Enterprises In The Pearl River Delta Are Facing "Wage Surge" Or Will Aggravate Northward Migration.

Foxconn announced that since June 1st, it has adjusted the salaries of operators, line leaders and team leaders outside the factory area and group outside Shenzhen to raise the overall salary level, with a minimum increase of 30%.

Just before the announcement of Foxconn's pay rise, Foshan's Honda Auto Parts Manufacturing Co in the South China Sea, which has attracted much attention as a result of the shutdown, has also announced a pay increase of 24%.

The two pieces of news have attracted the attention of the domestic manufacturing industry. The industry expects that the PRD manufacturing industry will face collective salary expectations in the wake of the events of Foxconn and Honda.

What is the expected salary increase for the PRD enterprises? Insiders say that the strategic layout of labor-intensive enterprises represented by Foxconn in recent years suggests a new round of industrial relocation and expansion.

The "herd effect" of pay rise

As the world's foundry carrier, Foxconn's overall welfare benefits were higher than that of the general manufacturing enterprises in the PRD.

However, this year's suicides have led Terry Gou to go to Longhua, Shenzhen for systematic rectification.

For the reason why Foxconn employees frequently jump off buildings, many media and experts have pointed the core of the problem to the distribution of wealth, and the wages of workers are low. Foxconn has been criticized.

Foxconn is the main supplier of brands such as apple, DELL, HP and so on. The public's accusation of Foxconn has also been shifted to these brand enterprises. The media has reported on a bloody apple, denouncing the sweatshops and criticize the labor exploitation behind Apple's high profits.

And in June 1st, many people held demonstrations at the Taiwan headquarters of Hon Hai Group (Foxconn's parent company), denouncing the death of employees in Foxconn factories in the mainland.

On the media open day held by Foxconn in May 26th, Terry Gou was nervous and sweating. He was under the pressure of many parties. Two days later, Foxconn announced the average salary increase of 20% for mainland workers.

In June 2nd, the unexpected news from Foxconn was a decision to raise 30% for ordinary employees.

Since the beginning of this year, the prices of various kinds of food have increased significantly, and the cost of living in the PRD has increased.

In the near future, the Foshan Nanhai Honda Auto Parts Manufacturing Co, which was beset by the "downtime" incident, announced a 24% increase in wages for employees in May 31st. Earlier, Kangshifu's factory in Guangzhou Development Zone raised the minimum wage from RMB 870 to 1100 yuan.

Some experts said that the herding effect of leading enterprises' pay increase will soon appear, which will play a leading role in the whole industry wage.

Foxconn's 30% pay rise has also exerted a strong pressure on competitors. If colleagues do not follow the promotion, it will be difficult for them to recruit employees or retain them.

Industry experts predict that the wave of wage increases in the manufacturing industry may start with the electronics or automotive industry.

The pay surge may also be supported by the government.

According to reports, Shenzhen plans to temporarily promulgate the minimum wage standard after 6, and began to implement it in July 1st.

The reporter learned from the relevant officials of the Shenzhen Municipal Bureau of human resources and social security that Shenzhen intends to make a press release in the near future and adjust the minimum wage standard.

The specific proposals will not be disclosed for the time being.

Wang Min, director of the Shenzhen Municipal Bureau of human resources and social security, said that the adjustment of the new standard would not be less than 10% of the minimum wage in the SAR, that is, no less than 1100 yuan.

As early as this spring, the Ministry of human resources and social security of Guangdong province raised the minimum wage standard in the whole province.

Guangzhou raised its minimum wage to 1100 yuan in May 1st.

Cost forced enterprises to move northward

In May 25th, when the eleventh jump of Foxconn took place, Terry Gou was receiving an economic and trade delegation from Sichuan.

In fact, Foxconn, which has long been in the national layout, is now trying to expand its factory northward.

In response to a reporter's question in May 26th, Cheng Tianzong, a special assistant to Shenzhen with Terry Gou, said: "reducing costs is the normal behavior of enterprises. Do you know why Foxconn set up branches in Chongqing and Chengdu?" the implication is that saving labor costs is a basic principle of Foxconn's business strategy.

Correspondingly, in October 2009, Foxconn Chengdu industrial base project settled in Chengdu high tech Zone, with a total investment of US $1 billion.

In May this year, Foxconn (Chongqing) 80 million global laptop production base was formally put into operation, and the industrial base will expect to use 100 thousand local labor force.

According to the report of the Hongkong TDC on the continued increase in the pressure on the rise in the price of mainland exports, ~5 visited 500 Hong Kong companies in January this year. The survey shows that the average salary in the Pearl River Delta has increased by 17% in the past six months, plus the corresponding social security, and the total production cost has increased by 4%~6%.

Guo Zhenhua, director of the Hongkong Federation of industry, said that in recent years, many low-end, two high one (high energy consumption, high pollution and resource) enterprises moved away from the Pearl River Delta, instead of factories in North Guangdong, Jiangxi, Hunan and other places where production costs are relatively low.

However, some enterprises with insufficient strength may be unable to move factories because of the collapse of small businesses.

Coincidentally, under the pressure of multiple factors such as labor shortage, Delta Electronics, located in Dongguan, has been exploring various cities in the mainland since 2000, looking for more suitable investment areas.

This year, the new factory project of Delta Electronics in Chenzhou, Hunan has been signed, and there are also the surrounding manufacturers supporting the Delta Electronics.

A survey of Hong Kong businessmen in the Pearl River Delta region at the early stage of the Hongkong Federation of industry shows that 37.3% of the 8 Hong Kong enterprises in the Pearl River Delta are planning to move all or part of their production capacity away from the PRD, and more than 63% of them plan to move out of Guangdong.

Good time for investment in Central China

Due to the continuous upgrading of labor costs along the coast, it has become a major bottleneck for Taiwan's electronic subcontracting enterprises. Therefore, large enterprises including Hon Hai, quanta, and Inda have speeded up to move to Chongqing.

With the increase of the cost of employment, the labour intensive enterprises in the Pearl River Delta will move northward or will further intensify.

This is seen as a golden opportunity for inland cities.

Since the beginning of the Pearl River Delta in the beginning of the "shortage of migrant workers", these investment teams from Hunan, Jiangxi, Henan and other places are especially active. Almost every week, there are all kinds of investment promotion meetings in Guangzhou, Shenzhen and Dongguan.

At the time of the press release, all the staff of the Shenzhen office in Sichuan were preparing for the "West fair". This brand exhibition, regarded as the highlight of Sichuan's investment promotion, has become an important platform for the current relocation of enterprises.

According to incomplete statistics, only more than 100 cities in Dongguan are stationed.

In the first 5 months of this year, nearly 40 inland cities have been introduced to Dongguan. The total amount of investment is estimated to exceed 100 billion yuan.

After the wage surge, the long term foundry economic model maintained at a low price is being tested, and the traditional economic growth party in the Pearl River Delta has gone to the cross.