KOTRA held an emergency meeting, 'Countermeasures and Strategies for Changes in the Working Environment of China" on the 18th of June to support the establishment of business strategies for domestic companies.
The meeting was flooded with applications after the final announcement last week and it reflects the high interest for the Chinese labor issue. It covered changes and implications for the Chinese working environment, practices and measures for labor disputes, wage increases and labor shortages.
The consultant to the meeting mentioned that recent Chinese worker's chain suicides in the Foxconn factory in Guangdong and demanding higher wages, starting with the Honda car parts plant strike situation. And he stressed that the 'low-wage period in China' is practically over.
The causes of China's working conditions changes are lack of personnel due to China's One-Child Policy enforcement, awareness of labor rights according to a new generation's increased knowledge and changes in government policy. Especially, since China switched from an export orientation to a domestic consumption economic model. China has induced policy-making to reduce the gap between rich and poor wages and expand domestic demand. For instance, a nationwide minimum wage has been raised significantly including the increment of the minimum wage in Guangzhou is nearly 21.9 percent. In addition the promulgation for "Wage Ordinance," which is the mandatory collective wage bargaining will be driven forward by end of the year. Also implementation of an income doubling plan, including 15 percent of annual wage increases for five years from 2011, has been reviewed.
The meeting concluded the counterplot for the change is as follow: Reduction of human resources through automation equipment, enhancment of domestic markets targeting value-added products, transfer and distribution of the production base in South Asia or mainland of china where the low labor costs are and so on.
Park Ki Shik, Head of Strategic Business KOTRA said "Recent changes in the Chinese labor market implies the end of era which advantaged low-wage China," and, "new strategies such as strengthening the domestic market and facilitating automation are required to cope with the change of China." he added.
