Moving up the value chain

Financial crisis, rising cost of labor may spur consolidation and innovation among embattled Chinese manufacturers

'It's a dying business," said the owner of a garment factory in Zhuhai, a city in Guangdong province. Like many in his line of business, he is packing up. Lured by abundant cheap labor, investors flooded Zhuhai two decades ago. Gone, it seems, are the heydays of T-shirts, toys, plastic flowers, tiles, hooks, springs, and the like. Today, the costs of manufacturing such items are lower in countries like Bangladesh and Vietnam than in Guangdong.

As labor costs continue to climb, is China set to lose its coveted spot as the world's workshop?