China: factory wages to rise 9%, survey
Wage pressures in China show no sign of easing.
Manufacturers operating in the Pearl River Delta (PRD) in southern China, for instance, said labour shortages and pay rises will see manufacturing wages accelerate 9.2 per cent this year for migrant workers, according to an annual employment survey by Standard Chartered Bank. Continue reading »
China: a pay dispute goes viral
Clad in a blue plaid shirt and speaking with a rural accent, Miao Cuihua trips over her words as she demands unpaid wages, her “blood and sweat money” for toiling on a construction project.
Miao is certainly not the first migrant worker in China to complain about unpaid wages, but her act of protest has probably been seen by more of her fellow citizens than any other salary dispute in history. Continue reading »
The myths about China pharma
Big pharma often waxes lyrical about why it makes sense to do more and more R&D in China: the size of the market; the need to be close to that market (and learn about the diseases that affect it particularly badly); and the local talent pool.
According to a study out this week from McKinsey, Healthcare in China, 80 per cent of global life science groups will be conducting R&D in China and other emerging markets by 2016. But it’s worth debunking a few of the myths about Chinese pharma R&D. Continue reading »
China: rising costs push products online
By Kathrin Hille and Patti Waldmeir
It is no secret that it is no longer that cheap to make things in China. But now, it is becoming expensive to sell there, too.
Neiman Marcus, the US multi-brand luxury retailer, plans to enter China via e-commerce rather than traditional bricks-and-mortar. And it is not the only one. A report due to be published on Friday shows that the spiraling cost of doing business in the country is driving other foreign companies with new products away from traditional retailers and into the arms of e-commerce firms. Continue reading »
Vietnam: agility can beat scale
Even as sharply rising wages push some manufacturers to expand outside of China, it is unlikely to lose its reputation as the world’s workshop any time soon. The country’s vast scale and superior infrastructure and supporting industries see to that.
Yet big is not always best. In addition to offering lower wages, countries like Vietnam can capitalise on their smaller size to win new manufacturing business at a time of global economic uncertainty. Continue reading »
[video] Can Made in China stay competitive?
While rising wages and tightening credit lines have led some manufacturers to move outside southern China, others are choosing stay and move up the value chain to remain competitive. Josh Noble visits two factories that have been operating in Guangdong for over 30 years to find out how they are shifting up market.
Guest post: Bangladesh in 2012 – opportunities, with less global gloom
By Ifty Islam of Asian Tiger Capital Partners
The macro uncertainties for 2012 remain daunting. The prospects for the next phase of the eurozone crisis still looms large, while an ongoing Chinese real estate crash (and a prospective banking crisis) and the sharp decline in the Indian Rupee suggest that Asia EM may not be the counterbalance growth optimists would hope for. US consumer confidence has been surprisingly resilient but fiscal reality and housing gloom is likely to re-assert itself.
So the balance of risks remains for the global economy to slow significantly more than consensus. Against this backdrop, investors may wish to consider increasing exposure in the less correlated frontier markets such as Bangladesh. Continue reading »
Minimum wage hike leaves few smiling
The new year begins with what ought to be good news for workers in southern China.
First, Shenzhen announced that it would raise local minimum wage from Rmb1,320 ($210) a month to Rmb1,500, the highest in the country. Then, a Guangzhou newspaper reported that cities in Guangdong province were planning to raise wages by 13 per cent on average this year.
The reaction from factory workers is cynical. Continue reading »
Guest post: The end of ‘Made in China’?
By Ben Simpfendorfer of Silk Road Associates
It’s the change the world was waiting for – factories are finally leaving China, pushed out by rising wages and other costs. Politicians in Brussels and Washington can finally point to stories of factories returning home.
Yet, while China’s title as the world’s most competitive exporter is slipping, the economic fallout will be different to that popularly expected. Continue reading »
A word from Foxconn’s Gou
By Jane Rickards in Taiwan
How could Taiwan’s Hon Hai Precision Industry (Foxconn’s parent company), the main manufacturer of Apple’s popular iPad, create so much success for Apple and yet still fail to enjoy Apple’s rate of profit growth?
Are Hon Hai’s shrinking profit margins testimony to the power of Apple’s branding? The negative impact of poor labor conditions, a deadly factory explosion and a string of workers’ suicides last year for Hon Hai and its parent company Foxconn Group? Terry Gou, the chairman of Taiwan’s Hon Hai Precision Industry, says no. Continue reading »
Foxconn, worth less than toilet paper
Ouch. First the suicides. Then the plant explosion. Now Foxconn International, the scandal-hit Taiwanese company that toils in the shadow of high-profile clients such as Apple, is being stripped of its blue-chip status after it was dropped on Tuesday from Hong Kong’s benchmark Hang Seng index. Continue reading »
China: the end of cheap? Not so fast…
…says Anthony Chan at Alliance Bernstein. The view that rising wages in China herald the end of a decade of ultra-low inflation in the west has a fatal flaw – the value chain.
While China is indeed exporting inflation through its labour intensive export industries, like footwear or textile manufacturing, as China gets better at making more advanced goods, the net effect remains disinflationary. Continue reading »
Chinese wages: exporting inflation
By Sun Yu of FT China Confidential
Chinese workers, makers of cheap goods for the world, are standing in the way of a global battle against inflation as their rapid ascent up the income ladder boosts the prices of exports to western consumers. The structural underpinnings behind the swelling wages of Chinese workers may portend a phase of exported inflation that runs for several years (see chart after the break).
According to a China Confidential survey in seven provinces, shortages of manufacturing labour are now present almost everywhere, even in rural counties that were once famous for supplying coastal factory towns with migrant workers. Continue reading »
Guest post: China bubble will burst
Rising wages threaten to burst China’s investment bubble, writes Peter Tasker, a veteran Asia market watcher, in Tuesday’s FT.
Tasker, who saw the Japanese boom-bust unfold 20 years ago, sees history repeating itself today in China. He says the China story “is simply another version of the “new era” thinking that has characterised every investment mania from the South Sea bubble to the dotcom frenzy”. Continue reading »
How to stop Chinese workers striking: take them on holiday
While Japanese corporate giants like Toyota and Honda grapple with disgruntled workers across China – Eisai, Japan’s fourth-largest pharmaceutical company, has come up with a novel idea that has kept its Chinese staff happy and off the picket lines: take them on holiday.
Under Chinese law, foreign companies pay 3 per cent of annual profit into a welfare foundation to benefit employees, Eisai said. However, Eisai uses a chunk of that money to take its sales, administration and factory employees on annual trips overseas.
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