Japanese digital camera manufacturer Olympus has decided to combine its two factories in China into one before 2009 to reduce costs.

According to local media, the company says that China's new Labor Contract Law will be enforced in January 2008 and by that time it can not easily dismiss employees or hire temporary workers, which will lead to an increase of its operational costs. So in order to reduce costs and transfer risks, it will close one factory in China and move the facility to a new location in Vietnam.

Olympus currently has two factories in China, one of which is located in Fanyu District of Guangzhou and the other in Nanshan District of Shenzhen. The Guangzhou factory has about 4300 employees and the one in Shenzhen has about 7000. Media reports do not say which of the two factories Olympus will close.

It is estimated that Olympus will make a total of 11.8 million digital cameras in 2007, which ranks it fourth in the world's digital camera market.