Rising Labor Costs Plagued China'S Small Businesses

The impact of China's rising wages and the appreciation of the renminbi began to be tightly linked in the eastern town of Zhejiang, Zhili.

There are hundreds of small garment factories in the weaving workshop of a viaduct in Beijing. It seems that every enterprise is involved in the production of children's clothing more or less.

Fu Weimin, the owner of a clothing workshop in the weaving, said we had to raise prices to adapt to the rise in costs, and the wages would rise every year.

China's wages have been rising for many years, but because of the shrinking number of young workers in the family planning policy, China's economic rebound is suffering from labor shortage.

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But for China's about 10000000 small businesses, the impact may be even more obvious.

The output value of small enterprises accounts for 60% of China's economy and employment accounts for 80%.

Many small light manufacturing enterprises constitute a highly divided "cluster", especially in the eastern coastal province of Zhejiang.

Huzhou, not far from weaving, is famous for its bamboo products.

The lighters produced in Wenzhou account for a large part of the world and are also known for it.

What they have in common is their low cost labor force, and the low cost labor force is becoming increasingly scarce.

Zhang Xiaobo, an economist and research group of International Food Policy Research Institute in Washington, has an impact on rural development. The cluster based model is labor-intensive.

The real question is whether it can survive in a new environment where labor shortages and labor costs rise.

This is an important period of pition.

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Since mid June, China has loosened the link between the renminbi and the US dollar, and manufacturers relying on export markets have been faced with greater uncertainty.

This year, the renminbi has appreciated 0.75% against the US dollar.

Cindy Wu, sales manager of Dawei zipper limited, said that if the RMB appreciated by 5% or 10%, our business would be difficult to maintain, because this would obliterate China's cost advantage.

Such worries from enterprises are a major reason why the Chinese government has ignored external pressure and is expected to limit the pace of RMB appreciation.