Outlook on Light Manufacturing in China: July 2015

July 2, 2015 Posted by China Briefing Reading Time: 4 minutes

The below is a sample of Cascade Asia Advisor’s monthly report on light manufacturing across emerging Asia, available for purchase through the Asia Briefing bookstore. The report is a 4-5 page executive-ready assessment and outlook designed to help companies anticipate labor risks and dynamics across key manufacturing countries in Asia. Countries of coverage include Cambodia, China, Indonesia and Vietnam.

China

A series of measures have been recently proposed by China’s central government to encourage migrant workers to return to their hometowns and start their own businesses, including a three-year plan to progressively offer tax-reductions and easier access to loans. Enterprises in traditional manufacturing regions are also provided guidance to relocate their production to migrant workers’ home provinces. With continuous wage increases and foreign brands gradually downsizing or pulling out orders, the policy will help alleviate labor shortages and reduce cost pressures for many struggling Chinese factories.

Factories are required to disburse a monthly High Temperature Subsidy between June and September for workers operating in excessively hot conditions specified in national and provincial regulations. Amounts differ in each province but range from RMB 150 to 200 per month.

Guangdong: Employers who fail to disburse wages on time or who make unreasonable deductions to worker’s pay could face criminal prosecution according to a draft amendment of the Regulation on Wage Payment of Guangdong Province. The draft has provoked public discussions for stipulating enterprises to disburse wages before the 10th of each month and proposing a public fund to compensate migrant workerswho have wages owed to them. Although the amendment is still under public review, factories should be prepared for tougher wage inspection measures as the government starts responding to a swelling of disputes on unpaid wages, layoffs and social insurances.

Small internet-based footwear firms have mushroomed in Dongguan as many local shoe manufacturers have halted production due to a loss of orders to Southeast Asian countries and an inability to cover costs. Despite higher labor risk including excessive working hours, hazardous work environment and uncovered social insurance, these factories are growing rapidly by receiving orders from China’s e-commerce sites and are attracting workers previously employed by traditional manufacturers.

Factories in Guangdong are required to pay workers RMB 150 per month for High Temperature Subsidy.

Zhejiang: The provincial trade union recently announced measures to ensure enterprises provide heat protection equipment to production workers and High Temperature Subsidies to those who work in conditions higher than 33 degrees Celsius (91.4 degrees Fahrenheit). Factories are required to pay workers 200 yuan per month for High Temperature Subsidy and should be prepared to handle more frequent occupational health issues and tightened labor inspections related to this.

Fujian: Factories are required to pay workers RMB 200 per month for High Temperature Subsidy and will likewise face more frequent and more rigorous occupational health and labor inspections.

About Us

Cascade Asia Advisors is a boutique advisory firm focused on Southeast Asia. They help businesses anticipate risk and make better decisions using forward-looking, localized intelligence. For information about developments mentioned in this report, please contact them at info@cascadeasia.com.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

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