The Main Reason For The Closure Or Relocation Of Enterprises Such As Footwear In The Pearl River Delta Is National Policy.

When the factory production line is shut down in the US, trade protectionism tends to rise.

In China, the opposite is happening.

The combination of inflation, the appreciation of the renminbi, and many unstable factors such as the new labor law are eating away the profits of China's manufacturing hinterland.

Hundreds or thousands of factories may close or leave the Pearl River Delta region.

The Pearl River Delta produces more than 1/4 of China's exports.

Some factories migrate inland.

Others plan to move to countries like Vietnam, where labor is cheaper.

But analysts say these moves are in line with the Chinese government's policy of pushing the economy up the value ladder.

Guangdong has guided China's reform in the past, and now it is guiding the change of China's manufacturing industry.

Similar to other rapidly developing industrialized economies, China is gradually realizing that it can not rely on producing cheap and simple goods to compete with other countries. At the same time, the production is still at the expense of increasingly expensive raw materials, such as oil and iron ore.

National policymakers are eager to develop more effective and high value-added products to usher in more predictable and sustainable economic growth.

"The factories that are closing down are actually victims of creative destruction," EdithTerry, a consultant, said in February this year he released a report on changes in the PRD.

Although the Guangdong Trade Office said that the Pearl River Delta will close less than 300 factories, the industry estimates it could reach as high as 1.5.

The government said that most of them were labor-intensive, small or medium-sized factories of metal or plastic products, toys, clothing and footwear.

About 90% of them are Hong Kong funded or Taiwan funded enterprises, which can explain why the industry organizations there are clamour to reduce the serious negative effects of the sharp increase in costs.

"It's like a tsunami," said Chen Zhenren of the Hongkong Federation of industry.

Policies have been pressed, but these strong appeals have not been heard at all.

With the increase of input costs, the Chinese government hopes to get rid of the low-end industries in the more developed regions of the country.