China has a labor problem

At least along the east coast (especially in Guangdong province).  As hard as it may seem to believe it, yes we’re seeing a labor crunch here in Shenzhen.  David Dayton of SRI can’t say it any better “We just have to push back our completion/start dates and move on”

Though I can’t say this is a new phenomenon.  It really all starts with the Global Financial Crisis.  China weathered the storm better than anyone, by investing billions of dollars in infrastructure improvements for the Chinese interior.  Due to this heavy investment, Chinese migrants no longer need to travel to the east coast to get high paying jobs in factories hundreds-if not thousands of miles away.   Why travel days away from home or family when a job building infrastructure in your own hometown area can be just as easily be attained (and we’re starting to see better incomes for them as well)?  The simple answer is there IS NO reason for them to leave home.  Because of this though, factories in Guangdong province suffer from labor shortages.  In order to keep the staffs they HAVEN’T lost, managers must pay higher salaries.

So one can hopefully see the problems with this- Managers of factories have to make money somehow!  How do they do it? There are 2 easy ways that come to mind REAL quickly- raise the prices for your project to be completed AND/or (sadly AND just as often) cut back spending on hi-quality materials needed for your project.  Now is a risky time as not only are you potentially paying more now, you may be paying a WHOLE LOT MORE if you’re dealing with a factory who’s margins are small.

As the labor crunch on the east coast continues, it is imperative to do your Due Dilligence and Quality Control to make (doubly) sure that the factory you’ve chosen is who they actually say they are, and that they can produce the product you desire at the quality you need (no longer a DESIRE situation).

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