Outlook on Light Manufacturing in China: June 2015

June 5, 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

The Ministry of Human Resources and Social Security, the All-China Federation of Trade Unions and the Confederation of Enterprises, respectively representing government, workers and employers, met recently to discuss strategies to construct harmonious labor relations amidst more frequent strikes. Workers’ demands are growing on a wider range of issues particularly wage arrears, social insurance payment and rights of collective bargaining. While the meeting signals the central government’s resolution to address labor unrest by applying stricter inspections and empowering local trade unions, the prospect of involving all representative parties in the process is diminishing considering the continuous crackdown on labor NGOs and activists.

The recent ‘Made in China 2025’ initiative specifies China’s next 10-year plan for maintaining a manufacturing base while focusing on innovations and developing greener and higher value-added industries. Without being on the priority list, textile and footwear manufacturing enterprises will need to consider technology upgrades or transformation to survive.

Guangdong: Starting on June 1, an extra 5-day verification will be added to the review process of workers’ application for cashing out their housing fund upon resignation. The aim is to avoid fake documents and to ensure the authenticity of their household relocation requests. Factories are expected to offer additional support on confirming workers’ records and resolving disputes.

Under increasing pressure from the provincial government on enterprise contributions to workers’ social insurance, factories will be required to ensure full social insurance coverage of their workforce starting from 2015 and pay all contributions since 1999 should any disputes occur with workers. This measure aims to help factories reduce social insurance related disputes and to retain a skilled workforce for government-promoted technology upgrades.

Following the provincial government’s recent exposure of 44 enterprises for employment violations (most for wage arrears) expect more violators to be made public. Factories should prepare for tighter inspections and more timely fixes should disputes arise.

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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