The Era Of Low Wage In China Is Bound To Draw The End Of High-End Pformation.

"The era of China's low wages has come to a close?"

"China's labor force is no longer cheap?"

"From New York to Tokyo, the time for enterprise operators to worry before has arrived?"

...

Foreign media have issued such questions.

In the past, foreign media seemed never concerned about the situation of Chinese employees who made western food and clothing products, but the Foxconn incident changed the situation.

Foreign media viewpoint

China or losing competitive advantage

The French Le Monde tells a story: Henry Ford, the founder of Ford motor company, is the first owner in history to use assembly line production.

In his later years, he realized that allowing workers to get higher wages could increase the purchasing power of the market and ultimately benefit the enterprises themselves, so he added 2 dollars to each worker.

Today, however, will China's pay rise play such an effect?

In the past ten years, China has been a "world factory", which relies heavily on low labor costs.

However, preliminary findings from Al-ix Partners, a business consultancy, show that China's position as the world's lowest cost component manufacturer has been surpassed by India and Mexico during last year's global financial crisis.

Some economic experts put forward the possibility of slowing economic growth in China.

Huang Yiping, a former chief economist at Citibank Asia, said that the once abundant Chinese labor force was moving towards the turning point of Lewis, that is, the surplus of labor force was disappearing, and wages, consumer prices and inflation began to rise. This trend in China will force some manufacturers to turn to countries with lower labor costs, such as India and Vietnam.

Robert Tigno, a professor at Princeton University, believes that as wages rise, China will lose its competitive advantage.

The Financial Times article says that as wages increase, manufacturers' costs and exchange rate fluctuations may turn the meager profits of manufacturers into naught, China is losing its biggest advantage as a manufacturing export base.

"Foreign land" may end

VOA VOA, China's factory wage increase and global price rise?

Some Western commentators exclaimed: the era of China's "Foreign Capital Paradise" has at least begun.

Broadcasting British Corporation BBC quoted some analysts as saying that this shows that the tolerance of Chinese contemporary workers is limited.

At the same time, it shows that the cheap labor age of China is coming to an end.

But Southeast Asian countries are happy.

The Associated Press estimates that thousands of companies will have to pfer their businesses to low cost countries such as Vietnam.

India media also said that the wage increase in China might be beneficial to India, because senior officials of Foxconn said recently that it might move to two low-cost areas in northern China or to India and Vietnam.

Expert analysis

Cheap labor can never be provided forever.

Zhang Libin, a researcher at the Labor Science Research Institute of the Ministry of human resources and social security, said that China has been at the end of the industrial chain, providing cheap labor for other countries, but with little profit, which in itself is not consistent with the sustainable development of a country.

Economic pformation is a necessary stage in the development of our country. She said that as long as our wages do not rise faster than the rate of labor productivity increase, our enterprises will still be competitive.

We can't always provide cheap labor for the West.

Game winner

"Made in China" has room for advancement.

Lianhe Zaobao commented that western enterprises should only think about labor force.

The threshold and difficulty of entry into Southeast Asian countries lacking mature industrial bases and industrial chains should not be underestimated.

The legal status and social development level of India can not be compared with that of China.

There is no denying that there will be a cruel game between China and Western countries in the price war of "made in China".

The cost of China's labor force can only rise and fall, and Chinese export enterprises can not only do business that does not make money.

At this time, both sides are confident and determined.

It is normal to bring the price of "made in China" up with the increase of labor cost in China.

However, the rise in the price of "made in China" is not a wild demand, but a long process of adjustment until China and the world are fully adapted to it.

Expert analysis

May bring

Analysts at CICC said that if this year's salary increase exceeds the increase in production efficiency, the profit margins of enterprises may be under pressure, because the prices of Chinese export commodities are determined by the international market, and it is difficult for manufacturers to pass on the increased cost.

Next year, there may be a whole new game.

CICC predicts that with the change of recruitment intention, China's 4 trillion economic stimulus plan has come to an end, and the current labor market may cause serious unemployment.

The company estimated that the government's stimulus plan created 25 million temporary jobs in 2009-2010 years, and that once the stimulus measures are over, the number of unemployed people in China's cities and towns in 2011 may reach 40 million.

Stimulating consumption

China or "world market"

"This is the end of an era and the beginning of another era", commented by foreign media.

The Wall Street journal commented that this is a watershed and the wage surge is destined to change the country's economy.

How can it change? If China really loses the title of "world factory", what will it become? The media thinks that, just like the four small dragons in Japan and Asia, China is trying to move towards the high-end value chain with the increasing prosperity of the people, thus contributing to the pformation of China's economic development mode.

Standard Chartered Bank economist Yan Jin said: "this is good news, it will start to promote consumer spending."

Switzerland

According to the French Le Monde, the wages of Chinese workers have increased significantly since 2005, but according to statistics, the average hourly wage of Chinese workers is only 5% of that of Korea and 17% of that of Brazil.

Even if wages increase substantially, it is still one of the regions with the highest cost performance of the global labor force, which will not affect the competitiveness of the products of pnational corporations, but will foster a broader market.

Official statement

China's labor market has potential {page_break}

Yao Jian, spokesman of the Ministry of Commerce of China, said that 63% of foreign capital attached importance to the future potential of the Chinese market; secondly, China's related industries were relatively complete, such as the upstream and downstream industries related to notebook computers, and could find good support channels in China; moreover, there was a large number of high-quality labor markets in China.

At present, China has 6 million university graduates every year, and a large number of graduates of Vocational and technical education.

Transition opportunity

Possible pformation of China's economy

The US Christian Science Monitor reported that Foxconn and Honda, the two major industrial giants, have sharply raised their staff salaries last week, although their goal is to quell their dissatisfaction, but it is an important milestone for China's economic pformation, which means that China is changing from export oriented to domestic demand driven economy.

Rising wages will pose a major threat to low cost shoes, toys and clothing manufacturers. Their profit margins are often only 2%. Such factory investors are generally from China's Taiwan or Hongkong, and have recently moved to countries with lower wages such as Vietnam, Kampuchea and Indonesia.

However, many higher level manufacturers will remain on the coast.

For example, Honda is eyeing the potential domestic market of China, and it is meaningless to migrate overseas.

Economic Advisor

"Low cost, labor-intensive factories will leave, and the companies that the government really wants will stay," predicts Kolb, the head of Drago-nomics.

But even the companies left behind can no longer operate in the way they used to.

"This is a zero sum game between salary and profit," he said. "If wages go up quickly, profit growth is not slowing down or falling."

Expert analysis

Salary increase is an indirect driving force.

Lan Qingxin, an associate professor of the International Economic Research Institute of University of International Business and Economics, said in an interview with this newspaper that in the short term, salary increase will not play a role in pforming China's economy, but in the long run, it will play an indirect role more or less, and will stimulate the pace of China's economic restructuring.