Aug. 21 – A repercussion of increasing labor costs in China is resulting in Chinese companies choosing to head to Indonesia as the preferred destination for business expansion.
A survey of 516 Chinese SMEs based in Singapore conducted by the Singapore-Chinese Chamber of Commerce & Industry (SCCCI) last week showed that Chinese SMEs were shying away from their own country when it came to costs. Of the Chinese companies polled, 39.9 percent favored investment in Malaysia, 28.1 percent Indonesia and just 27.2 percent back in mainland China.
“Indonesia has more potential and a larger labor force. It also has strong ties with Singapore which makes it attractive to Chinese companies with business here,” commented SCCCI Secretary-General Emily Deng.
The increased interest in Southeast Asia by Chinese firms comes at a time when Mainland China’s labor costs are steadily increasing at roughly 15-20 percent per year depending on location. Indonesia’s GDP growth has meanwhile dropped to 5.81 percent and the country is experiencing a four-year high in inflation and Malaysia came in at 4.10 percent GDP growth, however both countries are being considered as better longer term investment bets than China.
China’s official GDP growth figures are at 7.8 percent, yet analysts are increasingly calling State-provided figures into question.
