And the shoe industry sets the tone. Hundreds of companies have already had to close their factories in China's Guangdong province. In return, hundreds have launched new operations in countries like India, Bangladesh, Indonesia, Vietnam and Cambodia. Ironically, the German shoe industry sometimes runs into old acquaintances there: Often it is the Chinese who develop factories in these countries.

Thomas Schneider, 52, has also set up shop in Vietnam, the promised land of the international shoe industry, where most of his customers -- global brands from the Adidas Group to Timberland -- are increasingly having their shoes manufactured. Schneider inquired with countless industrial parks before finding an area near Ho Chi Minh City, formerly known as Saigon. Beginning in August 2009, 200 workers will be tanning leather for Schneider at the new facility.

Schneider, who learned the tanning business in Reutlingen near Stuttgart, had almost put down roots in China. He developed a leather factory in Taiwan and, in the early 1990s, followed the leather industry to China, the latest low-wage paradise at the time.

Schneider now operates one of China's largest tanneries in Guangdong, where his company, ISA Tan Tec, developed environmentally friendly production systems and provides exemplary occupational health and safety, thereby revolutionizing the notoriously polluted and unsafe tannery industry.

But now his model factory has run into difficulties. Last year, the government in Beijing withdrew tax breaks for export goods like leather. Beginning in April, ISA Tan Tex began paying close to 18 percent of the selling price in duties to supply shoe factories abroad. In the past, the surcharge was only a little over 2 percent.

General price increases -- due to higher wages, a record inflation rate of more than 8 percent and the yuan's rising exchange rate -- have also complicated matters. But the worst thing in China, says Schneider, is uncertainty, because officials in Beijing plan to decide on the level of tax breaks on a year by year basis. This makes it impossible for any company to plan reliably for the future.

Because of high costs, Schneider has already reduced his workforce in Guangdong from 1,000 to 800 workers. Until the planned factory in Vietnam is ready for operation, he is already having leather produced in Vietnam by another manufacturer. After all, his customers are not going to wait for him.

Schneider is also planning his new location near Ho Chi Minh City as a showcase factory. Although he is only required to pay workers in Vietnam just half as much as workers in China -- about €42 ($65) a month -- the shoe companies' strict requirements on environmental protection and safety are just as applicable there. Schneider has no compunctions about complying, because his environmentally friendly production methods are in fact his strongest asset in the fight against his competition.

Schneider even plans to reduce the temperature in his factory by using a heat pump. In addition to lowering CO2 emissions, such techniques also allow Schneider to reduce his electricity costs. Prices are also going up in Vietnam, where inflation is close to 20 percent. During a fact-finding visit, Schneider heard stories from other bosses about how tough the competition for qualified personnel is. After Tet, the Vietnamese New Year, thousands of Vietnamese didn't return to their jobs -- they switched to companies that pay more.

But Schneider has no choice. The next stage in the game is Vietnam -- at least until his customers in the shoe industry decide it's time to move on to the next low-wage country.