US and Japanese companies leaving China

On April 9th, the US White House economic adviser Kurod put forward measures to “relocate American companies in China at the expense of capital.” The so-called spare no expense is that the government pays for all the expenses for enterprises moving to the United States. Immediately thereafter, it was announced on the 11th that it would relocate Japanese companies in China to Japan or Southeast Asian countries.

In fact, in addition to the impact of this epidemic, there are several reasons for the withdrawal of US and Japanese companies from China: First, the labor cost has become higher. When you open a factory in China and recruit workers, three or four thousand yuan per month is the minimum. And Vietnamese people only need less than half of this price, so some developed countries now move their companies to Southeast Asia to reduce their costs. Second, in the past, we introduced policy support for foreign investment in land, taxation, and loans. Now, as foreign companies enter China more and more, some preferential policies have been reduced or cancelled. This makes foreign investors feel uncomfortable. Third, due to higher domestic housing prices, leading to higher land prices, the rents of office buildings and factory buildings have increased, which has made many foreign-invested companies feel that the domestic rental costs cannot be overwhelmed. In fact, not only foreign companies such as Japan and the United States, even Huawei ’s Ren Zhengfei believes that housing prices in Shenzhen are too high, and the cost of acquiring land in Longgang District is expensive. High rents and high land prices, while increasing the investment cost of foreign-funded enterprises in China.

The evacuation of foreign countries will definitely affect domestic employment and the economy, which will make the domestic economy already in a downward trend even worse.

It is really bad news for China, the domestic sales of PFCT Machinery will be greatly affected. And the export won’t be better because of the covid-19 all over the world and the high tax rates which charged by US govement. We must focus on developping the market in East Asia, Middle East, Africa and South America.