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Hong Kong reemerges as a strategic base for Asia Sourcing, Brand Development, and Finance

August 7, 2007

Analysis of:HK narrows gap with mainland on expat costs of living | www.scmp.com

There have been several significant developments in China that are converging into an overhead crisis for businesses that have buying, logistics, wholesaling, and other support services in China. These include 1)The appreciation of the RMB. 2)Real inflation in the double digits in the costal cities. 3)A high demand for Chinese graduates ensures a short supply of managers and engineers and a high staff turnovers. 4)The announced removal of special tax treatment for Special Economic Zones (SEZ) with a uniform national business tax of around 25% to be phased in over the next 2 years. The year on year overhead impact to companies with operations in PRC as result of the above reasons are in the double digits.

China’s new Labor Contract Law (LCL) will have significant impact on labor intensive manufacturers

July 12, 2007

Analysis of:Prepare for price increases from China as new Labor Contract Law is enacted | evatt.org.au

China’s new Labor Contract Law (LCL) will have significant impact on labor intensive manufacturers. This coupled with appreciating RMB and more enforcement of Social Security contributions will have significant impact to FOB prices of orders to ship by January 2008. There is some potential offsetting good news from ocean freight rates this Fall. Importers with significant exposure in China should look for contingencies

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