American Media: Western Enterprises Worry About The Wage Increase Of Chinese Workers

This year, China and its major low-cost competitors in Asia Salary increase And benefit the workers in these countries. but Trade Companies and Western retailers are facing greater cost pressure, and prices in the United States and Europe are becoming higher.

Hong Kong Li&Fung Group is the largest trading company that purchases Chinese daily necessities for American retail chains. President Le Yumin said on Tuesday that the average cost of goods in the first five months of this year increased by 15% year on year. The heads of other commodity companies also encountered similar or more serious problems. Faced with double-digit wage growth in China, many company executives have flown to Vietnam, Bangladesh, Indonesia and other low wages Asian countries, looking for suppliers to replace China. However, prices are rising all over the world. Driven by China, wages in many of these countries are also growing rapidly or even faster. These buyers have little choice.

Luxury brand Coach announced in January this year that by moving its production lines to Vietnam and India, the company's dependence on China will drop from 80% to less than 50% within five years. But Vietnam's wage growth rate is not lower than that of China, while India has always been a headache for large manufacturers. Le Yumin said that India's infrastructure was "dilapidated", and the labor problems, including government regulations, made it impossible to build a Chinese style factory with tens of thousands of workers. In addition, many garment enterprises are still worried about purchasing outside China. "Everyone is worried about quality. It takes years of training for a factory" to meet various specific requirements, said Bennett Model, president of Cassin, an American fashion designer.

Le Yumin said that through the use of social networking sites, workers in developing countries around the world are more pay conscious, which increases the pressure on enterprises to raise wages. He and other company leaders predict that in the next five years, factories that are excessively concentrated in southeast China will gradually spread to all parts of China. Workers are increasingly reluctant to spend three days by means of transportation from inland to coastal factories, especially when domestic demand growth creates more employment opportunities for inland. Even the recently opened high-speed railway line failed to enable enough migrant workers to return to coastal factories. In addition, the wage increase in inland China is even higher than that in coastal provinces, and the wage gap with the latter is gradually narrowing.

Many companies choose to stay in China for their own reasons: this is the region where their sales are growing fastest. China has become the largest market for many products, such as automobiles and steel. Producing and selling in China can help enterprises avoid facing the policy of "buying Chinese goods", anti-dumping investigations and other import restrictions. They can also be protected from exchange rate fluctuations.

Wage growth and a strong currency make Asia less attractive to high value-added industries such as western automobile manufacturing. But few insiders mentioned the possibility of returning these relatively labor-intensive manufacturing industries to the United States or Europe. Le Yumin also holds a negative attitude towards this statement. "There is no labor force engaged in such industries in the western world," he said. "For 'Made in Italy', the workers are old now, and no new workers can compete."