Labor Costs Grew Too Fast, Pressure On Foundry Shoe Enterprises Increased Sharply

Since May 1st this year, Guangdong has adjusted the minimum wage standard for enterprise employees, and the new standard has increased by an average of 21.1%.

At this point, enterprises in the Pearl River Delta began to face the most serious "wage surge" in the past 30 years.

It is understood that by this "wage surge", 70% enterprises passive pay rise, 30% companies choose to take the initiative to raise wages.

In the face of the widespread wage surge in the Pearl River Delta region, some scholars expressed concern that enterprises also threatened to "move inland" and "move abroad".

With all sorts of doubts, reporters went deep into different enterprises to conduct interviews.

Labor costs have increased too fast, and pressure from OEM enterprises has increased sharply.

In Ganzhou, Jiangxi, the world's top 500 enterprises, 80 thousand square meters of Flextronics workshop are carrying out final equipment modulation.

At the end of August, as the first "world top 500" enterprise to come to Ganzhou, Flextronics's power supply line will be put into use.

As the world's second largest electronic contract manufacturing service provider, Flextronics has 25 factories in China, all of which are in economically developed areas such as Shenzhen and Zhuhai.

The Zhuhai Doumen Industrial Park, which has an area of 1 million square meters, is the largest production base of Flextronics in China. 60 thousand employees worked in the prime of life.

However, the "labor shortage" and "wage surge" that spread throughout the Pearl River Delta have been putting pressure on management.

In July this year, the basic salary of ordinary employees in the park has been raised from 935 yuan to 1100 yuan. Meanwhile, the increasingly scarce land resources also restrict the further development of Zhuhai's Flextronics.

By comparison, the minimum wage in Ganzhou is only 660 yuan, and the cost of manpower alone has dropped by 40%.

Fu Jun, vice president of Flextronics Zhuhai Industrial Park, said that the Ganzhou plant will recruit about 10 thousand workers early next year, and another 30 thousand projects will be planned.

However, Flextronics does not think that their project in Ganzhou is "relocation", and even denies that enterprises are investing in pfer because of the pressure of higher salary.

"Flextronics enterprises in Shenzhen, Zhuhai and other places, Ganzhou is only a small part of the entire production kingdom.

This is a partial trapezoidal adjustment made according to the requirements of customers and our development needs.

Fu Jun said.

But it is precisely because of this small step "adjustment" that the foundry enterprises in the Pearl River Delta smell something different.

Following the massive relocation of Foxconn in Shenzhen, the British plant in Dongguan, which is the foundry of HP in Dongguan, is expected to enter mass production in November. Another Dongguan foundry firm Delta Electronics has also reached an agreement with Hunan to set up new production projects in Chenzhou.

"The wage surge has brought about too much labor cost growth. This is the first time I feel the pressure of wage payment. I am considering whether to move to the central and western regions. Anyway, the workshop is rented."

Zhang Yisheng, the boss of the garment manufacturing factory in Kaiping, Guangdong, said that labor costs accounted for 60% of the total expenditure of enterprises. The profits of producing 400 thousand ski suits are equivalent to 60 thousand profits in 1998, and the newly issued minimum wage standards have increased by about 20% at a time, which has further reduced the already small profits.

He thinks Jiangxi, Sichuan and other places labor force is cheaper than Guangdong, the pportation is also convenient, intends to pfer to these places.

"For many enterprises in Guangdong, relocation is an expansion."

The Ministry of foreign trade and economic cooperation of Guangdong believes that most enterprises choose to manage their headquarters and manage them.

Comparing all kinds of factors, it is difficult to pfer to the outside world.

"Recently, Chuang Xin has adjusted the staff salaries of the two production lines in Guangzhou and Shenzhen, of which the adjustment of Guangzhou staff has reached 25%."

Wu Zhenchang, the leading shoemaking enterprise in Guangdong and chairman of Guangdong Chuangxin shoes industry, understands that if we want to maintain a large scale of shoe production in Guangdong, it is absolutely necessary to increase the wages of workers.

Wu Zhenchang introduced, 20 years ago, he gave ordinary employees monthly salary of 200 to 250 yuan.

At that time, if these workers stayed in their hometown, they could only earn 80 yuan to 90 yuan a month, and the price difference was very large, so the workers were willing to work.

Now, even if he gives workers a basic salary of more than 1000 yuan, it does not have enough appeal, because wages in the mainland have risen.

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Wu Zhenchang came from Taiwan in 1990 to set up factories in Panyu, Guangzhou. It was one of the first shoe manufacturers to move the production line to the mainland.

He made use of the original single channel and domestic cheap labor force to build a large number of large customers such as Nike, and developed rapidly in Guangzhou.

Later, he simply shut down the Taiwan plant and pferred all the orders to the mainland.

At the peak of the order, Chuang Xin had nearly 20 thousand employees, with an annual export volume of US $more than 100 million.

And now, his system.

In view of the current state of operation in the Pearl River Delta, Wu Zhenchang believes that the current rate is less than US $30.

However, Wu Zhenchang is somewhat puzzled about whether the enterprise is turning to "inside" or "outside".

A few years ago, Wu Zhenchang also began to represent some brands to expand domestic sales, but the progress was not smooth. At present, it still accounts for less than 10% of the company's sales. It is very difficult for a pure export foundry enterprise to pform into the domestic market.

Wu Zhenchang visited Vietnam and Southeast Asian countries more than once, hoping to pfer some of the production lines to Southeast Asian countries.

The labor cost advantage of Southeast Asian countries is obvious.

According to his textual research, the wage level of Vietnam is only 40% of that of the Pearl River Delta, while other Southeast Asian countries are less than half of the Pearl River Delta and some of them are lower.

Moreover, setting up factories in Southeast Asia can rely on the China ASEAN Free Trade Area to avoid some trade frictions.

However, there are many undesirable places to pfer to the outside world.

"Southeast Asia's water, electricity, pportation, infrastructure and production facilities are far less than the Pearl River Delta, and the business environment is far less than domestic," Wu Zhenchang said.

Whether to leave or stay is to be carefully considered.

Also in Ganzhou, Zhang Huarong, the 53 year old chairman of Huajian international shoe city in Ganzhou, has a little memory of his days in Dongguan.

As the first Guangdong businessman to eat crabs in Ganzhou, Zhang Huarong came to Ganzhou from Dongguan 7 years ago, and built a shoe-making production line.

The labor cost in Ganzhou is cheap, the monthly salary per person is 300 yuan less than that in Dongguan, and the manpower is ample.

The cost of water and electricity in Ganzhou is also much lower. The electricity consumption per kilowatt hour is only 0.68 yuan, while the electricity price in Dongguan is over 0.9 yuan. In Ganzhou, water is 0.9 yuan per ton, while Dongguan is 1.5 yuan.

At first, Zhang Huarong worked hard in Ganzhou, but then he found many disappointments.

Due to the imperfect local industry support, the vast majority of fittings and raw materials have to be pported from Dongguan, and the cost of pportation logistics is increasing.

"In Dongguan, Shenzhen, freight accounts for only 3% of the cost of production, and at least 10% in Ganzhou."

In addition, the lack of skilled skilled workers and experienced managerial personnel also increase the management cost of enterprises.

Zhang Huarong said that after 30 years of development, the Pearl River Delta has formed a complete industrial chain that matches production capacity.

Relocation to the field can, of course, reduce labor costs, but the cost of raw materials matching will also rise.

And the two offset, he did not feel the cost of ease.

At present, the salary increase of enterprises in the Pearl River Delta is mainly due to the fact that the market has made up for the low wages and slow wage growth of the migrant workers in the Pearl River Delta over the years. In the long run, the rising cost of labor in the Pearl River Delta region and the tension of land, energy and various production factors will encourage some enterprises to "pfer" to the areas with low production costs, which is a necessary phenomenon in the market economy.

Ding Li, director of the competitiveness research center of Guangdong Academy of Social Sciences, said.

For many OEM enterprises, pferring to the mainland does not necessarily solve all problems, or even encounter unexpected problems.

For example, Ding Li, a casual wear manufacturer in Zhongshan, Guangdong, pferred to a provincial capital city in Southwest China, and offered preferential treatment in tax policy, land, supporting facilities and so on.

In order to find a cuff button, the purchasing department ran around several counties and cities, and finally had to carry it from Guangdong to the enterprise.

Finally, the enterprise accounts, delays and freight charges, so that the cost of pfer and production in Guangdong almost the same time.

Ding Li believes that, from now on, the Pearl River Delta indeed appears a single enterprise "to go out" phenomenon, but there is no large-scale "industrial chain pfer" trend.

In the market competition, enterprises are not alone, they all need upstream and downstream industry chain matching, and the cost of enterprises is not only labor costs, but also more cooperation costs, logistics costs and other operating costs. Under many restrictive conditions, enterprises must be cautious when they go and stay. "Transfer" may be in line with the development strategy of enterprises, leaving behind to digest costs, and in situ pformation and upgrading may also be able to go out of a new path.