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Is the era of cheap Chinese labour almost over?
Page last updated at 15:59 GMT, Sunday, 13 June 2010 16:59 UK
By Chris Hogg
BBC News, Shanghai
Foxconn's Chinese workers have had a pay rise A string of suicides at the Foxconn plant in southern China that makes iPads and iPhones for Apple has focused attention on wages and conditions there.
See full article here: http://news.bbc.co.uk/2/hi/business/10294850.stm
Why a pay raise for workers signals key shift for China's economy
Workers at Foxconn and Honda won hefty pay raises this week. Higher wages will help Beijing move China's economy away from relying on masses of unskilled workers and toward higher-value manufacturing.
http://www.csmonitor.com/World/Asia-Pac ... -s-economy
Perhaps the question being asked or implied is where are we going to get all our cheap junk from once China rises & has no big need or desire to export stuff anymore just to make money to serve themselves?
Maybe US companies will start bringing the work back to the US, if the Chinese start demanding too much money, and coupled with the high cost of transport makes it cheaper to manufacture in the US again. Or am I fooling myself? Will they just move to another, yet cheaper labor market?
I don't see this developing world/high labor-low tech manufacturing model changing anytime soon. It's just a matter of time before China climbs the technology value chain though. China is already becoming a world class leader in areas such as high speed railway development (GE signed a contract with one of China's largest HS railway builders for the LA to SF line)
Even though the writing is on the wall in regards to labor there's still a ton of developing world countries such as Vietnam that can fill the gap for different industries.
What makes China attractive is that the PRC is accommodating to foreign investment and has streamlined the manufacturing to some extent where it's easy to build a factory and train workers. Also corruption isn't quite bad enough where the government officials will steal your factories and investment wholesale like what happens sometimes in countries like Malaysia or Indonesia. This is why you don't see multinationals setting up factories in Somalia or something.
Plus Chinese workers generally speaking aren't imbeciles so labor productivity tends to be high. So even if the labor costs go up some companies will still play ball simply because there are some overhead expense concerns where China still comes out on top.
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