Outlook on Light Manufacturing in China: May 2015

May 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 Occupational Health Check Regulation announced last week by the National Health and Family Planning Commission refines existing occupational disease laws by clarifying the range of risks covered in the health checks, inclusive of exposure to dust, chemicals and hazardous materials among others. The regulation also specifies the employer’s obligation in bearing the financial costs of the checkups, and the employee’s right to choose, to an extent, where the checkup would be performed.

According to a recent announcement, the Ministry of Human Resources and Social Security has refined its strategic goals and will be prioritizing the effectiveness of collective agreements, focusing on effectively resolving labor disputes and reinforcing inspections on social insurance, wages and employment procedures. The move is in line with the central government’s recent directive on fostering harmonious industrial relations. Factories will be required to be more proactive in implementing collective bargaining and ramping up efforts to manage tensions with workers before they escalate.

Guangdong: As highlighted last month, the recently reformed Dongguan Housing Fund regulation forbidding employees from withdrawing their housing fund money paid in cash after March 1 has continued to draw the ire of workers. The regulation has been the source of strikes at several footwear and handbag factories. More protests are likely in the coming weeks.

The Guangdong government is incentivizing factories to adopt more aggressive measures in production automation with its announcement of a 3-year program to subsidize the purchase of robots at nearly 2,000 of the province’s largest manufactures. While enjoying the fruits of efficiency upgrades and reduced labor costs, factories should be aware of the settlement of workers who are likely to be displaced during the process. Proper workplace communication, intensified training and satisfactory severance packages will go a long way to mitigating the threat of backlash.

Fujian: More occupational risks are likely to be uncovered in the coming weeks under the recently launched photo campaign by Fujian’s provincial trade union encouraging workers to take photos of health and safety violations at their workplaces. The campaign poses reputational risks to brands using factoring in violation or even perceived to be in violation should photos and even video emerge on social media. The campaign also may gain traction as a popular means of whistle-blowing in other parts of China.

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.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

‍

Manufacturing Hubs Across Emerging Asia
In this issue of Asia Briefing Magazine, we explore several of the region’s most competitive and promising manufacturing locales including India, Indonesia, Malaysia, Singapore, Thailand and Vietnam. Exploring a wide variety of factors such as key industries, investment regulations, and labor, shipping, and operational costs, we delineate the cost competitiveness and ease of investment in each while highlighting Indonesia, Vietnam and India’s exceptional potential as the manufacturing leaders of the future.

The Asia Sourcing Guide 2015
In this issue of Asia Briefing, we explain how and why the Asian sourcing market is changing, compare wage overheads, and look at where certain types of products are being manufactured and exported. We discuss the impact of ASEAN’s Free Trade Agreements with China and India, and highlight the options available for establishing a sourcing model in three locations: Vietnam, China, and India. Finally, we examines the differences in quality control in each of these markets.

Adapting Your China WFOE to Service China’s Consumers
In this issue of China Briefing Magazine, we look at the challenges posed to manufacturers amidst China’s rising labor costs and stricter environmental regulations. Manufacturing WFOEs in China should adapt by expanding their business scope to include distribution and determine suitable supply chain solutions. In this regard, we will take a look at the opportunities in China’s domestic consumer market and forecast the sectors that are set to boom in the coming years.