AMONG the millions crowding China s railway stations and airports in the annual Lunar New Year trek home are many workers who won t be coming back to their jobs in the workshop of the world.
At the end of a year of rising wages and labor unrest in coastal manufacturing regions, some manufacturers are pulling up stakes and moving to less costly locales in the hinterlands or out of China altogether.
Premium leather-goods brand Coach Inc. said last week it would gradually slash production of handbags and wallets in China and shift to lower-cost countries such as Vietnam and India.
More and more workers in the traditional manufacturing belts in the Pearl River and Yangtze River deltas will be staying back in their home villages in the countryside after the long New Year holidays. Some of them will be taking jobs with those companies moving into the interior.
I won t come back. I want to find a factory nearer home, said He Yingkang, a worker from Jiangxi Province joining the crush at the East Dongguan train station in the Pearl River Delta.
There the environment is better and cleaner ... a lot of people I know are considering moving. Things are also too expensive here.
The seemingly endless flow of migrant workers into the booming coastal provinces about 150 million of them make the annual journey from the interior to the coast is drying up.
At the East Dongguan railway station, migrant workers wheeled suitcases, hefted sacks on bamboo poles and lugged nylon bags bursting with family gifts, bought with those fatter paychecks.
I hope, of course, my wages get higher year after year, said Fan Zhen, a 24-year-old plastics worker heading back to his village in central Henan. I want to work hard and earn more.
While migrant workers have long clamored for better pay in China, last year may have marked a tipping point, when a series of independently organized strikes crippled production at several factories, including Toyota and Honda car plants.
Local governments in many regions responded by raising minimum wages.
This has unsettled the smaller, indigenous factories that make up the bulk of the workshops in the Pearl River Delta, who worry that a fresh round of wage and cost increases could put them out of business.
This month, Gangdong announced they d be raising minimum wages by about 20 percent in several regions of the delta including Guangzhou. The city s new base monthly salary will be 1300 yuan (US$200), the highest in China, when the new wage rates take effect March 1.
It ll impose tremendous pressure on the manufacturing sector, especially the labor intensive industries, said Clement Chen, an honorary president of the Federation of Hong Kong Industries and a veteran industrialist in the region.
It s not just Hong Kong firms, but Taiwanese, South Korean and Japanese firms will all be facing these pressures, said Chen who expects payrolls to rise by up to 20 percent.
Rising wages are a double-edged sword for the workers, now caught in a spiral of wage-price inflation. This may also accelerate the movement of workers inland and accentuate labor market imbalances.
Many firms facing rising wages and production costs, along with labor shortages in coastal regions are planning to move labor-intensive production out of China, such as Coach.
Shenzhen-based Taiwanese-run Foxconn, China s biggest manufacturer with a million workers churning out gadgets including iPhones and iPads for Apple, has started to shift production inland with a few giant new factories, taking entire supply chains with them.
The effect can be seen on labor intensive light industries such as in textiles, handbag and shoemakers as well as electronics, said William Lo, an analyst at Ample Capital. These manufacturers may choose some cheaper cost countries such as Vietnam and India.
Higher-end industries and goods requiring advanced production techniques, swift turnaround times and sophisticated supply chains, however, were likely to remain in China for now, Lo said.
Rapid urbanization and economic development in China s interior has helped drive up wages and reduced the incentives for workers to uproot and seek work in coastal factory hubs.
The migrant workers now certainly have a greater number of options than they did, say, just a couple of years ago, said Geoffrey Crothall of China Labor Bulletin. Southern China and Guangdong are no longer the only show in town.
Some recruitment centers in the Pearl River Delta see acute labor shortages when factories resume production in February after the New Year break.
I m 1,000 percent sure the factories won t be able to find enough workers, said Liu Hong, a manager at the Longguan human resources market in Shenzhen, one of the region s largest. There will be a shortage of millions, he said.
Some Chinese officials aware that Chinese leaders advocate raising rural wages to reduce income inequality and speed China s transformation into a consumption driven-economy seem willing to let low-margin industries wither away.
A moderate increase in the minimum wage will bolster the momentum of industrial transformation and upgrading, Ou Zhenzhi, head of Guangdong s labor and social security bureau, was quoted as saying by the Southern Metropolis Daily in comments this month. (SD-Agencies)
