Germans wary of shifting base to China?

02-Feb-06

Though China seems to be the hot investment destination for global plastics industry as a manufacturing base, players in the German plastics industry seem to be wary of shifting production to China, despite its many advantages including the low production and labor cost. A delay on their part in their decision to invest in China proved expensive as there were already too many plastics manufacturers by then. The other factors considered as hurdles by the Germans are problems such as the geographic distance, alien culture and work ethics. Germany has the highest labor and production costs in Europe, which would eventually lead companies to scout for locales in distant countries. Alternative destinations that offer similar advantages as China of low-cost production and labor are being preferred. Germany's RKW has set up a polyethylene film manufacturing plant in Vietnam, which supplies mainly upper-value products for the export markets and sells low-end products in the domestic market. Weber Kunststofftechnik (WKT), which manufactures plastics-based automotive interior components for such heavyweights in automobile manufacturing as Volkswagen, Audi, SEAT and Škoda, has decided to set up an operation in Poland which is "geographically and culturally much closer to Germany than Asia". At present, the Polish unit provides 90% of its supplies to Germany.