As Wages Rise, Time to Leave China?

Rising wages—together with currency fluctuations and high fuel costs—are eating away the once-formidable "China price" advantage, prompting thousands of factory owners to flee the Pearl River Delta. Much has been written about the more than doubling of wages at the Shenzhen factory of Foxconn (2317:TT), the world's largest electronics contract manufacturer, which produces Apple (AAPL) iPhones and iPads and employs 920,000 people in China alone. "One can talk about a world pre- and post-Foxconn," says Victor Fung, chairman of Li & Fung (494:HK), the world's biggest sourcing company and a supplier of Wal-Mart (WMT). "Foxconn is as important as that."

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