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Border factories face struggle 2014-01-21 11:52:49 Release　Author：Global Times　Read Flow：2934次

Many Chinese-Americans based in Southern California make their living in Baja California, Mexico, by running factories using relatively cheap labor and vast consumption potential. An increasing number of such commuters have quit this lifestyle and returned to the US recently for various reasons, including safety and rising costs.
Chinese-Americans in Southern California like to open shops, factories and restaurants at border states such as Mexicali, Tijuana and Ensenada. More factories have moved to Mexico to take advantage of the reduced tariffs since the establishment of the North American Free Trade Agreement (NAFTA) in 1992.
Esther Woo-Jan, counselor with the Los Angeles-based Chinese Women's New life Movement Club, lived in Mexicali for years, where her husband owned and ran four factories in the 1970s and 1980s, making and selling garments and shoes.
Woo-Jan said that they paid 200 pesos ($16) for an employee a month in the early years and the store rent was very cheap.
As Mexicans liked to spend a lot during holiday seasons, no matter how much they earned, their shoe shops were very profitable, making a daily turnover of $7,000 to $10,000 before Christmas, she added.
Woo-Jan expressed pride that they had helped over 30 relatives of Woo emigrate to the US through initially settling in Mexico. A Mexican permanent residency cost only about $10,000 in the 1980s. The relatives opened businesses and set up families in Mexico, and eventually aimed to become US citizens to provide better education to their children.
Derek Wong, a manufacturer in Mexico, agreed with Woo-Jan that Mexicans' consumption ability was amazing, especially during the Christmas season. He held a Christmas party at his factory for workers and gave them bonuses. Astonishingly, his Mexican employees spent all the money, he added.
Wong said that running factories is no longer as profitable as it was, due to the soaring labor costs and powerful labor unions in Mexico. Any business owner in Mexico has to first join a labor union. It is a rule in the industry and anyone who does not follow it will encounter difficulties in doing business, Wong noted.
Eddy Zhu, a grocery owner in Riverside County, California, said that he used to purchase fish in Tijuana every week, which sold out fast for high profits, but now he only goes twice a week for regular customers as profits are low, while gasoline and customs costs are higher.
Taxes are also rising. Many garment plants have recently been hit by the new Mexican decision to raise value-added tax in border states to the standard level of 16 percent from January 1. The tax hike made doing business in Mexico more difficult and more people have started to think of returning to the US.
Poor security is another reason for many Chinese-Americans returning to the US. Wong cited the case of a Chinese restaurant owner who was kidnapped and blackmailed for $300,000, in addition to hundreds of burglary cases every year.

Gold Brand Management Consulting Co.,Ltd.; Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting,USA company registration, due diligence and financial review services to multinationals investing in emerging Asia.For further details or to contact the firm, please email gbd33@163.com, visit www.chinagbd.com,tel +86 20 61133120, or 020 61133120.

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Border factories face struggle