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May 27, 2017

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China labor costs to exceed Taiwan's: Quanta vice chair

TAIPEI -- Rising wages in China mean labor costs there could catch up to and exceed Taiwan's within a year, according to the vice chairman of Taoyuan-based Quanta Computer Inc. (廣達電腦), the world's top contract laptop maker.

C.C. Leung (梁次震) made the prediction when talking about salaries for new graduates — a hot issue of debate in Taiwan — which for years have been expected to be only around NT$22,000 (US$728.88) a month.

While Taiwanese salaries have been stagnant for years, wages in China have grown 12-13 percent annually, said Leung, whose company operates three large factories in China.

In addition to rising labor costs, the Chinese workforce is likely to see a shrinking of working-aged people as workers' rights improve. This will raise costs for enterprises as competition increases, he said.

He suggested automated production to help solve labor issues and keep his company afloat.

Leung noted that the world's population doubled to 5 billion people between 1950 and 1980, but half of all human beings lived in communist countries, leaving Taiwan, the world's 16th biggest economy by per capita income at the time, in a good position.

Taiwan was then outcompeted by a combined population of only 600 million people. But still stuck in 16th place, it has been surpassed by many communist and formerly communist countries, meaning the Taiwanese people will have to compete with 5.8 billion people with higher incomes, he said.

In an environment of free flowing capital and products, high income earners will have to consistently adapt to the latest job market trends and continue to improve their competitiveness in order to outcompete, he said.

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