The Chinese New Year is two weeks away, and that means trouble for American firms. As Chinese workers are going home to celebrate this major holiday, factories in China will be shut down for 15 days straight.
The problem is old, but the negative effect that it causes has been increasing recently. American firms fear that many workers will not come back to their jobs after the holiday. This will cause a great shortage in the U.S. for products that are made in China.
The problem is contributed by the Chinese government incentives to keep the peasant inland to work on farm rather than leave home to work in factories. Moreover, the quality of life in China has improve significantly over the years, causing workers to look for better jobs with higher wage.
As manufacturing cost is increasing in China, due to lower supply of workers and demand for higher wage, many American firms are moving their factories to other countries like Vietnam, Indonesia, India, and Thailand. Others even choose to produce their products in the U.S., since this will help retailers to fill their inventory much faster.
3 comments:
one thing that always changes in a growing country like china is the standard of living. now that the people are starting to see more opportunities to get away from their rural lives in china they are becoming more picky with their job selection and this could eventually lead many companies to relocate their businesses to cheaper regions were they can pay workers less. the global race to the bottom could be moving to a new country or area.
Although workers may try to look for better jobs with higher wage, there is a high chance that they won't try to do so. The large labor force makes it hard for current workers to keep jobs. Further, with inflationary pressure is piling up, the wages they receive will not let them enjoy their holiday fully. I do not think that American firms should worry too much about the situation since there are substitutions and the thirst for jobs are at high stake in China
I do not think that Chinese workers going home for the holidays will lead to a significant amount of Chinese workers leaving their jobs. Both pay, benefits, and the work environment are more worker-friendly in blue collar jobs in the United States than in China and Chinese workers are well aware of this fact.
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