Rising Labor Costs in China – How it Affects Manufacturing Exports
Tanya Crossman
There’s been a lot of talk around the world about rising labor costs in China. There is no longer an unending stream of workers prepared to accept the low wages which sufficed in previous decades.
Factories are offering better salaries and improving working conditions in order to entice the workers they need to fulfill production, and still coming up short. These additional costs are being passed onto buyers abroad, and therefore a “Made in China” tag is more expensive than ever.
Here’s a few articles on the subject that we’ve found helpful:
How Rising Wages are Changing the Game in China (BusinessWeek)
Doesn’t China have an inexhaustible supply of cheap labor? Not any longer. From the textile and toy factories of the south to the corporate headquarters and research labs in Beijing and Shanghai, the No. 1 challenge today is finding and keeping good workers. Turnover in some low-tech industries approaches 50%, according to the Institute of Contemporary Observation, a Shenzhen labor research group. Guangdong Province says it has 2.5 million jobs that remain unfilled, while Jiangsu, Zhejiang, and Shandong provinces say they, too, face shortages of qualified workers. “Before, people talked about China’s unlimited labor supply,” says Zhang Juwei, deputy director of the Institute of Population & Labor Economics at the Chinese Academy of Social Sciences in Beijing. “We should revise that: China is facing a limited supply of labor.”
This is not all bad news. Yes, it means the costs for companies exporting are going up, that international buyers will have to pay more for goods made in China. It also means, however, a strengthening of the domestic market. There are opportunities for those importing to and selling in China.
We here at Imports Oriental are very pleased to see worker salaries going up. It may not be good for the bottom line of exporters like us, but it’s good for the workers we all rely on. Factory workers are not as expendable as they once were, which should raise their value and result in better conditions. We’re glad to see the people of China gaining a share of the wealth being created here.
Made in China Remade (Project Syndicate)
Rising labor costs are inevitable. China’s government introduced tough labor laws and a minimum wage in 2008. Recent policies to improve rural economic conditions have slowed the flow of migrants from the countryside. Workers are demanding higher compensation to match the fast-rising cost of living in China’s cities, as manifested in an ongoing and high-profile labor strike at a Honda plant based in Guangdong. Salary was the major point of contention.
One of the reasons for the labor shortage is that some people who once would have traveled to the city to seek work are staying closer to home in the interior provinces, as opportunities are growing there. We’re also glad to see this – it means fewer families split in half, with parents working in the city and children staying back with grandparents to attend school, seeing their parents only once or twice a year.
In a macro view, changes that improve the lives of workers here are good for the country as a whole and, we believe, for those of us who engage in business here.
China’s Rising Labour Costs (Euromonitor International)
The Chinese work force now varies between highly-skilled technical workers and low-level manual labourers, ensuring that all types of labour requirements can be met. This has allowed China to become a major manufacturing centre, with products ranging from textiles, to basic manufacturing and high-end electronic goods.
Manufacturing in China is maturing. While price is one of the major reasons companies choose China for their manufacturing needs, it is not the only reason. Countries such as Vietnam, India and Bangladesh, to name a few, also provide low-cost manufacturing, yet China remains the location of choice for many businesses. China has more to offer than cost.
Rising Labor Costs In China (Fibre2Fashion)
China possess high skill level, and quality fabrics. The country has good familiarity with the American retailers. Whilst these factors are beneficial to them, high import duties, and rising labor costs does not favor them from the views of apparel manufacturers. . .China might not lose its manufacturing base owing to its huge domestic market, but there may be a perceptible shift towards high-end goods.
Other countries may undercut on price when it comes to low quality garments, but China is still the place to source high quality items on a budget.
