High productivity in technology industry a threat to multinationals

A McKinsey & Co survey reports that the high level of productivity among China's technology companies threatens multinational corporations, reports the Wall Street Journal. Whereas before the industry developed mainly mid-price products, it now produces high-end products long controlled by foreign investors.

The McKinsey survey also indicates that the productivity of China's privately-owned companies is high because worker productivity levels match or surpass those of foreign companies.

Although the annual production rate for foreign company workers in China is still higher than the rate of domestic company workers, in recent years the rates have been steadily rising. In 2001, domestic companies yielded annual profits of Rmb226,000 per worker and foreign companies gained Rmb501,000 per worker in comparison. In 2005, however, the gap narrowed considerably, with foreign company workers yielding Rmb439,000 and domestic company workers yielding close to Rmb426,000.