REFILE-INSIDER-China's factories on the move

Jul 11 (Reuters) - Wage hikes and labour shortages are forcing companies to rethink their China strategy, and while some are moving inland, others are choosing to relocate outside the country.

Hong Kong-based Lever Style employs more than 7,000 workers in the southern Chinese city of Shenzhen and makes shirts for top brands including Calvin Klein and Banana Republic. The company is restructuring its manufacturing model to cope with soaring labour costs, which it says are up about 50 percent in dollar terms.

"In the short-term we want to move the moderate price point items towards cheap locations in northern China, western China, Bangladesh and Vietnam," says Stanley Szeto, CEO of Lever Style.

Data shows China's share of U.S. imports of labour-intensive goods is declining. U.S. apparel imports for the first few months of 2011 show higher rates of growth in Vietnam and Indonesia, when compared with China, indicating sourcing is flowing into other markets.

But companies moving operations out of China still face challenges in their new locations.

"The difficulty in competing with China is on speed. China is by far the most efficient, quick-to-market, including in price and quality, if you add it all together," says Bruce Rockowitz, CEO of sourcing company Li & Fung, which exports to firms such as Wal-Mart and Abercrombie & Fitch.