 19.3 percent from a year ago, official data showed.
In Lin's view, Africa is the obvious choice. "Africa has about 1 billion people and very young labor force. It's just like China in the 1980s. There is substantial room in Africa to accommodate China's labor intensive manufacturing," he said.
In contrast, the population of South Asian countries is relatively small, and the wages will go up soon, Lin said.
Although some argued that costal factories could move to China's hinterland rather than moving overseas, Lin said the country's central and western regions are already expensive.
While moving low-margin manufacturing to Africa, businesses can put more focus on the two ends of the "smiling curve", which depicts value-added in the industrial value chain, in China, he added.
In 2012, trade between China and Africa totaled $198.49 billion, up 19.3 percent from a year ago, official data showed.
