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Electronics Production | October 05, 2005

Ericsson, "China soon<br> to be too expensive"

Companies such as Ericsson might move their production from China to other low cost regions thus wages in China are on the rise.

It is still a huge gap between Chinese and western European wages, even though it is shrinking every day. When the cost difference is smaller, China will be less interesting, and companies such as Ericsson will move parts of its production to other regions. Africa could be one possible region according to Gabriela Styf Sjöman, which is the manager of system integration at Ericsson in China. "China will continue to grow for another 10 years. At the same time, Chinas economy will be stronger, which leads to higher costs for the companies. It is today a huge advantage to move production to China, but the wage differences between China and western Europe are shrinking" Gabriela said. "China need to be more innovative to continuing attracting companies to the region, otherwise the production will move away from China", Gabriela said. Another of Ericsson's problems in china is piracy. Ericsson continuously tries to find new ways to stop piracy of its products. There are a lot of information leakages from Ericsson's employees in China. However, according to Gabriella, information is not the same thing as knowledge, which is needed for new innovations. Therefore, Ericsson still keeps most of its product development and innovation at its own facilities in Sweden.
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