2011-01-17

Wage hikes coming to Guangdong

Guangdong pay pledge to drive out HK factories
The chairman of the Hong Kong Small and Medium Enterprises Association, Danny Lau Tat-pong, said Guangdong's wages would jump between 25 per cent and 30 per cent this year as a combined result of worker shortages, the need to retrain people, yuan appreciation and more requirements for workers' social welfare and insurance.

"We have even been subsidising the workers' canteen more because meat and vegetables are getting more expensive," said Lau, who runs a curtain-wall plant in Dongguan. "Factories have either to upgrade or move out of the province."

The other factor expected to impact on the future of Guangdong's exports is a stronger yuan, which Lau expected would appreciate by 5 per cent this year.

He said the number of Hong Kong factories would dwindle sharply in coming months, citing government estimate that less than 40,000 Hong Kong-owned factories now operate in the province compared with roughly 56,000 at the end of 2009.

"Some will be forced out of the business, some will be sold and some will be relocated to remoter parts of the country or even overseas."
One company is already moving production to Bangladesh; I'm sure Vietnam will also capture some business leaving China.

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