In the news: U.S.-China BIT talks continue, Dongguan's labor market suffers and Nestle rides the e-commerce boom

Economic restructuring hits factory hub

Manufacturing hub Dongguan is quiet these days. The city sprang up between Shenzhen and Guangzhou making everything from toys and furniture to apparel and electronics, putting itself on the global map as the epicenter of China's export boom. Workers on the ground are saying the city is experiencing the worst time ever—small factories shut down after the 2008 global financial crisis, and the larger ones are getting hit now. Rising labor and production costs have already had businesses downsize or close down in the last couple of years. With China shifting to a consumption and services-based economy, lawyers on the ground say that a largely unqualified workforce will lose out in the transition. Officials say that the layoffs are under control (a campaign was launched in Dongguan that replaced 43,684 workers with robots in 2015, reportedly cutting factory costs by 10%) and that the city's plans for high tech will benefit everyone. In the short run, there is no doubt that things will be tough.

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Nestle's China e-commerce boost

After four years of disappointing growth, Nestle SA is seeing its luck turn around in China by focusing on e-commerce and product innovation. The multinational food company's e-commerce business is now more profitable on average than brick-and-mortar retail, Nestle's Greater China managing director said. The company was known to have failed to react quickly to trends like e-commerce and healthier eating, leading Chinese shoppers to shun some of its packaged food offerings. Nestle relaunched products with flavors tailored to local tastes however, and its online revenue in the PRC doubled last year, fueling 6% sales growth to $7.3 billion for the greater China region. It also tied up with Alibaba to unveil 67 products, which are brand new to the market and aren't available in shops, on Tmall.com over the weekend. Hundreds of competitors are already selling Nestle products on Chinese e-commerce sites, and some analysts doubt whether having a flagship store is sufficient to lure customers. In terms of IP, online shopping platforms are generally seen as both a disease and a cure for big brands, which work with the internet firms' IP teams to remove counterfeit links. This involves a lot of repetitive work, and around-the-clock monitoring, which can eat into a company's resources.

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