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From sports cars to slums: China's huge wealth gap

Foxconn to move 200,000 jobs to central China
Taipei (AFP) March 4, 2011 - Taiwan IT giant Foxconn said Friday it is set to transform its factories in southern China into an engineering base while moving about 200,000 jobs inland. "Our long-term plan is to continue to carry out some manufacturing in Shenzhen but to also transform our operations in Shenzhen into an engineering base and (research and development) centre," said Louis Woo, a Foxconn spokesperson. The move will take place over several years and see Foxconn's workforce in Shenzhen decline to around 300,000 and change in composition as it recruits more engineers, designers, and researchers, Woo said. Foxconn's plan to turn its manufacturing hub in Shenzhen, across the border from Hong Kong, into an "engineering campus" reflects a broader trend to move low-end factories from coastal zones to cheap inland provinces.

"This is in keeping with the government's own programme to transform Shenzhen into an R and D and engineering centre and a location for higher value-added manufacturing," Woo said. Foxconn is the world's largest maker of computer components and produces goods for Apple, Sony and Nokia. It currently employs around one million workers in China, about half of them based in Shenzhen. The company has been expanding its workforce in central China as it seeks to scale back the size of its biggest facility in Shenzhen, which has been plagued by a series of employee suicides in recent years. Foxconn has previously said it plans to hire up to 400,000 new workers this year, mostly in the central provinces, partly to keep up production while cutting maximum overtime hours.

Hong Kong office space priciest in world: survey
Hong Kong March 4, 2011 - Hong Kong became the world's most expensive place to rent office space last year, a study has found, despite government efforts to cool the surging property market and avoid a bubble. "Fuelled by the economic recovery, Hong Kong entered 2011 as the most expensive office location in the world," said property consultant DTZ in its annual report on global office occupancy costs. The average price of office property per workstation rose by almost a third from a year earlier in Hong Kong to $22,330, surpassing the 2009 leader, London's West End, the report said. The soaring cost of property in Hong Kong has become a major cause of complaint for the southern Chinese city's seven million residents.

Worries about a property bubble have prompted officials to announce a series of measures to cool the market, including boosting land supply, new stamp duties to keep out speculators and tightening mortgage lending. Last year, a 79th floor office unit in The Center -- a downtown skyscraper owned by Hong Kong's richest man, Li Ka-shing -- sold for HK$338 million ($44 million), or about HK$25,580 a square foot. Office costs in the city's prime districts rose 31 percent year-on-year from $16,970 in 2009, outstripping the rest of the Asia-Pacific region and the world amid strong demand and limited supply, the report said.

"We forecast that Hong Kong will continue to outpace other markets in the region, with the gap between it and other centres widening," David Green-Morgan, head of Asia-Pacific research at DTZ said in a statement. Average workstation costs in London's West End were $20,160 a year, while Geneva came in third at $18,840, Tokyo fourth at $17,400 and Zurich fifth at $16,700. Surabaya in Indonesia was the cheapest place to rent last year, while the Chinese cities of Shenyang, Qingdao and Dalian were also among the least expensive places surveyed.
by Staff Writers
Beijing (AFP) March 4, 2011
Li Fu is 29, owns five cars including a Ferrari and has a diamond-encrusted cell phone. Wang Qingzhan is 44, works as a cleaner and lives with his family in a tiny room that is about to be torn down.

Li and Wang are the faces of China's yawning wealth gap -- an unfortunate by-product of the country's stunning economic transformation and a problem that the ruling Communist Party aims to address in a new plan to revamp the economy.

That plan -- to be formally adopted by the National People's Congress, the rubber-stamp parliament that will convene for its annual session from Saturday -- aims to boost wages and rebalance growth via higher domestic consumption.

The idea of buying more is certainly not a problem for the flashy Li, who grew up poor but worked his way up the ladder in the world of design and now owns his own media post-production company.

"When I first started working, despite all my best efforts, my salary remained low. The first year, I earned 600 yuan ($90) a month. I worked like that for four or five years -- that was a tough time," Li told AFP.

"Only when I opened my own company did I start to earn more and more money," said Li, who now owns three flats in Beijing along with his cars. Along with the fire-engine red Ferrari, he has a Porsche.

Li -- sporting Ray-Ban sunglasses in the middle of a bleak winter, his hair carefully brushed into his face -- says he is one of the winners in China's economic boom, which has seen blistering growth for the past decade.

He is a dollar millionaire who spends his holidays in the south of France, Milan or Monte Carlo, where he likes to take in the annual Formula One race. In his free time, he races cars outside Beijing.

"The gap between rich and poor is a totally normal phenomenon in China's economic development, which only began 30 years ago," Li says.

"It's not like in the West, where more than 200 years of development has allowed for a vast accumulation of wealth."

In a country where "guanxi" -- connections with high-level officials or businessmen -- are seen as vital to moving up the ladder, Li nevertheless insists his success is the product of pure determination and simple hard work.

His friends -- clad in streetwear from edgy French designer Christian Audigier, creator of the Ed Hardy brand of tattoo art clothing -- are also part of China's elite.

Benjamin Fu owns a luxury car dealership on Jinbao Street -- Beijing's equivalent of New York's Fifth Avenue -- where everything from the Jaguar XJL to the Pagani Zonda R are on offer. Some cars are worth millions of dollars.

"My customers are mainly artists, businessmen and stars. Most of them are not from Beijing," Fu says, taking a deep drag on his cigarette.

The dramatic transformation in recent decades has created dozens of dollar billionaires in China, but also left millions more languishing at the bottom of the pile in a country still marked by grinding poverty among the rural masses.

With its new five-year plan for 2011-2015, the leadership in Beijing hopes to damp down mounting public concerns about soaring inflation and the perception that many of China's 1.34 billion people are being left behind.

Wang, from the central province of Henan, is one of the less fortunate. He is one of the more than 200 million migrants who have left their homes in the countryside in search of a better life, but end up as second-class citizens.

"I don't make much money -- about 1,500 yuan ($230) a month, without an allowance for food or lodging," Wang told AFP at his home in the city centre.

"If I don't do odd jobs, I can't take care of anything here -- my kids' schooling, food, accommodation.... One person has to have two jobs. Only then can we get by."

Wang -- wearing a heavy cloth jacket with threadbare sleeves, his hair in complete disarray -- lives with his wife and two teenage sons in a room with crumbling walls that measures about 10 square metres (107 square feet).

He has no "guanxi" to give him a leg up.

As the family does not have a Beijing residency permit, the children cannot go to school for free in the capital and so spend much of their time in Henan, far from their parents.

Husband and wife cram into the bottom bunk, with only an electric radiator for heat -- their sons sleep above them when they are in town. The ceiling does not appear to be water-tight, while the family's belongings are stashed in a small chest of drawers.

The Wangs prepare meals on a hot plate. There is no shower or toilet. The surrounding roads are unpaved and the family pays 350 yuan a month in rent. The neighbourhood will soon fall victim to the wrecking ball.

"Life is difficult," Wang says with a sigh.







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