One strategy to beat rising costs: Move manufacturing operations inland. The average total cost for a manager or engineer at one of Asimco's inland plants can be 41.6 percent less than in Beijing.
Thirteen of Asimco's 18 China plants are in interior provinces. The other five are in Beijing.
But prices are rising in China's inland cities, as well. Hewitt says salaries in the southwestern China city of Chongqing, home to a Ford joint venture, have risen 11.4 percent in 2005.
Move farther inland -- say to Hebei province, where Asimco has a plant -- and costs come down even more. But moving inland brings other problems.
Relocation costs are high. And persuading engineering and managerial staff to move to China's relatively undeveloped inland cities can be tough.
"Engineering resources are hard to come by," says Magna's Lomason. "If you've got good people, you don't want to lose them."
China is still a low-cost manufacturing country for many automotive components. "Labor costs are only one part of the competitiveness equation," points out Ashvin Chotai, head of Asian automotive industry research at Global Insight in London.
As the size of the market grows, he says, manufacturing efficiencies will rise and fixed costs per item will come down. "This is where the specifics start," he says.
GM sources only $250 million a year in components from China for worldwide operations, says GM spokesman Tom Wickham. But GM aims to source $10 billon a year from China by 2009.
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