Recently, there has been a lot of talk about the upcoming “end of China manufacturing”. It is true that prices are going up, and an increasing number of importers will have to source from other Asian countries.

What commenters forget to mention, though, is that higher prices force a higher number of companies to come and work directly in China, because (1) China is still, by far, the easiest/cheapest source in many product categories, and (2) these “new to China” buyers can’t afford to buy through an an intermediary any more.

This is why I am writing this article for importers who are planning to open a buying office in China. And more specifically in the Southern province where the supply chain is most mature.

Map of the Pearl River Delta, where 80%+ of Guangdong factories are located:

What types of areas would I avoid?

If I had to choose a place in Guangdong, I would try to avoid the centers of tier 1 cities. You are buying from China to save money, right? So don’t over-spend.

Shenzhen and Guangzhou are definitely tier-1 cities, but I also include districts such as Humen, Houjie, and Chang’an (all of them in Dongguan city) in this category. They are surprisingly expensive.

On the other hand, forget about small towns. They usually have no good bus/train station, no office building, no real shopping mall… It will be difficult to attract and retain good staff there (boring!).

What places are good candidates?

I suggest you look at the geographical position that is the closest to your suppliers, within the next few options around the Pearl River Delta:

1. The center of Bao’an district, Shenzhen city

Transportation:

• Metro to downtown Shenzhen
• Below 30 min to the center of Nanshan district, about 45 min to Shekou town
• Very close to Shenzhen airport
• 90 min from Kowloon in Hong Kong (if there is no queue at the immigration counters)

Pros:

• Easy to live in downtown Shenzhen and to work there
• Good environment for foreigners

Cons:

• Because of the metro line, prices will keep rising fast
• Factories will slowly be pushed out of this area

2. Wanjiang district, Dongguan city

Transportation:

• Close to the central Dongguan bus station — 2 hours from Shenzhen downtown
• 20 min (by taxi) away from the train from Guangzhou to Hong Kong

Pros:

• The lowest costs of all 4 options presented in this artlcle.
• Easier to recruit staff (many merchandisers looking for new opportunities in Dongguan, and many inspectors live in this area).

Con:

• Much higher capital requirement for opening a WOFE (foreign-invested company) than in options 1, 3, and 4.

3. Shiqiao town, Panyu district, Guangzhou city

Transportation:

• 30 min by taxi from Guangzhou South train station
• An old bus station is in the center, and a new (and bigger) one is about 15 min away

Pros:

• Metro to downtown Guangzhou.
• Many foreigners live in the area, particularly in nice residential areas like Clifford or Country Garden (about 15 min away from the business district by taxi).
• Very central, easy to go to the East and the West of the delta.

Con:

• Easier to recruit good staff, but costs are rapidly increasing (same situation as option 1).

4. Daliang town, Shunde district, Foshan city

Transportation:

• There is a train station about 10km from Daliang. This line goes down North to Guangzhou, and South to Zhongshan
• The bus station is large, and 3 km from the center. A bus ride to Shenzhen usually takes less than 3 hours
• 10 min away from the center, there is a ferry line to Hong Kong (it takes 2 hours)

Pros:

• Rather central, easy to go to most places around the delta.
• Less expensive than options 1 and 3.

Cons:

• A bit harder to attract really good staff.
• Some foreigners live there, but not many.

———–

This list is not exhaustive, but I think this is already a good set of options for an importer looking for a place to start.

Anybody has other suggestions?