With rise in minimum labor wages and shortage of labor in the coastal regions of China, major manufacturing and assembling industries like Foxconn have been moving inwards into central China to cut down their costs. Current major manufacturers like Foxconn (Hon Hai Precision Industries), Quanta Computer, Compal Electronics, Wistron, and Inventec are all planning to automate their production lines to avoid this problem. The problem with labor wages and labor shortage will eventually be faced in central China as well soon and the production industries feel that automation is the only way to fight this issue on a longer run but the only problem currently seems to be the process of achieving it as there are no standards or rules to follow as of now. Taiwan based Simplo, a notebook battery provider with a market share of 20% proved to fight this issue by aggressively automating its plants and which helped it increase efficiency by up to 40%
Even after the global slowdown of economy, China’s minimum wages begin to go higher. For example, in Shenzhen the minimum wage went up to CNY 1,600/month from CNY 1,500/month and the industries are paying more than the average pay to retain their workforce. Seven major provinces such as Beijing, Zhejiang, Henan, Shaanxi, Guizhou, Guangdong, and Shenzhen have all increased their minimum wages.
Digitimes claims that the shortage in labor is primarily due to younger crowed increasing becoming unwilling to join the manufacturing sector, this will eventually cause delayed shipments and further increase in labor expenses for these industries. Foxconn currently handles most of the assembly work for Apple devices.