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- March 22, 2012 -

 
     
 

Supply Chain Graphic of the Week: Wages Rising Across Asia


Significant Wage Increases in China are Putting Strong Upward Pressure on Costs in Many Other Asian Countries; Central American Countries to Benefit in the End?

 
     
 

By SCDigest Editorial Staff

 
 

 

Most of us know that wages in China have been rising rapidly in recent years, illustrated most recently giant contract manufacturer Foxconn, the world's largest contract manufacturer most well known lately for its assembly of Apple's iPads at a facility in China, which announced a few weeks ago that it has raised pay again for its workers, this time by 16-25%. That was Foxconn’s third wage hike since 2010.

The rising wages in China are having an influence wage rates in a number of other Asian countries, as we detailed earlier this week (see China Effect has Wages Rising Across Much of the Rest of Asia.) That is causing a number of companies, such as apparel retailer Jos. A. Bank, to look at sourcing from areas outside of Asia, such as the Middle East and Latin America.

The graphic below, from a Wall Street Journal article last week on a similar theme, nicely illustrates the wage pressures that are arising in many areas of Asia.

 

Source: Wall Street Journal

 

As in China, other Asian governments are pushing increases in minimum wages and other changes to keep a lid on social unrest, as there is a growing sense in China and other Asian nations that a relative few in their nations are making fortunes from the tremendous growth in globalization and low cost country sourcing, while workers are seeing little benefit.

Combined with demographic trends that actually may result in labor shortages in several other countries in Asia such as Vietnam and South Korea, the biggest beneficiary in the end may be Central America, as manufacturers move there to source for North American markets.

 

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