A series of strikes over the past two months have been a rude wake-up call for the many foreign companies that depend on China's low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets such as the iPad.
Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers now are demanding a bigger share of the profits. The government, meanwhile, is pushing foreign companies to make investments in areas such as technology that it believes will create greater wealth for China.
Many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and a few are even resuming production in the West.
"China is going to go through a very dramatic period. The big companies are starting to exit. We all see the writing on the wall," said Rick Goodwin, a China trade veteran of 22 years, whose company links foreign buyers with Chinese suppliers.
"I have 15 major clients. My job is to give the best advice I can give. I tell it like it is. I tell them, 'Put your helmet on, it's going to get ugly,' " said Goodwin, who says dissatisfied workers and hard-to-predict exchange rates are his top worries.
Beijing's decision to stop tethering the Chinese currency to the U.S. dollar, allowing it to appreciate and thus boosting costs in yuan, has multiplied the uncertainty for companies already struggling with meager profit margins.
In an about-face mocked on The Daily Show with Jon Stewart , Wham-O, the company that created the Hula-Hoop and Slip 'n Slide, decided to bring half of its Frisbee production and some production of its other products back to the U.S.
At the other end of the scale, some in research-intensive sectors such as pharmaceutical, biotech and other life sciences companies are reconsidering China for a range of reasons, including costs and incentives being offered in other countries.(2 of 2)
Jones Lang LaSalle, Other Companies Add Solar to Service and Product LinesTyson returns to profitability