In the wake of mounting pressure caused by the 30 percent pay raise introduced by Shenzhen-based Foxconn Technology Group (富士康), many Taiwanese businesses in China say they cannot afford to follow suit, though many promised to improve human resource management.
Most companies also promised to respect the minimum wage, which is slated to rise in Beijing next month.
“The Foxconn incident did put some pressure on businesses here,” chairman of the Taiwan Merchant Association Shenzhen (深圳台商協會), Sobby Huang (黃明智), said by telephone yesterday.
However, any pay rises will have a negative impact on business profitability, which usually makes company owners think twice, he said.
Instead of increasing pay, Taiwanese companies in Shenzhen are more concerned with establishing a reasonable level of remuneration for overtime, he said.
Another difficulty they face is a shortage of skilled workers, most of whom are increasingly reluctant to work far from home in coastal cities, said Huang, who is also the chairman of Kingtec Group (井得集團).
As a result of shortage of talent, reasonable pay hikes for some companies are inevitable, he said, declining to second guess the Chinese government’s plan to hike the minimum wage by up to 20 percent.
Beijing City Government on Thursday announced a 20 percent increase in the city’s minimum wage to 960 yuan (US$141) from 800 yuan per month, effective July 1, local media reported.
Before Beijing’s announcement, the minimum wage in Shanghai, Zhejiang and Fujian provinces had risen by between 13 percent and 46 percent, to between 700 yuan and 1,120 yuan per month, since March this year, the report added.
Oliver Ho (何希灝), chairman of Zhangzhou Taiwan Investment Enterprise Association (漳州市台商投資企業協會), however, said he welcomed the minimum wage raise.
“The [minimum wage] hikes are more or less in line with the hike in commodities prices and will help our employees maintain their daily lives,” Ho said on the phone.
However, he added that few businesses in Zhangzhou face pressure to increase wages from the Foxconn incident, as the local labor market is not too tight.
Ho said he believed businesses in Dongguan City, Guangdong Province, would see the worst impact as price competition between Taiwanese businesses there is stiff and there is a severe labor shortage.
Andrew Yeh (葉春榮), chairman of the Taiwanese business association in Dongguan, wasn’t available for comment yesterday.
In general, Taiwanese businesses with branches in China, view the Foxconn incident as an isolated one and will base pay decisions on supply and demand factors in the local labor market as well as their own corporate policies, secretary general of the Chinese National Federation of Industries (工業總會), Tsai Lien-sheng (蔡練生) said.
Faced with rising labor costs in China, C.C. Leung (梁次震), vice chairman of Quanta Computer Inc (廣達電腦), the world’s second-largest notebook computer contract maker by shipments, told local media earlier this week that the company will adapt by standardizing and optimizing its assembly lines or opening new lines in more inland Chinese cities such as Chongqing, where labor costs are lower.