The cost of manufacturing toys in the Shenzhen special economic zone of China

This paper examines the problems and costs involved in the transfer of production facilities from Hong Kong to the Shenzhen special economic zone of China. This is done via a case study in the production of toys. The payback period needed to recover the costs incurred in the transfer of different types of plant are calculated. The production unit cost for a toy is also examined and compared to that of producing the same product in Hong Kong. Costs appear to favour Shenzhen, but there are many nuisance problems of a general management nature that come up when trying to operate in a socialist country such as China. Some of these problems are also discussed.