How have increasing labor costs in China affected the manufacturing industry?

Many China commentators have been focusing on the increasing labor costs in China, and noting how many China-based businesses are now struggling in the face of rising wages. The China-ASEAN free trade agreement (FTA), which was signed off in 2002 and came into effect more than three years ago, offers a way out by allowing companies to reposition manufacturing to other low cost areas of Asia, yet still be able to service the China market via the duty-free imports permitted under the FTA. With ASEAN including the vibrant economies of Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, together with smaller regional players such as Brunei, Cambodia, Laos and Myanmar, this single agreement is reshaping the coordinated development of China-ASEAN manufacturing.