Mutual benefits

Industry analysts say Foxconn's decision to shift operations is a signal of a larger trend of labor-intensive businesses looking to move from "expensive" coastal cities to populous inland areas.

A study released in June by the Federation of Hong Kong Industries showed that 37 percent of the 80,000 Hong Kong companies with bases in the Pearl River Delta are planning to transfer part or all of their production operations.

More than 60 percent are prepared to move away from Guangdong province, said the federation report.

Foxconn's growth in Shenzhen has helped form a strong manufacturing industry value chain and contributed considerably to the city government's financial revenue, said Wei Dazhi, director of Shenzhen University's industrial economy center.

However, as the city gets more crowded (with 17,510 people per square kilometer, the city has the highest population density in the mainland) and as resources begin to become depleted, authorities are determined to encourage industrial upgrading through innovation-oriented, high-tech industries.

Meanwhile, inland cities are welcoming such a transition to create new economic growth engines. Both Henan and Sichuan are major sources of the country's huge army of migrant workers.

In such areas, industrialization and urbanization is still at a very early stage and the establishment of major manufacturing companies, such as Foxconn, will speed up that process, said Shi Pu, a professor at Henan University of Finance and Economics.

The demand for related services, such as logistics, can also foster new industries and create job opportunities, he said.