Thursday, August 30, 2012

"Shenzhen minimum wage rise could impact tech product costs worldwide" (or not) AAPL

First up, Wired:
Shenzhen, where some of China's largest electronics manufacturers are located, looks set to have its minimum wage hiked by 13.3 percent from 2013, in a move that could cause a ripple effect across the world's major technology companies.

Apple, HP, Samsung and Nokia are among the companies that have parts and products manufactured in the Guangdong province city, so the wage rise, reported by Digitimes, could impact the cost of computers, handsets and games consoles worldwide. Among the companies based in the city's Pearl River Delta tech hub, many of them Taiwanese OEMs (Original Equipment Manufacturers), BYD Company produces handsets for Nokia and HTC, while Shenzhen-based Wistron signed a patent deal with Microsoft in 2011 to supply its Android and Chrome products.

Rising costs in China have fuelled a string of protests from workers in recent years, with strikes by manufacturing employees rapidly increasing between May and July 2012. Shenzhen's local authorities are tempering possible worker action with the rise, which raises the basic pay from about £149 to £169 a month in early 2013. Shenzhen already boasts one of the country's highest minimum wage rates, falling just short of Beijing....MORE
And from TechInAsia:
Why the 2013 Minimum Wage Hike in Shenzhen, China’s First Tech Hub, is Not That Scary
The hi-tech manufacturing hub around the city of Shenzhen, in southern China, is set to be hit with a rise in the minimum wage of 13.3 percent in 2013. According to Wired, that could cause something of a shockwave through gadget manufacturers in that area – Taiwanese OEMs like Foxconn [1], for example, which does the final assembly of so many Apple products – that might result in inflated costs for the phones, tablets, and other gadgets we love to buy.

But after weighing up the figures and considering the changing manufacturing landscape in China, we don’t think this’ll make too hard an impact on consumers. For one, Shenzhen saw its minimum wage go up in February this year already, by 13.6 percent, to stand at 1,500 RMB (US$236) per month. The anticipated hike for 2013 shouldn’t be a surprise, as the China Daily points out that, “Local governments are required to raise their minimum wage levels at least once every two years.” If it does rise 13.3 percent next year, probably again in February during Chinese New Year, then it’ll stand at 1,700 RMB ($268).

Other factors come into play, too. Shenzhen is not quite the manufacturing hub that it once was, and it seems that the international media haven’t yet followed the trail of gadget guts to newer tech hubs in, say, Jiangsu province in eastern China – where a great deal of Samsung, Apple, and Nokia components are made – or to much poorer inland areas where land and labor costs are significantly lower. And so minimum wages in other regions of the country are more of a factor than ever before....MORE