Will Rising Labor Costs Hurt China’s Exports?

Will rising labor costs hurt china's exports?

Will Rising Labor Costs Hurt China’s Exports?

Outsourcing manufacturing to China has
enabled foreign companies to take advantage of various benefits such as
cheap labor costs and favorable policies (e.g. tax rebate incentives) for
select industries. However, in recent years this trend has been altered by a
series of environmental, social and economic changes. Labor costs in newly
emerging economies can be up to 30% lower than China’s, but these regions
often have their fair share of drawbacks as well. Additionally, the introduction
of new trade strategies in China is helping to shape the modern global trade
industry. The “China plus one” model has gained popularity throughout
the industry as China shifts from a centralized single production location to
a complementary assembling hub in conjunction with other neighboring

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This White Paper will analyze the trend of rising labor costs, as well as how
rising labor costs affect the value of products from China. Lastly it will review
what China is doing to deal with the changing environment through a series
of Case Studies. Typically, one may think that rising labor costs directly affect
manufacturing and the final pricing of goods; however, China will remain the
exception to this rule as long as they continue to adjust to the demands of
the global market.

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