Dongguan’s Thorny Path of Transformation
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dongguan is a city in Guangdong. It is not as famous as Shenzhen and Guangzhou， but it is called the “World Plant”. New York Times once described Dongguan like this： “you might not have heard of this city， but its 10-million population is filling your wardrobes. Just remember one thing： 40% of the shoes sold in the U.S. are made in Dongguan”.
But now， this city is losing its title as the “World Plant”. In recent years， the increasing cost in raw materials， labor force and the appreciation of RMB has pushed the operating cost of enterprises of Dongguan onto an ascending route. The global depression reduced the number of orders for them. And in order to maintain the clients， these enterprises had to keep their prices unchanged. All these led to the decreasing profits of enterprises.
In 2012， a well established shoe manufacturer only received one third of orders it did in 2011 and the profits dropped by 30%.
Zhai Suoling， board chairman of Dongguan Guangsheng Hardware & Plastics Co.， Ltd， said that his enterprise is now facing the decreasing number of orders and dropping profits. As the vice president of the Association of Taiwanese Investors in Donguaun， he had enough authority to say that this is only a single case.
Zhao Weinan， secretary-general of the Association of Taiwanese Investors in Donguaun， said that some Taiwanese businessmen were reducing their investment in Dongguan and moving their plants to Southwest China， Vietnam and Cambodia. Some of the enterprises are not willing to leave， but not moving means no chance to survive.
Ji Daosi， a columnist also worried about the development pattern of Dongguan. In his opinion， this pattern based on low-cost manufacturing was once popular in Hong Kong and Taiwan but eventually moved out of these places. “What fate is waiting for Dongguan in the future？” he asked.
“In recent years， Dongguan went through the international financial crisis and underwent the pains of transformation.” In 2012， Xu Jiahua， the CPC chief of Dongguan， said that the government of Dongguan wanted to agglomerate the power of all businessmen from Dongguan in the world to drive the transformation of Dongguan to help this city survive the financial crisis.
In the past ten years， the processing trade was always the engine for the GDP growth of Dongguan. 80% of its industrial output was created by processing trade enterprises. The net exports of these enterprises contributed over 40% of the GDP growth. Now， the weak international market kept impairing this engine. In the first half of 2012， Dongguan only had 2.5% GDP growth rate， the lowest in Guangdong Province.