China's Business Climate

Filed in archive News on March 18, 2010

© xiquinhosilva


Jeff Nolan (Venture Chronicles) blogged this week about his recent trip to Southern China.

Nolan takes a close look at China's Guangdong Province. He visited a number of manufacturing facilities and spoke with business executives in Chang'an, Foshan, Guangzhou, and Shenzhen. Conclusion number one: there is a labor shortage.

Nolan looks at worker compensation as one of the issues involved in the labor shortage. He sees wage inflation in Guangdong Province cutting into the relatively small profit margin that businesses in the region have. He also sees the one child policy in China as part of the reason for a shrinking workforce.

Business in Southern China also faces pressure because of the uncertainty of the future value of the Yuan. The Yuan is tied to the US dollar. The dollar is weak. Both Chinese and UJS monetary policy is in a state of flux. That makes for insecurity in a region that depends on export.

Nolan's article is an interesting read.