China to continue as the world’s factory, but at a “proper” price
23/01/2014
The report on January 23 confirmed that labour costs in China continue to rise. In 2012, in the Pearl River Delta region, wages went up by 20% and the local authorities in many parts of the region, host to large numbers of garment factories, are already committed to increases of 40% in pay levels between 2011 and 2015.
However, it said availability of infrastructure, including access to major ports in Shenzhen and Hong Kong, can help compensate for this. The report concluded that China is likely to continue to make products such as garments for many global brands, but suggested the days of doing this cheaply are over.
It gave an example of the city of Dalang, near Dongguan, which recently took advantage of government funding to invest in 40,000 computerised knitting machines to ease local manufacturers’ struggle to find and pay for workers. A spokesman for the local authority told the FT that the new technology can do the work of 200,000 people.
William Fung, chairman of global sourcing company Li & Fung, told the newspaper: “The era of China subsidising the world’s standard of living by providing really affordable goods, between 1979 and 2009, is basically over. People will [now] pay what others would probably say is a proper price.”
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