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Comment by shimon_e | Hacker News Reader

The inland factories are not the same type of low value factories that covered the coastal regions. Those factories depend on low labour costs and low logistics cost to be able to produce tons of junk; to be sent all around the world and sold for cents in stores all around the world. The inland factories came from major investments made in building sophisticated factories and supply chains inland.

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Its a bit more of both I think. The SMEs* on the coast are moving production inland to take advantage of human and natural resources. They haven't gone into villages yet, but definitely into cities like Chongqing, Wuhan, Lanzhou, Urumuqi, the supply chains follow (which are also SMEs).

The big blocker to this movement so far have been coastal export zones, where import tariffs on supplies are waved as long as the production must be exported, which is why we in China pay so much for things "made in China." But as China produces more for its own domestic economy, that becomes much less relevant.

* Small and medium scale enterprises, usually private, compared to the massive SOEs (state-owned enterprises) and JVs (joint ventures).

I'm talking a lot less professional than SME. More like the equivalent to a lemonade stand in the manufacturing world. Those businesses won't make it inland without some logistics miracle. If you are involved you know what I mean.

I'm not sure, like-kinds of small business always cluster together to solve logistic problem. The side effect here is that its a race to the bottom since all of these guys are doing pretty much the same thing. Its not sustainable even on the coast, I think.

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