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Manufacturers Plan To Pull Out of PRD Citing High Labor Costs

Posted: 07/22/2014 5:13 pm

factory workers prd chinaDespite building up a reputation as the “cradle of manufacturing” for China, the cost of manufacturing may now be too high for some companies to continue doing business in the Pearl River Delta.

According to a poll done by the Chinese Manufacturers’ Association of Hong Kong, almost a third (29.6%) of all Hong Kong companies intend to withdraw their investments from the Pearl River Delta, reports the SCMP. That is 2.7% more than last year.

Furthermore, 32% of Hong Kong manufacturers already have plans to move their factories to other places in Asia that have lower labor costs, including Southeast Asia, rural areas of Guangdong Province, and other parts of China.

Association chairman Irons Sze said labor costs in the PRD have been increasing some 10 to 15% every year. As well, changing local labor policies are cited as a source of frustration for the companies.

Meanwhile, a policy to replace human labor with robots has been spreading throughout the PRD, a trend that can be seen in Shenzhen, Guangzhou and Dongguan. In many of these cases, the main reason given for the replacement is a lack of an available work force, followed by rising costs.

The lack of workers is cited as the main reason for hukou reform in Guangdong province, encouraging some 11 million migrant workers to come and reside in less populated areas of the province.


Photo: Compassionate English

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