China’s coastal manufacturing hubs have, for many years, been the production base of choice for domestic and multinational companies looking to take advantage of the country’s vast pool of inexpensive labour.
But along with a strengthening renminbi and government action to curb pollution and overcapacity, a surge of labour disputes since May suggests that the low-cost model of production is no longer robust.
Companies that traditionally relied on China as a source of cheap labour are increasingly relocating low-margin production lines to lower-cost labour venues – particularly in central China, by speeding up factory automation plans and, where possible, by passing on costs to customers.
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