China wage hikes bad for Taiwan businesses: Kuo

[momopi]

http://www.chinapost.com.tw/taiwan-busi ... a-wage.htm

Updated Tuesday, June 8, 2010 9:36 am TWN, CNA
China wage hikes bad for Taiwan businesses: Kuo

BEIJING -- The head of a Taiwanese investor association in China said yesterday that most of his association members will be adversely impacted by wage hikes in China that are on too high a scale or at too fast a pace. Kuo Shan-hui, chairman of the Beijing-based Association of Taiwan Investment Enterprises on the Mainland, said that as a result of China's rapid economic growth over the past decade, it is inevitable that average wages in China will go up.

However, wages should not increase too high or too fast, so that enterprises can find room to adapt to the changing economic and social situation, Kuo said after presiding over a ceremony to open an express service center established by his association.

“For most of Taiwanese investors in China, a wage hike of 10 percent at present would be acceptable,� said Kuo, whose association is a federation of over 100 Taiwanese groupings across China.

Kuo was responding to the latest in a spate of pay hikes in China, after Foxconn Technology announced a day earlier a new round of wage hikes for its workers, taking their monthly salaries to 2,000 Chinese yuan (US$293), effective Oct. 1.

It was the second pay hike in a week announced by Foxconn and was part of a series of moves to assuage its workers and overcome public criticism of its management practices following a rash of suicides at its Shenzhen complex this year. Foxconn had already adjusted upward the monthly wages of its workers from 900 yuan to 1,200 yuan from June 1.

The statutory minimum wage in many of China's eastern coastal provinces has risen by up by 20 percent since the beginning of this year.

Kuo said his association will relay the concerns of its members to the relevant Chinese agencies.

“Many Taiwanese enterprises will be forced to move their operations elsewhere with relatively lower wages if the problem (higher wages in China) is left unaddressed,� he said.

The express service center was set up to protect Taiwanese businessmen operating in China by providing them with needed and timely services.

Kuo also revealed that his association will set up a think tank to focus on research into investment strategies for Taiwanese businesses in China.

[Repatriate]

It's actually a good move by Foxconn. They have managed to address a possible PR nightmare before it spiraled out of control and have also built up guanxi with PRC officials. They can spin this as altruism etc.. down the road next time they are bidding on projects. Also, they probably already had projected wage increases on the books and have decided to do it now instead of incrementally over years. To make up for it they can just withhold future salary raises. I don't see them retaining much more overhead since a skilled labor pool who are can assemble electronics are valuable and take awhile to train.