China Sourcing Update
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1 Fung Business Intelligence Centre Global Sourcing China Sourcing Update November 12, 2015 Labour Cost 1. Minimum wage levels in a number of provinces/ autonomous regions are adjusted upward From July to November, 10 provinces/ regions increased the minimum wage levels in their jurisdictions, with the percentages of increase ranging from 7.1% to 40.0%. Sichuan province On 1 July, the minimum monthly wage levels in various districts within the Sichuan province were adjusted to 1,500 yuan, 1,380 yuan and 1,260 yuan, up by 7.1% %. 1 The previous adjustment was made on 1 July last year, when the minimum wage levels were raised to 1,400 yuan, 1,250 yuan and 1,100 yuan. Inner Mongolia autonomous region On 1 July, the minimum monthly wage levels in various districts within the Inner Mongolia autonomous region were raised to 1,640 yuan, 1,540 yuan, 1,440 yuan and 1,340 yuan, up by 9.3% -11.7%, from the previous levels of 1,500 yuan, 1,400 yuan, 1,300 yuan and 1,200 yuan respectively. 2 Fujian province On 1 July, the minimum monthly wage levels in various districts within the Fujian province were adjusted to 1,500 yuan, 1,350 yuan, 1,230 yuan and 1,130 yuan, up by 13.6% %. 3 The previous adjustment was made on 1 August 2013, with the minimum wage levels of 1,320 yuan, 1,170 yuan, 1,050 yuan and 950 yuan. 4 Henan province
2 On 1 July, the minimum monthly wage levels within the Henan province were adjusted to 1,600 yuan, 1,450 yuan, and 1,300 yuan 5, up by 14.3% %, from the previous levels of 1,400 yuan, 1,250 yuan and 1,100 yuan respectively. 6 Xinjiang Uyghur autonomous region On 1 July, the minimum monthly wage levels in various districts within the Xinjiang Uyghur autonomous region were adjusted to 1,670 yuan, 1,470 yuan, 1,390 yuan and 1,310 yuan, up by 9.9% %. 7 The previous adjustment was made on 1 June 2013, with the minimum wage levels of 1,520 yuan, 1,320 yuan, 1,240 yuan and 1,160 yuan. 8 Hubei province On 1 September, the minimum monthly wage levels in various districts within the Hubei province were adjusted to 1,550 yuan, 1,320 yuan, 1,225 yuan and 1,100 yuan, up by19.2% to 22.2%. 9 The previous adjustment was made on 1 September 2013, with the minimum wage levels of 1,300 yuan, 1,020 yuan and 900 yuan. 10 Yunnan province On 1 September, the minimum monthly wage levels within the Yunnan province were adjusted to 1,570 yuan, 1,400 yuan and 1,180 yuan 11, up by 10.2% %, from the previous levels of 1,420 yuan, 1,270 yuan, and 1,070 yuan. 12 Guizhou province On 1 October, the minimum monthly wage levels within the Guizhou province were adjusted to 1,600 yuan, 1,500 yuan and 1,400 yuan 13, up by 28.0% %, compared with the previous levels of 1,250 yuan, 1,100 yuan, and 1,000 yuan. 14 Jiangxi province On 1 October, the minimum monthly wage levels within the Jiangxi province were adjusted to 1,530 yuan, 1,430 yuan, 1,340 yuan, and 1,180 yuan 15, up by 10.0% %, compared with the previous levels of 1,390 yuan, 1,300 yuan, 1,210 yuan and 1060 yuan
3 Zhejiang province On 1 November, the minimum monthly wage levels within the Zhejiang province were adjusted to 1,860 yuan, 1,660 yuan, 1,530 yuan and 1,380 yuan 17, up by 12.7% % on average, compared with the previous levels of 1,650 yuan, 1,470 yuan, 1,350 yuan, and 1,220 yuan Local governments in some provinces /regions issue new guidelines on salary rise From June to November 2015, local governments in 13 provinces/ regions, including Henan, Fujian, Qinghai, Jiangxi, Liaoning, Hainan, Yunnan, Gansu, Guangxi, and Jilin, issued new guidelines on salary rise (see exhibit 1). For example, according to the announcement issued by the Henan provincial government, enterprises with average performance and employees wage levels staying at the industry averages in the province are recommended to raise the salaries of their workers by 12%, the pay rise benchmark for Enterprises with good performance and employees wage levels lower than the industry averages or provincial average can offer higher pay rise than the 12%-benchmark to their workers in 2015 (It is noteworthy that the local government also sets a upper limit at 18% in its guideline). Meanwhile, enterprises with worsening performance or difficulties in operating their businesses should consider raising the salaries of their workers by no less than 3%, the lower limit of the pay rise guideline. 19 Although these guidelines are not mandatory for employers to follow, they will affect workers expectations of salary rise and are thus regarded as an important reference of labour cost a0c7debe85251.html
4 Exhibit 1: Guidelines on salary rise issued by local governments, June to October 2015 Province/autonomous region Upper limit Benchmark Lower limit Issue date Sichuan 17% 11% 4% June 2015 Beijing 16% 10.5% 3.5% June 2015 Shaanxi 15% 10% 5% June 2015 Henan 18% 12% 3% June 2015 Fujian 15% 10% 2% July 2015 Qinghai 16% 9% 4% July 2015 Jiangxi No Cap 12% 5% August 2015 Liaoning 12% 8% 3% August 2015 Hainan 12.3% 11.3% 4% August 2015 Yunnan 17% 10% 3% August 2015 Gansu 16% 10% 5% September 2015 Guangxi 16% 10% 3% September 2015 Jilin 13% 8% 3% October 2015 Source: Announced by various local governments 3. Income of migrant workers gains 9.1% yoy in 3Q15 The average monthly income of migrant workers in China increased by 9.1% yoy to 3,052 yuan in 3Q15, according to the National Bureau of Statistics (NBS) of China. We noticed two major trends in the migrant labour market. First, the migrant labour supply in China has started to show negative growth recently. According to the NBS, the yoy growth of migrant workers supply registered minus 3.6% in 1Q15, 0.1% in 2Q15 and minus 0.04% in 3Q15, compared to the positive growth of 1.3% yoy seen in The other trend is that the migrant labour force has been aging in recent years. According to the NBS, the average age of migrant workers increased from 35.5 in 2010 to 38.3 in Looking forward, we expect that the wages of migrant workers will continue to increase. In fact, labour costs have kept rising in recent years, posing challenges to manufacturers in China. 20
5 THE FUNG BUSINESS INTELLIGENCE CENTRE The Fung Group is a privately held multinational group of companies headquartered in Hong Kong whose core businesses are trading, logistics, distribution and retailing. The Fung Group employs over 46,800 people across 40 economies worldwide, generating total revenue of more than US$24.65 billion in Fung Holdings (1937) Limited, a privately held business entity headquartered in Hong Kong, is the major shareholder of the Fung group of companies. The Fung Business Intelligence Centre (FBIC) collects and analyses market data on sourcing, supply chains, distribution and retail. It also provides thought leadership on technology and other key issues shaping their future. Headquartered in Hong Kong, FBIC leverages unique relationships and information networks to track and report on trends and developments in China and other Asian countries. In addition, its New York-based Global Retail & Technology research team follows broader retail and technology trends, specialising in how they intersect and building collaborative knowledge communities around the revolution occurring worldwide at the retail interface. Since its establishment in 2000, the FBIC (formerly known as the Li & Fung Research Centre) has served as the knowledge bank and think tank for the Fung Group. Through regular research reports and other publications, it makes its market data, impartial analysis and expertise available to businesses, scholars and governments around the world. It also provides advice and consultancy services to colleagues and business partners of the Fung Group on issues related to doing business in China, ranging from market entry and company structure, to tax, licensing and other regulatory matters. CONTACT Helen Chin Vice President Global Sourcing Fung Business Intelligence Centre 10/F LiFung Tower, 888 Cheung Sha Wan Road Kowloon, Hong Kong T: (852) F: (852) E: fbicgroup@fung1937.com W: Copyright 2015 The Fung Business Intelligence Centre. All rights reserved. Though the Fung Business Intelligence Centre endeavours to ensure the information provided in this publication is accurate and updated, no legal liability can be attached as to the contents hereof. Reproduction or redistribution of this material without prior written consent of the Fung Business Intelligence Centre is prohibited.
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