labor cost statistics 10 yr comparison

[ttwjr32]

here is an interesting set of stats comparing the rise of wages in manufacturing here in China

                                         1998                             2008

guangdong                        10,337                          25,249
guangxi                              6,153                            21,181
hunan                                 6,108                            22,188
guizhou                               6,193                            22,224
bejing                                  11,370                          39,076
shanghai                             12,944                           42,311
zhejiang                               8,321                             23,816
jiangsu                                  7,398                            25,688
chongqing                             6,392                             24,131
sichuan                                  6,488                             22,046
inner mongolia                       5,127                             22,352
tibet                                        5,612                            19,486

thought it was an interesting item to post as you can see it has changed a lot over the past 10 years and if it continues to rise
dramatically it will remove the advantage that China has in this sector, by not making them the first choice for companies looking
to manufacture here.


   

[Jason B]

it will remove the advantage that China has in this sector, by not making them the first choice for companies looking
to manufacture here.

I understand what you are saying Ted, so many companies from Australia outsourced to China to make manufacturing cheaper.  When the wages go up where are they going to outsource to then? India I suppose and when their wages rise maybe the business will move back home?  Kind of like a full circle thing.

[ttwjr32]

Jason,

correct for example Apple has i phone items and others made in a plant in Shenzhen were all the people have been jumping off the building committing suicide because of the wages. they make them for 200 and sell to Apple for 220  in the USA it can be made for 300 and sold for 320
but with more being produced during the day so if china ends up rising to like 260 or 280 then they could just stay with the USA firms and forgo
all the shipping charges also. but India is at the point of having better prices for this

[shaun]

Ted,

I just looked at AT&T to see what they are charging for the iphone.  The lowest price is 1000RMB or $149.00US.  I know they have to pay import/export taxes and shipping fees but AT&T and Apple are making a boatload of money on each phone.  I wonder if Americans realize that this is the same place where people are committing suicide over wages.?  I hear since the new iphone has come out they sold over 2 million the first day they came out and expect to sell over 25 million by years end.

[Vince G]

Word has spread of problems with the newest iPhone so sales have slowed up already.

[temur72]

While coastal China is no longer "cheap" it does have the interior which still has cheap labour, Foxcon the maker of the Iphone is moving to western China to take advantage of the cheaper labour.

India, Vietnam, and other potential cheap places to manufacture  have not built up the transportation or power infrustructure that would be required to replace China as a significant source of cheap labour. They will require a massive infrustructure build up first then the factories for cheap labour can move. In that time frame though, China's skills in not only manufacturing, but in development, research and design will improve allowing China to move the value scale.

I expect that the coastal area's of China will have a living standard comparable to that of South Korea, Japan and Southern Europe within 15 years. The central and western parts of China will have standards close to that of Coastal China today. During that time frame though the living standards of North America, and Europe will decrease by at least 15-20%

[Paul Todd]

Beijing releases 2010 salary increase guidelines
 (China Daily)
 2010-07-08


The 2010 wage guideline in Beijing was released on Wednesday, stating an average salary jump of 11 percent.
The wage guideline, which includes an average, upper and lower level, is an annual requirement from the government to enterprises to raise employee salaries.

It stated that all enterprises in Beijing in 2010 must raise wages by between the lower and upper limits of 3 and 16 percent.

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According to the Beijing Human Resources and Social Security Bureau, only enterprises that can prove they were affected by the financial crisis can select a different rate, after negotiation with trade unions, but they must pay at least the minimum wage, which was set in July 1 as a monthly salary of 960 yuan.

Due to the financial crisis, the municipal government did not release a similar guideline in 2009, but in 2008, the increase was 0.5 percent higher than this year for all three levels.This is a result of the GDP increment in 2009 being slower than 2007 by 2.2 percentage points and a reduction in the CPI (consumer price index) by 3.7 percentage points."I am looking forward to my pay rise this year because last year I only got a few hundred yuan more," said Hu Peng, an employee at a foreign accounting firm in Beijing.
Hu said his wage jumped by 30 percent in his second year of work in his company, but 2009 was a bad year.He said some of his colleagues quit in early 2010 but he carried on because he hoped his salary will be better this year.

The bureau also released "human cost" statistics for every industry in Beijing - detailing the complete cost of keeping an employee, including salaries and benefits - as well as wage guides for some specific positions.The banking sector had the highest annual labor cost of 176,771 yuan per person, with the rental and business service industry, such as rental car companies and employment agencies, scraping the bottom at 27,439 yuan.

For specific salary guides, chief financial officers were said to claim the highest annual average at 362,867 yuan, almost 13 times that of a cleaner, the lowest, at 28,249 yuan.
The income gap was reported to be the most significant problem for employees, according to an investigation by the Beijing municipal federation of trade unions.
"We are searching for measures to reduce it and the wage guideline is one such approach," said Huang Wei, director of the labor rights department of the Beijing municipal federation of trade unions.

[Jadams79]

In my old area of the world Wrangler is retooling 2 of the plants in the area to restart production in the US due to the wage increase in China. There is also a couple of other manufacturing plants moving back to the midwest I was reading in a local paper the other day, somewhere around Des Moines if I remember. Lots of rich people seeing $$ going away will gradually return to the US if its cost effective.

[ttwjr32]

as China raises its wages then that might hurt them as far as being so appealing for companies
and then what happens here???  implosion??

India is really putting on a push for western companies at this time.

[temur72]

as China raises its wages then that might hurt them as far as being so appealing for companies
and then what happens here???  implosion??

India is really putting on a push for western companies at this time.

A more balanced growth in China, with the western poorer area's gaining in wages, and living standards. Places like Henan, Hunan and Guanxi will see more development better wages, while the Pearl River Delta area move up the value chain and living standards more comparable to places like Taiwan

[Jimmy]

Wages going up everything going up here in China.
The Chinese want to be like Americans.  Well they are doing a very good job.  History will repeat it always does.
And in 50 or 60 years the Chinese can be stuck in the same hole the US is in.

You get a fat raise in pay say a $100 a week. All of your expenses also go up about $110 a week.  I just don't see how you are better off.

My wife thought we had a lot of money coming in each month. Until I sat her down with me to pay the bills we still have in the US.  All she can say is how is it so much, She is finally starting to understand.

Just like people in the US I will tell them of things that happen here. I love to hear them say. Well thats against the law, or they should sue them over it, or they have violated that persons rights.
They are so narrow minded they don't stop and think of the fact that the whole world is not the USA.
And then of course my favorite about my wife. " well if you have married her just bring her back. The government can't stop you from having a wife."
If people saw it in a Movie it must be real.