Manager Huang Hanxin, 68, is fighting the new wave of costs on all fronts. He heads Sha Wan Dian Ji, one of the world's largest producers of hair dryers, which produces some 7 million units a year. The workers, most of them young women, assemble hair dryers that will be sold under the brand names Revlon, Conair, Babyliss and Vidal Sassoon. They put together the plastic housings at an almost acrobatic rate, with 70 women assembling 3,000 units a day on each assembly line.

The factory once achieved a 15-percent profit, but today that figure has dropped to between 3 and 5 percent, says Huang, adding that the revaluation of the yuan against the dollar has been seriously detrimental to the company. Besides, says Huang, more stringent environmental protection laws have added 3 to 5 percent to the cost of production. The European Union recently demanded that manufacturers reduce the content of hazardous substances like lead or cadmium in electronic devices. This, says Huang, means buying different and more expensive materials.

The buyers of imported goods from China are finding that their prices have jumped considerably, especially for ordinary items like clothing and shoes. Top purchasing managers from German trading companies and manufacturers confirm that "made in China" is no longer synonymous with "unbeatably cheap." Sources at German mail-order giant Otto say that they have noticed "significant price hikes," especially for textiles. Kaufhof, a major German department store, has also seen steadily rising prices for Chinese-made products. Company sources say they are "concerned" about the situation. Indeed, the situation is a source of concern for anyone who does business with China, especially small and mid-sized companies.

Chinese suppliers have raised prices across the board, says Mario Moeschler, a marketing executive with Winora, a bicycle manufacturer based in the Bavarian city of Schweinfurt, who says the price hikes vary between 5 and 10 percent. "We have been informed of the price increases," says Moeschler, who receives three or four such letters from China every week.

The explanation for the price increase is always the same, he says: The invoice amount is higher, unfortunately, because steel and aluminum have become so incredibly expensive. Such price hikes are especially detrimental to bicycle manufacturers, who get many of their parts, like frames and forks, from China.

Of course, prices for raw materials have also risen everywhere else in the world. But what is making products from China so much more expensive now is the enormous increase in labor costs. An annual increase of 10 percent and more for wages and salaries has now become the rule.

Nowadays a Chinese engineer earns about €20,000 ($31,000) a year, about twice as much as at the beginning of the decade. In addition, it is growing more and more difficult to find -- and retain -- such qualified workers.

It comes as no surprise that 94 percent of German companies with business relations in China expect wage costs to continue rising, as a survey by the management consulting firm PricewaterhouseCoopers (PwC) and the Federal Association of Materials Management, Purchasing and Logistics has shown. According to the study, the average price saving with Chinese products is now only about 10 percent. Companies say it is not unusual for them to even take a loss.

"As quality standards rise and the level of automation increases, and as time constraints become more restrictive, sourcing products from China is becoming less and less attractive, from a price standpoint," says PwC expert Klaus Schulten.

Importers started looking for alternatives long ago. "Eastern Europe and India," the PwC study concludes, "will become substantially more important as procurement markets in the medium term." It seems that the caravan is moving on.