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To: SG who wrote (64102)	6/9/2010 3:03:12 AM
From: elmatador	Respond to of 217769

"upward pressure on wages will be much faster and steeper than many have expected because China's social structure is undergoing dramatic changes." Are wage hikes irreversible trend in China? 2010/06/09 10:36:11 Wage hikes across China's manufacturing and service sectors will be an irreversible trend, the founder of Hon Hai Precision Industry Co. (also known as Foxconn Technology Group) predicted Tuesday. Terry Gou further forecast that the upward pressure on wages will be much faster and steeper than many have expected because China's social structure is undergoing dramatic changes. The 59-year-old Gou said Foxconn's decision to more than double its assembly-line workers' wages in China is simply a harbinger of things to come. "A butterfly effect is hatching and Foxconn will be the bellwether of the high wage trend in China, " he predicted. The following are excerpts from local media coverage of the issue: Economic Daily News: Gou said at a shareholders meeting in Taipei thatFoxconn Group, which has a work force of 800,000 in China and accounted for 4 percent of China's total exports last year, began to raise the salaries of its employees in the fourth quarter of 2009. "As the transitional period of the wage adjustment will take three to nine months, the pay hike will therefore have limited effects on the group's earnings for this year, " Gou told Hon Hai shareholders confidently. The salary adjustment effect may become more evident in the first half of next year when the electronics industry hits its off-peak season, he acknowledged. "But you would be underestimating our group's adaptability if you think that the pay raises will eat up all of our earnings, " Gou said. The adjustment of the basic monthly salary for Foxconn employees at its Shenzhen factories in southern China to 2,000 yuan is a reasonable move in consideration of consumption levels there, he noted. In the future, workers at the group's factory complexes in other parts of China, such as Kunshan and Shandong, will all receive similar pay raises. Although most major electronics companies have said they will not follow the lead of Foxconn in raising wages for their workers in China, Gou said he believes adjusting wages will not just be a "problem for Foxconn." "I'm convinced that our move will definitely have a nationwide effect in China," he said. (June 9. 2010). United Daily News: After Foxconn and Japan-based Honda Co. raised salaries significantly for workers at their factories in China, many of their Taiwanese peers are worrying that they will be forced to follow suit. Taiwanese business executives in Kunshan in China's Jiangsu province said Tuesday they had not expected that the need to hike wages would have come so quickly. A wave of strikes to force pay raises has spread from the Pearl River Delta in southern China to the Yangtze River Delta in central China. Workers at a Honda-affiliated auto parts plant in Foshan City went on strike Monday to demand a pay raise after their peers at a Honda plant in the same area got a wage increase in the wake of a two-week strike recently. Last weekend, nearly 1,000 employees at Taiwan-owned KOK Machinery Co. in Kunshan also went on strike in an attempt to force a pay raise. The stand-off was exacerbated Monday and clashes erupted between workers and police forces. The recent labor protest movement opened the eyes of China's local governments in the Yangtze River Delta, and they took precautionary measures for fears of affecting the ongoing World Expo in nearby Shanghai. (June 9, 2010). China Times: A New York Times article said Tuesday China's wage hikes could be a mixed picture for companies: higher costs but richer customers. According to the paper, wage hikes in China will eventually impact the global economy, with prices for all made-in-China products going up and fueling worldwide inflation. Even though wages only account for a small portion of overall product costs, the supply chain will definitely be affected and retailers will have to raise product prices. But not all people were pessimistic about the wage hikes in China. Albert Keidel, a nonresident senior fellow at the Atlantic Council, a U.S. think tank, said wage hikes for workers would just transfer part of corporate profits to wages