SOURCE / INDUSTRIES
Reporter’s diary: one building that witnesses the transformation of the world’s factory
Dongguan building witnesses change
Published: Dec 29, 2020 05:28 PM

An employee tests a finished circuit board in Ruixinte Electronic, a factory manufactures LED screen parts and circuit boards, in Dongguan, South China's Guangdong Province on December 14. Photo: Cui Meng/GT



One six-story-high factory building in Dongguan, a manufacturing powerhouse in South China's Guangdong Province, sees China's industrial transformation firsthand.

The building, made of concrete and steel to withstand one ton of pressure per square meter, is located about one hour's drive inside one township outside the urban district of the Dongguan city.

The owner of the building, a multi-floor concrete structure specially built to house equipment, production lines and materials, is a Hong Kong businessman who takes original equipment manufacturer (OEM) orders of cloth and textile products from big supermarket brands in Western countries. During the factory's heyday, the owner hired some 3,000 workers as production lines ran day and night to catch up with non-stop orders placed by clients in the US and Europe.

Sadly, the golden age for textile OEM did not last into today's Dongguan. When I visited, the plant only had a few hundred workers left as production withered and was partially moved out of China to emerging countries such as Vietnam - labor is cheaper there and those places can somewhat evade a bruising trade war between China and the US.

The owner confides with me, somewhat sadly, that now what he is going to do is to let his factory fade away gradually and over time - the plant will take less orders as his overseas plants take more while less workers will be hired - all the production will die out eventually as orders and workers slowly disappear.

However, the owner told me that his business as a property landlord takes off since last year as he found a tenant who makes chips for home appliance makers. 

The tenant, also in the OEM business with the sole difference being its coming from another trade, makes integrated circuits (ICs) board for a big domestic home appliances brand.

Different from the sadness and "natural withering" seen in the floors occupied by landlord's textile business, the floors rented by the tenant are thriving - production lines are humming, workers bustling and unshipped finished goods are stored right next to production lines, leaving only a small passage for people to pass through. Workers also are notably younger.

Even as the production for the ICs are already in full throttle, it cannot meet the surging demand as end products including micro-ovens, washing machines and other types of home appliances are badly sought after by global consumers as they are confined to their homes amid the COVID-19 pandemic. 

The tenant told me that his downstream clients, which assemble the ICs manufactured out of his plant, have already told him to add two more production lines to ramp up production.

Dongguan has always struck me as a place of contrast. It is the place where limousines and dirt-covered truck wait for traffic lights side by side; where rich bosses and poor migrant workers eat at the same street-side barbeque, but nothing left me more amazed as how the new industrial force takes up the space of the old industrial force inside this factory building and how a unique snapshot of decades-long industrial transformation was encapsuled here.

The location has not changed, the products running out of the building changed. Products with higher value added prevailed as Dongguan scales up the global industrial and value chain. And the story of one of the world's leading factory floor goes on. More like a story about evolution, enterprises that can move up the value chain survive and thrive in the story.

To be sure, even the landlord has no plan to leave Dongguan. When production is transferred abroad, the factory floor will be occupied by sales team that obtains orders overseas and supply chain team that sources middle products and services so that OEM production at overseas site could begin and go smoothly. 

Leaving is not an option, and staying here is a must. "All the suppliers are in China and you must stay as close as possible with them to get the business moving forward," the building's owner told me. 

As Dongguan becomes a paradise for manufacturers, due to its unique and unparalleled supply chain advantage, it is also losing its cost advantages it used to beat the world, this has become a reality that any business wants to stay here has to face, moving up the value chain is key. 


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