Wednesday, June 02, 2010

Cost Saving Haven

The highly qualified yet low labour cost factors in China have had become the investment magnet in the past decade. The recent salary adjustment announcement of Honda (+24%) indicated that the workforce/ union is gaining strength. Foxconn’s 12 suicide cases though are irrelevant to the union strike, the boss has promised +20% raise to the workers. This precedence will ripple immensely in China. The immediate impact would trigger living costs and inflation jump high. Let’s see what the government would do next.

Meanwhile, under the global pressure and accusation of manipulating the RMB, China government is expected to appreciate the currency soon.

The soaring production cost is reducing China competition. Could be a good news to other countries, though I doubt the gap would be reduced significantly.