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High labour cost may lead to massive downsizing - Experts
16 Sep '08
1 min read
China has been known for its cheap labour availability for many years and the country's manufacturing industry is one of the most labour incentive sectors.
However, since the implementation of new labour law in 2008, Chinese companies are beginning to loose the advantage of cheap man-power.
This has become a huge burden on the industries who are already suffering from several other international problems like slowdown of the US economy, rise in raw-material prices and RMB appreciation.
Today, an employer with 200 workers has to spend more than 1 million yuan in salaries. Though the salary of workers is high, it is not helping them, because many manufacturers are bearing heavy losses and are struggling to survive.
Analysts believe that in an attempt to stay afloat many enterprises might opt for drastic measures like downsizing, leaving many workers jobless.
Besides, this ups-and-downs in textile industry, is directly affecting about 20 million workers, and indirectly have an impact on over one hundred million Chinese farmers.
Experts say that the low-cost labour advantage of China will be completely non-existent within next five years.
Thus, they say, that Made-in-Vietnam and Made-in-India products as well as that from other South-Asian nations will slowly replace China in the global market.
However, since the implementation of new labour law in 2008, Chinese companies are beginning to loose the advantage of cheap man-power.
This has become a huge burden on the industries who are already suffering from several other international problems like slowdown of the US economy, rise in raw-material prices and RMB appreciation.
Today, an employer with 200 workers has to spend more than 1 million yuan in salaries. Though the salary of workers is high, it is not helping them, because many manufacturers are bearing heavy losses and are struggling to survive.
Analysts believe that in an attempt to stay afloat many enterprises might opt for drastic measures like downsizing, leaving many workers jobless.
Besides, this ups-and-downs in textile industry, is directly affecting about 20 million workers, and indirectly have an impact on over one hundred million Chinese farmers.
Experts say that the low-cost labour advantage of China will be completely non-existent within next five years.
Thus, they say, that Made-in-Vietnam and Made-in-India products as well as that from other South-Asian nations will slowly replace China in the global market.
Fibre2fashion News Desk - China
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