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November 28, 2011

Chinese cosmetics packaging market may lose investment

A recent 10-20% rise in Chinese factory wages has forced some foreign cosmetic packaging manufacturers to make investments outside the country.

 

A recent 10-20% rise in Chinese factory wages has forced some foreign cosmetic packaging manufacturers to make investments outside the country.

PlasticNews reported that decisions on new investment are getting more complicated, which means that more plastic factories are being set up outside mainland China.

So has Taiwanese cosmetic packaging giant Esmin said the wage issue has prompted the company to set up two new injection moulding factories at its headquarters in Chang-Hua and in Jiayi, Taiwan, instead of China.

The firm, which is set to open the new facilities in early next year, said it is facing difficulties to get workers for its three existing factories in South China’s Guangdong province.

Similarly, Shanghai-based HCP Packaging is reportedly looking for investors to help fund a European plant where it will invest $12m to set up an Eastern European injection molding factory.

Jeff Chen, HCP chief executive officer, said the company is concerned about the rising costs at its three factories in the country and wants to shorten lead times and supply chains for customers.

"We still need to maintain our China operations. We will continue with investment in China but not as much as before," Chen said, adding that those plants will increasingly focus on the country’s domestic market.

The company’s business is experiencing a 25% annual growth and the proposed site would be its first manufacturing facility outside Asia and the Americas.

According to some Chinese firms, rising domestic costs are also prompting foreign packaging manufacturers to set up new units in the countries where production cost is much lower.

Kelly Wang, Guangzhou Qiaoxin Plastic general manager of injection molder, told PlasticNews the stronger Chinese currency and weaker US economy are prompting American customers to look for cheaper manufacturing, and is pushing the company to find new markets.

"Customers in the US are looking for factories in other countries like India," Wang said.

The Chinese cosmetic packaging maker exports 70% of its business to North America.

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