Stunned and in total disbelieve ....
Mr. Wong asked his senior accountant to redo the numbers. As
an owner of a Dongguan electroplating company in South China
he is by nature cautious and watches the top and bottom line
numbers like a sharp-eyed hawk.
Doing business in US, he reasoned, must be more expensive.
Conventional wisdom is certainly on his side. For example he
pays his Chinese workers USD 2/hr. room and board is a must,
and is extra. In the USA, he is resigned to pay the prevail-
ing local rate of over USD 12.
Electroplating is very electricity intensive. In China, he's
paying a subsidized rate. Which is 25% cheaper than the USA.
However, he has to endure frequent outages in China. Which,
costs him workers' idle time, spoilage of works in progress,
and penalties in order delays.
He set his sight on 6-acre of land by the Mississippi River,
for building a new plant in the US Deep South. The landowner
asked for USD 500K. In Dongguan, China, it would have easily
been four or five times more expensive.
His factories in S. China is facing mounting costs, reducing
subsidies, higher trans****tation costs, and tighter regulat-
ions. Making things worse, he believes, is that things will
only get worse in the future. On a daily basis, the Chinese
government is urging and offering incentives for him to move
west.
Finally, he decided to take the plunge - into the far west.
Instead of moving to China's western hinterland, however, he
is thinking of moving to the USA. He had many apprehensions:
language, culture, political climate, cost of doing business
etc. Finally, he received a letter from the state's governor
making him an offer that he could not say no. It offered him
a payroll tax credit of $1,500 per worker, to hep him offset
his labor cost. Now, looking at the double and triple check-
ed spreadsheet from his trusted number-cruncher, he takes a
deep breath, apparently relieved, and said calmly:
"I am stunned. We should've done this earlier." .... :)
Regards,
Albert K. Fung
Casa Tres Palmas, Santa Ynez, California, USA.
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