Will you consider the labor market in East Europe? Not late to decide it now

As I mentioned in the previous article--The electronic industry in China. China has become a world factory, the international company stepped into this “fertile soil” one after another due to the advantage of cheap labor. However the advantage is getting less obvious with the time passing by, and also in the meantime, Chinese electronic manufactures and IT industry has already lay their target on east Europe, here has relative cheaper labor comparing to west Europe, the geographic advantage can easily give a way for entering the eastern market, increasing the response speed of changing situation.

Let me give you an example of Changhong Electric Co.,Ltd.

In Nymburk, a small town with the population around only 15 thousand in the central Czech Republic, Changhong Electric was building a manufacture which costs USD 300 million, since the first year it completed, the yield of LED television reached one million. The mayor of Nymburk says “we are glad to invite Changhong Electric here, for providing us a great opportunity to make the amazing achievement”.

Since China has becoming the world factory, the manufactures in East Europe has impacted a lot because of the comparative advantage in China, the so called labor intensive industries for instance in textile and shoes industry has already got no chance to compete with the labor market in China. However, the market gave them another opportunity, the business from China brought them a way for developing.

In fact, some Japanese industries have already find potential in East Europe, China and Taiwan just set the target in recent years. Apparently on the one hand, this decision avoid the tariffs within European Union, on the other hand, it decreases the labor cost in manufacturing within Europe. Then why not choose this hotspot?

The data shows in the previous years, around ten companies from mainland China and Taiwan have already invested in this hotspot for more than USD 3000 million.

• In Czech Republic, Foxconn has invested USD 800 million in employing more than 5000 staff for the company like HP, APPLE, Cisco and other companies in producing computer peripherals products.

• An electronic company called Tatung from Taiwan has a manufacture in the west Czech which is producing 50 thousand LED television per month.

• Hisense from mainland China has ready invest a manufacture in Hungary at the year of 2006, at that time with only 110 employees.

• In 2007, the manufacture of SVA Information Industry from Shanghai brought into production in Bulgaria.

The labor cost in East Europe is still a fraction comparing to the West Europe, even if the European Union has expanded from West to the East. Moreover, these new members are eager to grab the opportunity of FDI which providing more job offer. On the other side, the government gives a strong support as well, for instance, both Foxconn and Changhong Electric in Czech are enjoying the ten year long taxation preference policy right at now.

The west market can be the most attractive point that FDI choose to stay in East Europe. In the manufacture in mainland China, Foxconn can produce more than 3 million computers, that’s not a bad number. However if the need from Spain and Germany is urgent, the manufacture in East Europe can deliver it there within 24 hours, from the mainland China, it take 35 days. Think like this, if you are the one who are interested, which one do you prefer?

Will you consider the labor market in East Europe? Not late to decide it now

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Note:

Sichuan Changhong Electric Co. http://en.wikipedia.org/wiki/Changhong

Tatung  http://en.wikipedia.org/wiki/Tatung_Institute_of_Commerce_and_Technology

Foxconn http://en.wikipedia.org/wiki/Foxconn

Hisense  http://en.wikipedia.org/wiki/Hisense

SVA http://www.svainfo.com/main/index.aspx