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English>>China Business

Reshoring to have 'limited' effect

(China Daily)

08:12, September 07, 2012

Officials at the Ministry of Commerce have insisted that China remains a strong and attractive market for foreign investors, despite reports that growing numbers of international companies, particularly manufacturers, have been considering pulling out of the market, as their own nations' economies suffer.

Shen Danyang, the ministry spokesman, told a news conference before the start of the four-day 16th China International Fair for Investment and Trade, to begin on Saturday in Xiamen, Fujian province, that some developed countries have already been encouraging their own organizations to consider reinvesting, or "reshoring", back in their own markets, as a boost to their own struggling sectors.

The United States launched its own official "Reshoring Initiative" in 2010, and according to one recent survey, as many as 39 percent of companies operating abroad were reported to be considering moving some manufacturing back to the US.

While this kind of policy could have an effect on China, Shen said that the ministry considers it to be "limited", and that the country still remains attractive to foreign direct investment in the medium and long term.

"Growing efforts by the United States and the European Union to boost their own domestic manufacturing sectors will surely have some impact on Chinese attractiveness of FDI.

"But that will be limited, owing to the differences in industrial structures between China and the US and countries in the EU, and the manufactured products in question," he said.

Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics in Beijing, disagreed.

Sang said that this "reindustrialization" of some developed economies will more likely lure back companies involved, for instance, in IT or innovation, best-suited to creating jobs at home, with businesses involved in more labor-intensive industries still happy to keep their investments in China.

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