(Yicai Global) Jan. 27 -- Germany’s Hanning Elektro-Werke, which makes electrical drive systems for motors, inverters, pumps and other devices, is transferring two of its production lines out of China to India due to price hikes on the supply side and other growing expenses.

The relocation should be complete by the end of this month, the firm said recently. The move has been confirmed by the landlord of its factory space in Shenzhen, who said that their lease is up in June.

The plan to move production lines to India is still underway, a company insider told Yicai Global.

Hanning Motors, the firm’s subsidiary in Shenzhen, is still operating and employs around 100 workers. Compensation will have to be paid to those who are let go, although exactly how much has yet to be determined, a member of the finance department told Yicai Global. It is worth noting that Hanning Motors is embroiled in a number of labor disputes with former employees.

It is perfectly normal for companies to adjust their production arrangements across the globe due to rising costs and economic trade frictions, Meng Wei, deputy director of the policy research office of the National Development and Reform Commission, said last year.

While some companies leave, others move in, Xin Guobin, vice minister of the Ministry of Industry and Technology, said earlier. In 2018, 588 foreign-backed factories moved their production out of Guangdong to Southeast Asian countries such as Vietnam, Thailand and Malaysia. But in the same year, 1,918 new overseas companies moved into the economic powerhouse.

Editor: Kim Taylor