Starting from April, Guangdong is adopting 860 yuan as the minimum monthly salary benchmark for a worker in corporate ventures, up 12.9 percent from the current one.
Chinese authorities have emphasized quality over speed in future economic development across the country.
Wang Yang, Guangdong Provincial Committee of the Communist Party of China (CPC) secretary, has advocated his province should have a global vision and learn to compete and catch up with Singapore and the Republic of Korea (ROC). This, according to industry observers, will in turn suggest Guangdong is determined to drop its extensive development pattern and will follow stringent regulations regarding environmental protection and higher standards for innovation and construction of modern enterprises system.
While delivering a work report to the local legislature of Guangdong on Jan. 17, Governor Huang Huahua laid out 10 key missions to be fulfilled this year, with adjustment of industrial structure as the core part of the tasks.
Local governments in Pearl River Delta cities have been trying hard to advance industrial transition or upgrading. In accordance with newly-drafted urban development plans, many conventional enterprises will by no means be able to continue business expansion in the old places because of problems such as environmental protection.
Shenzhen, for instance, has designated an ecological strip where all industrial enterprises should be moved out. The Dongguan City government has decided to build a high-tech industrial park at Songshan Lake in Dalingshan Township; a score of Taiwan-invested ventures inside the park failed to meet the standards for high-tech industries and were forced to relocate elsewhere.
Yin Yong, the Shenzhen trade and industry department deputy chief, believed the industrial structure in the delta had improved: from labor-intensive to technology-intensive and from sweatshops to the service and high-technology sectors.
Although delta cities have lost smaller overseas ventures, they have still seen growth in paid-in foreign investment over the past two years.
"The closure or flight of small- and medium-sized overseas ventures has, in a sense, opened up space for development on the part of big companies," Yin said.
He added Shenzhen had approved 243 overseas-invested projects last year, with each investment exceeding 10 million U.S. dollars.
Yin said conventional overseas ventures that are quick to make timely adjustments according to the changed business operating environment could continue to prosper in the Pearl River Delta.
Airmate Electrical (Shenzhen) Co.Ltd, for instance, used to rely on processing commodities with supplied materials and re-export them on behalf of other international brands and make profit at cheap labor. It began to lose money as labor costs rose. The losses totaled 10 million yuan in 2005.
The company's money-losing spree was stopped in 2006 when it adjusted its business expansion strategy and spent more on research and development while vigorously opening up the China domestic market.
The efforts have paid off. The company made 26 million yuan in profits in 2006. Its profits for 2007 will exceed 26 million yuan, according to Cai.
In the conventional manufacturing sector, previously strong overseas companies have grown bigger during the industrial transition. For example, Sewco Toys, a Hong Kong-invested venture, planned to continue expanding this year and add 5,000 people to its 10,000-strong payroll.
"In the long run, China's advantage should be the opportunity for more innovation instead of cheap labor," Yin added.
(Xinhua News Agency February 28, 2008)
