Labor worries for the toy industry

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As I reported earlier, rumors continue to circulate that many workers may not return to the toy factories in southern China after the Chinese New Year which begins February 3, 2011 and will end on the 18th.   During the holiday, workers traditionally return to their home provinces to visit with their families.  These home provinces can be a long distance away. 

It seems that these rumors may be grounded in a Chinese national and local policy to move toy manufacturing from southern China to the north.  I have heard from an informed source that some cities in northern and central China will be actively working to keep their citizens home.  They want them to to work in new local factories that have been backed by loans from the Chinese government.  These factories are designed to house labor intensive industries like toys.  

This reality could negatively impact south China labor availability seriously by the spring of 2011.  As a result there will be pressure to re-locate manufacturing to the north over the next couple of years, which is what the government wants.   In the meantime, this could mean troubles for existing toy factories as they struggle to find a labor supply and to keep wage increases in check. 

Toy companies and retailers may find that it will take longer to make and ship goods this coming year.  In fact, there could be shortages as factories struggle to work with available assets.  This will bear watching very closely.

If you have any information on this matter that you would like to share with readers please write in and let us know.  This is a very important issue for the global toy industry.

3 thoughts

  1. Factory orkers would coming back to Southern China because wage are almost the highest and living standard not much more expensive than their home town. I think the situation at SZ city (not the 2nd boarder) would be worser because the living standard there is really high.
    The rumor came earlier this Lunar since Chinese New Year is on early Feb. Weather is bad this year – lots of snow in the North; cold weather in the South.
    One of the main reason is the coach fare is much expensive than last year due to diesel cost higher than gasoline in China, don’t you believe this?

  2. This rumor surfaces every year. It’s true that a labor shortage was a reality in 2009 (in southern China), but lack of orders fixed that in 2010. Like every other low-cost labor market, China’s workforce is gradually changing, and toys and other lower-tech, lower cost factories will gradually see labor cost going up, as workers move to better paying jobs.

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