France Says China Can Maintain At Least Five Years Of Cheap Labor.

The French Le Figaro reported on June 11th that the price increase in China slowed down to 7.7% in May and 8.5% in April.

However, coping with inflation is still the main objective of Beijing. Because of rising wages, appreciation of the renminbi and rising prices of raw materials, China is likely to be surpassed by other emerging countries such as Vietnam and India in terms of competitiveness. This is the conclusion of a research report of the China Chamber of Commerce and industry that China is losing its attractiveness so as to benefit its neighbors.

The situation in Guangdong, China, is worrying.

Guangdong province is close to Hongkong, which accounts for 1/3 of China's foreign trade.

In November last year, Tomy, a toy maker in Japan, said its production in China would drop from 90% to 40% in three years.

The new production base in Thailand and Vietnam will take the baton of Chinese suppliers.

Meanwhile, OLYMPUS announced that it will invest 62 million euros to build a new digital camera factory in Vietnam.

The two production plants in Shenzhen and Guangdong will pfer part of their production to the new production line.

According to the Asian Footwear Association (AFA), 1/4 of shoe manufacturers have shifted their production base to Southeast Asia, Kampuchea, Burma, Vietnam or India.

200 to 300 factories in 1000 shoe factories in Guangdong are said to have been closed.

A person in charge of the Guangdong Textile Industry Association said that the appreciation of the renminbi and the cancellation of some export tax rebates made exports difficult. Some manufacturers were not optimistic about how to continue in such a context.

As in other areas, the rising prices of raw materials have caused pressure on the manufacturers.

In addition, the new labor law of China came into force on January 1st this year. The minimum wage rose and the cost of employing workers increased.

On the other hand, the development of China's inland provinces has made some workers work locally and do not have to run for more wages to the coastal areas.

The manager of a toy factory in Dongguan said, "we are recruiting workers all the year round."

China's Guangdong Province announced that the minimum monthly wage increased by 8 euros to 86 euro / month. The wage difference between regions was relatively large, and the rest of the province was 50 euros.

Green, chief economist of Standard Chartered Bank of Shanghai, pointed out that "China's wages are still low in general. According to our estimates, China's wages are only 3% of the US wages and 25% of Mexico's wages".

He believes that China can maintain at least five years of cheap labour.

Although most US businesses believe that China's competitiveness is decreasing, 83% of them still intend to stay in China, not just to sell their products in China, but now the Chinese market is inexhaustible.