Why the 2013 Minimum Wage Hike in Shenzhen, China's First Tech Hub, is Not That Scary

The hi-tech manufacturing hub around the city of Shenzhen, in southern China, is set to be hit with a rise in the minimum wage of 13.3 percent in 2013. According to Wired, that could cause something of a shockwave through gadget manufacturers in that area - Taiwanese OEMs like Foxconn [1], for example, which does the final assembly of so many Apple products - that might result in inflated costs for the phones, tablets, and other gadgets we love to buy.

But after weighing up the figures and considering the changing manufacturing landscape in China, we don’t think this’ll make too hard an impact on consumers. For one, Shenzhen saw its minimum wage go up in February this year already, by 13.6 percent, to stand at 1,500 RMB (US$236) per month. The anticipated hike for 2013 shouldn’t be a surprise, as the China Daily points out that, “Local governments are required to raise their minimum wage levels at least once every two years.” If it does rise 13.3 percent next year, probably again in February during Chinese New Year, then it’ll stand at 1,700 RMB ($268).

Other factors come into play, too. Shenzhen is not quite the manufacturing hub that it once was, and it seems that the international media haven’t yet followed the trail of gadget guts to newer tech hubs in, say, Jiangsu province in eastern China - where a great deal of Samsung, Apple, and Nokia components are made - or to much poorer inland areas where land and labor costs are significantly lower. And so minimum wages in other regions of the country are more of a factor than ever before.

Taiwan’s Foxconn (LSE:HHPD; HKEX:2038; TPE:2354) has blazed this trail, and it has already had a profound - and positive - impact on one town in central China’s Henan province where Foxconn’s two-year old plant now accounts for 48 percent of the province’s total exports. And others have moved too. Acer was making about 30 to 40 percent of its notebooks in the municipality of Chongqing by the end of last year; Philips opted for Chengdu in neighboring Sichuan province; others, such as Dell, are shifting to central China too, and are even looking towards ‘shipping’ by train directly to Europe from China’s amply hilly bosom.

So, the Shenzhen minimum wage hike is good for its factory workers - so long as greedy local landlords don’t screw them for extra rent once again - in an area that’s definitely not cheap to live in. But labor costs in other areas of China need to be taken into account as well, and so gadgets shouldn’t see noticeable or alarming price hikes in the coming year.


  1. The rumor that Foxconn might double its own wage levels by 2013 is indeed just a rumor. That would take its base salary way beyond the 1,700 RMB per month mandated by local authorities.  ↩

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Mercy pleas for Indonesia death row inmates as families arrive
    Mercy pleas for Indonesia death row inmates as families arrive

    Families of foreign drug convicts set to be hauled before the firing squad in Indonesia issued desperate mercy pleas on Saturday, as relatives and diplomats descended on a prison island ahead of the looming executions. Consular officials were arriving at a town near Nusakambangan, the high-security prison island where its executions are carried out, and where all of the death row convicts are now congregated. The foreigners -- two from Australia, one each from Brazil, France and the …

  • United States seeks access to Philippine bases as part of Asia pivot
    United States seeks access to Philippine bases as part of Asia pivot

    The United States has asked for access to Philippine military bases in eight locations to rotate troops, aircraft, and ships as Washington shifts its forces to Asia and as China expands its military presence in the South China Sea. U.S. Defense Secretary Ash Carter, in a speech in Arizona, has outlined Washington's next phase in its Asia "pivot", deploying its most sophisticated destroyers, bombers and fighters to the region. The Asia "pivot" has already seen U.S. Marines rotating through the …

  • China's island-building to loom large at SE Asia summit
    China's island-building to loom large at SE Asia summit

    China's creation of new island footholds in contested seas will hover over a Southeast Asian summit that has become an annual test of the region's nerve in standing up to its massive neighbour. The South China Sea hot potato drops this year into Malaysia's lap as the rotating chair of the 10 member Association of Southeast Asian Nations (ASEAN) and host of Monday's meeting. ASEAN states Vietnam, the Philippines, Malaysia and Brunei claim parts of the strategic South China Sea, but Beijing …

  • Philippines, China trade accusations over sea threats

    MANILA, Philippines (AP) — The Philippines accused China of aggressive maneuvers against its reconnaissance plane and fishermen in disputed seas where Beijing has stepped up construction of artificial islands, but China reiterated its claim on the strategic waterways. …

  • Indonesia orders execution of Mary Jane, 9 others
    Indonesia orders execution of Mary Jane, 9 others

    Indonesia has ordered preparations for the execution of 10 drug convicts, including Filipina Mary Jane Veloso, as the Philippine government filed yesterday a second appeal for judicial review of the case to save the maid from death by firing squad. The Attorney General’s Office (AGO) of Indonesia released an official letter dated April 23, instructing prosecutors to prepare for the execution of 10 convicts, the Jakarta Post reported yesterday. The execution would be conducted after the …

  • Business groups back K to 12 program
    Business groups back K to 12 program

    The government’s K to 12 program adding two more years to basic education received support from various business groups yesterday. However, they urged relevant government agencies to deal with issues regarding the implementation of Republic Act 10533, the Enhanced Basic Education Act or K-12 Law. In a statement, business groups led by the Philippine Business for Education (PBEd) said RA 10533 is a milestone piece of legislation that intends to bring the Philippines up to par with the rest of …

  • Happiest nations: Phl ranks 90th
    Happiest nations: Phl ranks 90th

    Switzerland is the happiest country in the world, while the Philippines placed 90th, according to a global ranking of happiness unveiled in New York on Thursday. Switzerland was followed closely by Iceland, Denmark, Norway and Canada. The 2015 World Happiness Report is the third annual report seeking to quantify happiness as a means of influencing government policy. The United Nations published the first study in 2012. …

  • Asean leaders want binding sea code with China
    Asean leaders want binding sea code with China

    Southeast Asian leaders will seek to speed up plans for a binding code of conduct with China governing behavior in the disputed South China Sea at a summit next week, Malaysia’s foreign minister said Friday. Foreign Minister Anifah Aman said a massive flow of Muslim Rohingya refugees from Myanmar to neighboring countries will also be discussed at the two-day summit of the 10-member Association of Southeast Asian Nations, which starts Monday. Anifah said leaders are expected to raise concerns …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options