It uses a more labour-intensive production system than the Japanese firms it competes with to take advantage of low labour costs.

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Because of inflexibility in the labour market and high labour costs, German companies do much of their labour-intensive production abroad, keeping the capital-intensive operations at home.

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In Dongguan, factory managers face the choice of increasing wages (which they have hardly adjusted for years), shifting to less labour-intensive production or moving to areas where cheap labour is more abundant.

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It has happened because rich-world companies have replaced workers with new technology to boost productivity and shifted production from labour-intensive products such as textiles to higher-tech, higher value-added, sectors such as pharmaceuticals.

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With most of the work done by hand without any help from modern technology, its production is a lengthy and labour-intensive process.

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