China’s reputation for low-cost manufacturing under attack

WHEN China was gripped by political turmoil in the 1960s and 1970s, Cao Dewang cut his teeth as an entrepreneur. Mao’s chaotic rule forced him out of school and he took to the street, a scrappy teenager selling fruit and cigarettes. Looking back, Mr Cao has said that it was actually a good time to do business: the government was too busy waging ideological campaigns to enforce its regulations. Mr Cao went on to become a billionaire, as China’s biggest manufacturer of automotive glass. Last month he sparked controversy by complaining that life was tough for businesses in China. There are, he said, far too many regulations—especially taxes and fees. These days the government is much more effective in enforcing them.

Mr Cao hit a nerve with his claim that it was more costly to run a business in China than in America. He should know. His company, Fuyao Glass, bought an old General Motors factory in Ohio in 2014 and announced plans to invest $200m there. Mr Cao claimed that the overall tax on manufacturers is 35% higher in China than in America. Once China’s higher land and energy costs are factored in, the advantages of its lower labour costs…Continue reading

This post was originally published in the Economist.

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China’s reputation for low-cost manufacturing under attack

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