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The end of the Great Migration: Foreign companies look to China’s interior

Rob Schmitz Oct 1, 2012
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The end of the Great Migration: Foreign companies look to China’s interior

Rob Schmitz Oct 1, 2012
HTML EMBED:
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Jeff Horwich: Lately the numbers we’ve been bringing you from China tell pretty clearly of a slowdown. China’s economy is still growing at a pace that’s mind-bogglingly fast compared to more advanced economies like the US and — especially right now — Europe. But changing from 10 percent GDP growth to 7.5 percent — what they’ve got now — is still a shock. Slower growth is prompting cost-cutting by many American companies in China that can mean moving away from high profile cities like Shanghai and Beijing to second tier cities further inland.

This week, our China Correspondent Rob Schmitz is taking a look at how workers are moving around China. Today, Rob takes us to the city of Chengdu.


Rob Schmitz: Luo Hui’s got a microphone headset holding her hair back and a small speaker strapped to her belt. She’s a teacher, and she’s leading a lesson in email English. Thirty young Chinese professionals are learning the proper way to end an email. They’ll use these etiquette tips with their new employers: foreign companies.

The city of Chengdu is picking up the tab for these classes. The government’s also paying rent, giving tax breaks, and providing free training for employees. These are subsidies that are typically the target of WTO complaints when the US wants to rein-in China for unfair trade practices. Except here at Tianfu software park in Chengdu, a third of the companies benefitting from these perks are from the US—Dell, Intel, Cisco, and GE. Li Chen, a manager at the park, says all these companies used to do all their business on China’s coast.

Li Chen: In China, foreign companies usually make their first stop in Beijing or Shanghai, but the cost of doing business in those cities is getting out of hand, especially in this economic climate. Companies that move to Chengdu can save a third of their operating costs.

Ever since the global financial crisis, Tianfu software park has quadrupled in size. Now there’s a waiting list to move in, and Li says he’s limiting space to Fortune 500 companies. When they arrive, they’ll have access to a trove of skilled workers — Chengdu has some of the top technology universities in the country. They’ve found Chinese employees here are generally happier than those in Eastern China.

Zhou Min: Here, rent is half as much, so we all can afford cars.

Says recent transplant Zhou Min,

Zhou: Here, we can have a good job and a good life.

And a city that for years suffered a brain drain to China’s coast is starting to see that trend reverse.

In Chengdu, I’m Rob Schmitz, for Marketplace.


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