Labor Supply in China

Special to Global Toy News from Wai Or, Managing Director of Longshore Limited,a Hong Kong based OEM manufacturer and sourcing agency.

China government has just raised the minimum wage almost 20% on May 2010. Most of the people think this raise won't affect us at all as in fact we are paying each worker more than the minimum each month. But indeed, if the salary base increase, the OT wages will be much higher and hence it has great impact to our production cost.

6a0133ec87bd6d970b0133efbaf9f6970b-200wiThis is not the only difficulties that manufacturers are encountering, the China Government also controls the electricity supply during peak season, i.e. not allowing to use electricity on some specific days each month. Thus we have to apply our own electricity generator which cost more than the supply.

All of these Government policies have upset many manufactures in the eastern part of China so we see the current trend is to move towards to the Northern part of China.

Furthermore, One Child Policy was introduced in 1978, all families are only allowed to have 1 child so parents will invest all they have on child. Consequently, child born after 1979s are too fragile and too vulnerable to stand any pressure and they have their own mentality towards works, thus it is very difficult to manage them nowadays.

The alternative is to apply automation in production so it can reduce human intervenes and can be worked continuously 24/7 and it is good for dangerous tasks and precise processes too! However, this requires huge initial cost investment.

Longshore Ltd.

One thought

  1. I wonder what the Min wage is in China since the 20% increase ?
    This again adds to the attraction of placing manufacturing operations in other Asian Countries which is great for countries like Vietnam, who already provide OEM manufacturing services at increasingly competitive pricing levels. With these continued increase’s in China based cost, one would expect many toy firms looking closly at their expenditure whilst evaluating current production plans they may have with Chinese based firms.

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