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[Exclusive Interview] EU companies in Guangdong well-prepared for rising labor cost

2015-October-30       Source: Newsgd.com

Mr. Alberto Vettoretti is the Chairman of South China Chapter of European Chamber of Commerce of China. Recently, he accepted the invitation of an exclusive interview with Newsgd.com, discussing about the European companies running business in Guangdong.
Mr. Alberto Vettoretti is the Chairman of South China Chapter of European Union Chamber of Commerce of China. Recently, he accepted the invitation of an exclusive interview with Newsgd.com, discussing about the European companies running business in Guangdong. The interview is edited for length.

[Exclusive Interview] EU companies in Guangdong well-prepared for rising labor cost

Newsgd: The global macro-economic situation is still unstable in the first half of 2015. What are the main pressures Guangdong-based EU companies suffered in H1?

[Exclusive Interview] EU companies in Guangdong well-prepared for rising labor cost

(Graphic from South China Position Paper 2015/2016, published by European Chamber of Commerce of China on July 2, 2015)

Vettoretti: Labor cost was No.1 concern, and was No.5 last year. So it shot up right to the top. Labor is indeed the main concern.

Second concern is the status of Chinese economy, which is quite interesting, because all of our members down here (South China) are always export-oriented. But we've seen a switch happening recently. Most of our members are also targeting local markets. So if the Chinese economy is not doing as well as it used to be, then it starts to be a concern, because they're moving from export-oriented to be about local selves as well.

[Exclusive Interview] EU companies in Guangdong well-prepared for rising labor cost
The 3rd concern is that Guangdong has been an international market, and also an export market. If Europe is not doing so great, of course it will be a matter of concern to our members.

For No. 4, RMB volatility is also one of other concerns. Last year RMB appreciated quite a lot. So looking back, this sudden depreciation was well-received.

Last but not least, the competition by local players.

Mr. Alberto Vettoretti was interviewed by Newsgd.com. (Photo/Xiaowen)

Newsgd: What had your members done to handle this situation?

Vettoretti: Some of them (European Companies in south China) have been better in efficiency. Some of them invested in heavy automation. Some of them are investing in retention. Some of them are implementing more flexible paying terms for the staffs.

I think they've been quite good, compared to the national European average. Raising cost has been happening here in South China in the export and manufacturing bases earlier than elsewhere in the country. And they have managed to go through this situation quite well.

If we look at the bottom line, in terms of net revenue of the companies, European companies in South China have done much better than the national average. This means they've been prepared, or ready to face this raising cost issue.

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Editor: Chan

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