Local electronics component maker Cheng Uei Precision Industry Co (正崴) yesterday said it planned to raise wages for its Chinese workers by between 10 percent and 20 percent as higher labor costs in southern China begin to bite.
Cheng Uei said it would follow new rules implemented by the Chinese government which raised the minimum monthly wage, company chairman Gou Tai-chiang (郭台強) told local TV station Unique Satellite TV (非凡電視台).
Gou is the younger brother of Hon Hai Precision Industry Co (鴻海精密) chairman Terry Gou (郭台銘). Terry Gou told shareholders early last week that the latest wave of wage increases in China would be fast and drastic.
Moving to China’s hinterland, where labor costs are lower than in coastal areas, Gou Tai-chiang said the company was considering setting up a new manufacturing base in Jiangxi Province or Anhui Province in the future, as part of the company’s expansion in China.
Cheng Uei is on Morgan Stanley’s list of companies hardest hit short-term by recent pay raises for Chinese workers. Morgan Stanley said Taiwan’s tech sector, especially hardware component manufacturers, would suffer the brunt of the pain, with the risk that earnings could shrink by 3.8 percent.
Moreover, Gou Tai-chang told reporters that the company, which also sells Apple Inc’s products, including iPods, iPhones and Macs, planned to expand the number of its retail outlets in China to 100 within three years.
The company expects to open its first outlet in Shanghai by the end of this year, he said.
Cheng Uei operates more than 20 outlets in Taiwan and one in Hong Kong.
Cheng Uei shareholders yesterday approved a proposal to issue a NT$2.4 per share cash dividend and 0.1 percent stock dividend based on last year’s net profits of NT$1.4 billion (US$43.3 million), or NT$3.08 per share.
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