Regulations May Help Improve China's Image

Back in the 80s, Japan was labeled the villain whose cheap goods were driving a trade deficit and unemployment in the United States. Then those socks, t-shirt and household goods industries found even cheaper labor and costs--first in Thailand, then Malaysia, Mexico, India and eventually China--as multinational businesses jumped from country to country seeking the best deals. And now, the exodus of manufacturing plants from China to cheaper labor countries such as Vietnam has begun.

Once the epicenter of low-cost manufacturing, China now has implemented new labor laws and environmental regulations and is changing tax incentives in an effort to pacify citizens and global critics and encourage an exodus of factories from an area long considered the world's shop floor. For example, employers are now required to offer employment contracts, a social security program and overtime pay. In addition, the Chinese government is pressing multinational corporations...