The Pearl River Delta Survey: 80%. 90% Of The Workers Who Started The Subcontract Work And 23% Of The Workers' Wages Increased.

As the financial crisis is gradually dissipated, labor costs are rising. What is the situation of the foundry enterprises in the Pearl River Delta? Where is the road?

Recently, the Chinese manufacturers' Federation of Hongkong (hereinafter referred to as the Hongkong manufacturers' Association) and the Hongkong TDC have provided South Korea's recent survey report on the Pearl River Delta port enterprises.

The report shows that since the beginning of this year, the labour shortage in the Pearl River Delta port enterprises is more than 20%, and the labor cost has increased by 17%, which has become the biggest factor affecting the profit of the port enterprises.

To this end, most enterprises intend to upgrade by upgrading technology, purchasing equipment, R & D products, etc., and more than 30% of enterprises intend to move out of the PRD and move to neighboring areas or provinces.

In addition, some large manufacturers are preparing to pfer some low-end production procedures abroad.

OEM still dominated.

The survey of Hongkong manufacturers' Association involves 222 Hong Kong enterprises, of which 160 are currently engaged in production business in the Pearl River Delta. The research reports mainly focus on 160 of these 160 industries, mainly from electronics, clothing, plastics, metals, textiles, food and other industries, and 60% of them adopt sole proprietorship, and are concentrated in three major regions of Shenzhen, Dongguan and Guangzhou.

65% of them went to local investment for the first time from 1985 to 1999.

From the perspective of business operation, the port enterprises are divided into three basic types, including OEM, ODM and OBM.

Among them, OEM (original equipment production) refers to manufacturing products according to customers' design, specifications and designated brands; ODM (original design and production) refers to self designed, confirmed by customers, and then using the brand designated by the customers to manufacture products; OBM

(original brand production) is the use of its own brand to produce or sell.

The survey shows that OEM is still the leading business of the Pearl River Delta port enterprises.

Most of the 159 Hong Kong companies surveyed (83%) involved O.

EM businesses, which involve ODM and OBM businesses, also account for 49.7% and 37.7% respectively.

If OEM is divided into stages of ODM and OBM development, there are 60, 48 and 49 enterprises in the OBM, ODM and OEM stages, 37.7%, 30.2% and 30.8% respectively, and the three development stages are almost equal.

However, compared with the survey data of Hongkong manufacturers' Association in 2001, it can be found that although the number of companies involved in O BM business is in the number of companies or O

BM business accounted for an average increase in sales volume, but a slight increase.

In this regard, manufacturers will conclude that, after 10 years, the real progress of Hong Kong businessmen in brand business is not significant.

To a certain extent, it also reflects that brand building is a complex and arduous project.

Labor shortage exceeds 20%

According to the Research Report of Hongkong manufacturers' Association this year, especially since April, labor costs have increased as compared with the rise in raw materials, appreciation of the renminbi and buyers' pressure, which is the biggest factor affecting the Pearl River Delta port enterprises.

At the same time, the two surveys conducted by Hongkong's TDC in April this year drew the same conclusion.

According to the above 160 Hong Kong enterprises, the average size of employees in the Pearl River Delta is 991, slightly lower than the previous two years.

According to the weighted score, the most important factor that troubles these enterprises is the rise of labor costs, followed by rising raw material prices, additional costs and risks caused by labor regulations, risks of changes in the RMB exchange rate, buyers' pressure and labor shortages.

If labor costs rise and the two scores of labor shortages are added, we can see that the impact of labor factors is far more than other factors.

Of the 160 Hong Kong enterprises, 150 or more than 90% of the Hong Kong enterprises are experiencing labour shortages.

If the rate of labour shortage is estimated, the total number of workers who are short of work is 29517, accounting for 20.8% of the total number of employees of 160 Hong Kong enterprises in the Pearl River Delta, that is, an average of 197 workers per enterprise.

According to a survey conducted by the Hongkong Trade Development Council in the first half of 2010, more than half of the companies surveyed indicated that they or their suppliers had encountered labour shortages in the mainland in the past 6 months.

Labour costs rise by 17%

Labor costs are accompanied by rising labor costs.

According to the Hongkong TDC, wages in the PRD increased by an average of 17% over the past 6 months, increasing total production costs by 4% to 6%.

Since the beginning of this year, some coastal provinces and cities in China have raised the minimum wage successively.

In Guangdong Province, where the Hong Kong enterprises concentrated, the minimum wage growth in cities from 2004 to 2008 ranged from 25.7% to 35.6%.

Since May 1, 2010, the minimum wage in Guangdong has increased again, with an average growth of 21%.

The Hongkong Chinese manufacturers' evaluation is: "in one breath, we recovered the extent of freezing in the past two years."

The sudden increase in wages has increased pressure on many Hong Kong enterprises.

According to a survey conducted in the first quarter and second quarter of Hongkong's TDC, the average wage level of the respondents who experienced the increase in labour costs in the mainland rose by about 17% in the past 6 months.

In the cost structure of different industries, the proportion of wages varies.

Take the garment industry as an example, wages account for about 20% to 30% of the total production cost. If other factors remain unchanged, the average wage increase in the past 6 months is 17%, plus the increase in social security costs, resulting in a total production cost rising 4% to 6%.

In fact, over the past few years, China's labor costs have continued to rise, which is higher than the average wage level of most emerging Asian regions.

According to information provided to Nandu by the Hongkong Trade Development Council (TDC), according to the survey conducted by the Japan Trade Promotion Agency in 2009 on the business situation of Japanese companies in Asia, the average wage for Japanese workers paid to Chinese workers is about 4000 dollars per year, while Vietnam's level is about 2000 dollars, and the state of Bangladesh is about 1000 dollars.

Nevertheless, wage increases and the development of the mainland economy have made workers who are away from work in the Pearl River delta look forward to a further rise in wages.

The Hongkong TDC survey found that the Pearl River Delta enterprises are facing new pressures. They need not only raise wage levels to maintain stable workforce, but also have new problems in human resources management.

30% enterprises consider relocation

As labor costs rise, in the past year, especially during the financial crisis triggered by the financial crisis, the Pearl River Delta port enterprises are also under increasing pressure from overseas buyers.

This has made export enterprises dominated by Hong Kong enterprises, and their already small profits have shrunk.

In the view of the Hongkong manufacturers' Association, the above surveys and data undoubtedly prove once again that the myth that Chinese laborers have unlimited supply of low wages has been shattered since last year, and that the industrial system with labor intensive and export oriented industries must be adjusted.

How to adjust? Most enterprises first consider upgrading.

According to the Hongkong manufacturers' Association, the proportion of various industrial upgrading strategies adopted this year to upgrade technology, adopt advanced machinery and equipment, design R & D products and so on are mostly 10 to 20 percentage points higher than that of last year.

In addition, the proportion of enterprises pferred to trade and relocation reached 14 respectively.

.4% and 33.1% were significantly higher than 6.6% and 23.5% in 2009.

Of the 160 enterprises surveyed by the manufacturers, 53 planned to move, 24 of them moved to the less developed areas of the Pearl River Delta, 6 moved to the environmental protection industrial park, and 17 said they would move to the central and western regions of the mainland, such as the central and western provinces adjacent to Guangdong.

In the face of rising labor costs, in addition to relocation, Hong Kong enterprises are rising another trend, that is, adjusting some production arrangements.

According to the Hongkong TDC investigation, some large manufacturers, such as footwear production leader Yuyuan industries, are planning to pfer some of the popular low shoe production to inland areas and other Asian countries.

As for shoes with high value-added and high technology level, they are still produced in the Pearl River Delta region.

Huang Xingbiao, senior economist at Hongkong's TDC, analyzed that as China turned to produce high value-added products, some of the low value-added production activities were pferred to other Asian emerging suppliers, which could be seen as an extension of the regional production chain.

observation

The strength of Chinese labor is still strong.

It is worth noting that even though the cost of labor in China has risen, and as mentioned above, is higher than most of the newly emerging regions in Asia, almost no port enterprises intend to move abroad as a whole.

In this regard, Huang Xingbiao, senior economist of Hongkong's TDC, analyzed that although China's labor costs are relatively high, its technological level and production capacity are also better.

It is estimated that the average output value of each worker in China's manufacturing industry is significantly higher than that in Vietnam, Bangladesh and Kampuchea.

The growth of labor productivity in China's manufacturing industry ranks first among new Asian production bases.

In addition, unlike Vietnam and other places, depending on imports, China has many developed industrial clusters with abundant supply of upstream and downstream products. For example, the wholesale market with many closely linked PRD can serve as a platform between different producers, retailers and customers to reduce their time and cost.

A Hongkong garment buyer who purchases products in Asia points out that Southeast Asian countries can supply large quantities of simple products with low cost.

However, if it is a well-designed, highly skilled, ordering less batch and shorter delivery period, China is still the preferred producer, especially in the Pearl River Delta.