Foxconn wage hike triggers domino effect
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Foxconn's doubling of workers' wages has already started to affect other companies. The personal computer firms and made-to-order electronic makers have shown concern over the salary hikes and have started to actively look for coping strategies.
According to National Business Daily, some electronics makers have had to raise employees' basic monthly wages because their workers' strikes stopped production after Foxconn made the announcement to increase wages Sunday.
When wages are increased, cost of production also rises. Reducing the production cost is the top priority for these made-to-order electronic makers.
It is reported that many firms intend to set up plants in regions with lower labor costs, such as inland cities, India or Vietnam, if they are forced to provide higher wages in the prosperous coastal regions.
A survey conducted by the Federation of Hong Kong Industries showed that of the 80,000 Hong Kong enterprises in Pearl River Delta (PRD), about 37.3 percent plan to move most of the production lines out of PRD, and more than 63 percent of firms intend to leave Guangdong Province.
Jimmy Kwok, chairman of the Chemical and Pharmaceutical Industries Council, the Federation of Hong Kong Industries, said, "Some medium-sized and small enterprises may have to close their factories in the face of the increasing labor costs, since they are unable to move plants to other areas because of capital shortage."
The clients of the made-to-order enterprises, like Apple and HP, are also aware of the pressure brought by this round of labor wage hikes. An official from a Chinese mainland enterprise said, "Ultimately, the part of cost increase may be transferred to the hands of consumers."
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