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Chinese labor law cuts profits of Taiwan firms

Taiwanese business executives based in China said yesterday that a new Chinese labor law was adding significantly to their cost of doing business, causing some to consider moving their operations.

The law, which went into effect on Jan. 1, increases severance pay for fired workers and requires the assent of Chinese labor unions when people are removed from their jobs. It also gives workers new rights in refusing to work overtime.

The new regulation hits hard at Taiwanese businesspeople, who have invested upward of US$100 billion in mainland ventures since the early 1990s.

Andrew Yeh (葉春榮), chairman of the Taiwan Merchant Association in the southern city of Dongguan, a major center for Taiwanese investment on the mainland, said the new law had raised the cost of doing business for Taiwanese companies in the area by 20 to 40 percent.

"Some companies have started to look for a new country to move to," he said.

Yeh said that it was increasingly difficult for Taiwanese companies to fire workers.

"You need witnesses, recordings and records of censure against an employee to be able to fire the person," he said.

Chairman of the Association Of Taiwan Investment Enterprises on the Mainland Chang Han-wen (張漢文) said another problem with the new law was that it made it difficult to require Chinese employees to work overtime.

"When it is high season, [Taiwanese] companies will need their employees to work overtime to deliver goods on time," Chang said. "If employees are unwilling, there will be problems for companies to coordinate their operations."
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