Electronics manufacturing powerhouses like Foxconn are having to open factories in inland China because of labour shortages at their usual industrial bases, including in the coastal Guandong area.
Foxconn has claimed that the moves toward Sichuan province and central Henan are not for saving cash on wages, as the regions pay a similar amount to Guangdong, but because of labour shortages.
A Bloomberg analyst, Jitendra Waral, said that to keep finding workers, there is a trend to move in land. “As that drives wages higher, any cost benefits from inland labour are likely to continue shrinking,” Waral said.
A Foxconn spokesperson said a reason for moving inland is because of the labour surplus. Henan and SIchuan in particular have historically had the largest amount of migrant workers, which proves useful for manufacturing behemoths who rely on enormous amounts of staff.
In 2010, Bloomberg pointed out, Foxconn employed barely any people in Henan – but in the fourth quarter of last year the roster reached 300,000 people.
Workers are more likely to be found inland as that is where the vast majority of employees are from, so seducing them into factories is a tad easier if they’re closer. Rising wages inland, at 120 percent in six years, are also killing incentives for workers to up sticks and move to coastal manufacturing bases. In short, the manufacturers are heading to where the most workers are.
This, coupled with a decline in the working age population, means manufacturers are looking for ways to maximise their workforce but minimise the wages they will have to pay.