Amid a severe shortage of migrant workers in coastal Chinese provinces, some local governments there have moved to raise minimum wages and businesses have agreed to offer better paychecks, which shows that higher production costs have become an issue for the global technology supply chain — from multinational companies to contract suppliers and to component suppliers operating there.
On Thursday, Guangdong Province announced the increase of the minimum monthly wage by an average of 21.1 percent, effective on May 1. This follows Jiangsu Province’s 12.9 percent increase in the minimum monthly wage from Feb. 1, and a 14.5 percent hike in Zhejiang Province and Shanghai from April 1. In Shenzhen, contract handset maker Foxconn International Holdings Ltd also reportedly agreed to an average increase of 3 percent in monthly wages this year after Xianduan Precision Metal Products Co reached a 10 percent hike deal with its employees in January.
As China attempts to move up the global manufacturing supply chain, Taiwanese companies operating there are facing growing challenges.
First, Taiwanese companies have to take steps to cope with labor shortages in China to assure investors and clients that things are under control and that products will be delivered on time. Basically, this is a problem that money can easily resolve and big companies are able to do so by offering better wages and generous incentives.
But more important questions remain: What would Taiwanese firms do if they continued operating their assembly lines in China? Where else would they move if costs grow too high and too soon? Could Taiwan, their home country, be one of the options?
Already, some large companies have thought of the labor problem beforehand and have gradually started operations in inland provinces. However, for small companies, financial constraints will limit their ability to relocate to China’s inland provinces. Some people suggested that companies move to India, Vietnam or other Southeast Asian countries to repeat what Taiwan already experienced in the early 1980s, when many local companies relocated to China.
A closer look at these new destinations, however, shows that aside from a cheaper workforce, they lack everything Taiwanese companies would need. This is because, compared with China, the infrastructure is poor and the quality of workers is inadequate. Others have suggested that returning to Taiwan could solve the labor problem, as people here are anxious about jobs following record unemployment last year.
The Ministry of Economic Affairs ostensibly sensed this potential and said last month it was planning to organize trips to China to persuade Taiwanese businesses in Dongguan and Shenzhen to come home.
But this suggestion would beg for realistic expectations. By any account, the costs of land and labor in Taiwan, as well as other operating expenses, are higher than China’s and those of other Southeast Asian countries. Moreover, not all businesses are suitable to make the move back home, as people in this country would not likely take up the low-paying and physically demanding work that many of these companies are getting from China.
Therefore, the government must improve the nation’s R&D environment to help transform Taiwanese companies, as innovation and upgrades in technology are what will ensure the long-term growth of these companies.
Putting all these factors together, the labor shortage in China poses a challenge to Taiwanese businesses on how to absorb higher costs by increasing productivity, but at the same time it offers an opportunity to all of us in Taiwan to rethink how our companies should position themselves in the global value chain over the next few decades. When China plans to climb the value ladder, so, too, must Taiwan.
On May 7, 1971, Henry Kissinger planned his first, ultra-secret mission to China and pondered whether it would be better to meet his Chinese interlocutors “in Pakistan where the Pakistanis would tape the meeting — or in China where the Chinese would do the taping.” After a flicker of thought, he decided to have the Chinese do all the tape recording, translating and transcribing. Fortuitously, historians have several thousand pages of verbatim texts of Dr. Kissinger’s negotiations with his Chinese counterparts. Paradoxically, behind the scenes, Chinese stenographers prepared verbatim English language typescripts faster than they could translate and type them
More than 30 years ago when I immigrated to the US, applied for citizenship and took the 100-question civics test, the one part of the naturalization process that left the deepest impression on me was one question on the N-400 form, which asked: “Have you ever been a member of, involved in or in any way associated with any communist or totalitarian party anywhere in the world?” Answering “yes” could lead to the rejection of your application. Some people might try their luck and lie, but if exposed, the consequences could be much worse — a person could be fined,
Taiwan aims to elevate its strategic position in supply chains by becoming an artificial intelligence (AI) hub for Nvidia Corp, providing everything from advanced chips and components to servers, in an attempt to edge out its closest rival in the region, South Korea. Taiwan’s importance in the AI ecosystem was clearly reflected in three major announcements Nvidia made during this year’s Computex trade show in Taipei. First, the US company’s number of partners in Taiwan would surge to 122 this year, from 34 last year, according to a slide shown during CEO Jensen Huang’s (黃仁勳) keynote speech on Monday last week.
On May 13, the Legislative Yuan passed an amendment to Article 6 of the Nuclear Reactor Facilities Regulation Act (核子反應器設施管制法) that would extend the life of nuclear reactors from 40 to 60 years, thereby providing a legal basis for the extension or reactivation of nuclear power plants. On May 20, Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP) legislators used their numerical advantage to pass the TPP caucus’ proposal for a public referendum that would determine whether the Ma-anshan Nuclear Power Plant should resume operations, provided it is deemed safe by the authorities. The Central Election Commission (CEC) has
RSS