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News Release from: Economist Intelligence Unit
Edited by the Manufacturingtalk Editorial
Team on 16 February 2007
Booming China may face rising labour
costs
While manufacturing executives' confidence in China remains high, concerns about rising labour costs there are growing, reports a recent business confidence index.
Executives' confidence in China remains extremely high, particularly with regard to domestic sales prospects, according to a new business confidence index from the Economist Intelligence Unit The overall confidence index value stands at 62 (out of a maximum possible score of 100)
This article was originally published on Manufacturingtalk on 30 Mar 2006 at 8.00am (UK)
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The index is based on a survey of over 400 executives at firms with operations in China; a quarter of the respondents are based in China and the rest are located at their companies' headquarters.
Among the key findings are those as folllows.
* Buoyant growth expectations - expectations are high for growing domestic sales.
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More than three-quarters believe that revenue from local sales will increase in the next year.
Sentiment about export growth is also positive, with 66% of respondents expecting an increase in revenue from exports.
The slight dip in confidence relative to expectations for domestic sales reflects widespread consensus among respondents that the renminbi will appreciate against the US dollar over the next 12 months.
* China-based executives more bullish - in-country managers are more bullish about business prospects than their counterparts at HQ and have higher expectations of investment spending.
* Focus on traditional regions - corporate activity continues to be dominated by China's traditional high-growth regions.
Shanghai, Beijing and Guangdong are the regions in which the largest proportions of respondents expect both revenue growth and investment activity over the coming 12 months.
Executives based outside China almost exclusively expect investment in these three locations, whereas executives based inside China see wider opportunities along the eastern seaboard.
* Labour the main barrier to growth - labour market concerns are identified as the biggest threat to business.
Demand for staff remains extremely high.
68% of all respondents expect to increase staffing levels in China within the next 12 months-and competition for the best people is fuelling employee turnover and wage inflation.
* About the tconomist Intelligence Unit - The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of 'The Economist'.
Through our global network of 700 analysts, we continuously assess and forecast political, economic and business conditions in nearly 200 countries.
As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.
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