By now, you’ve probably heard quite a bit about the wage landscape in China and how foreign companies are paying more for labor (funny how we don’t hear anything coming out of China about mainland-owned and government enterprises upping wages, too — perhaps workers are a bit scared to protest and demand more in these situations?). But what does the changing landscape imply for Western companies? A recent Reuter’s article does a good job of summarizing some of the changes in a FAQ format. It’s a must-read for companies with operations in the region, and those sourcing from Chinese suppliers, and especially those owned and/or operated by Western JVs.
According to the story, the recent strikes show that a “copy-cat chain of strikes” is indicative of “a workforce that is becoming bolder, and that may prompt some companies to preemptively raise wages … Younger migrant workers are becoming more demanding about job conditions … They are also gaining more bargaining power as the flow of potential job seekers tightens, because of wider opportunities and fewer entrants into the workforce as the population ages.” As a result of escalating wages and wage demands, Reuters suggests additional companies might “move production from crowded coastal regions to cheaper inland parts of China, or to other low-cost manufacturing countries such as Vietnam.”
Any company doing business with Chinese suppliers should also pay more attention to labor-drive supply risk…
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