China's social insurance bankrupts SME supply chain

Taiwanese PC supply chain companies are furious because they’re having to look after their employees by paying social insurance policies in China, and they’re worried about going bust.

That means more labour costs, with salaries rising at an average of between $47 and $54 in the Pearl River Delta area of China.

Most companies in the Pearl River have their roots in Hong Kong, and according to Digitimes, Hong Kong’s Federation of Small and Medium Enterprises has already predicted about 3,000 companies will push up the daisies in 2011 alone.

Average salaries will be growing 84 percent compared to 2010, which is partially why small Taiwanese companies are worried about when the trend spreads to the Yangtze River Delta.

There is a rush to acquire cash and raise funds before this whole looking after your employees thing really spirals out of control. 

China’s plan is to put the burden of insurance mostly on employers.

For example, points out Digitimes, in Shanghai bosses are forking out 28.5 percent of the pay while employees pay just nine percent, though the costs are expected to rise in the future.