China’s ‘factory of the world’ boosts minimum wages China’s ‘factory of the world’ boosts minimum wages

China’s ‘factory of the world’ boosts minimum wages
12 Jul 2018

Guangdong’s provincial government has boosted statutory minimum wages across the region for the first time in three years - a relatively long time when compared with the rest of China.

Until now, minimum wages across one of China’s wealthiest provinces have been frozen at 2015 levels in an effort to maintain its economic competitiveness – although the city of Shenzhen, which administers its wages separately, did increase its minimum wage last year. The move will see minimum wages across the region rise by around RMB 200 (US$30.30) per month.

Guangdong is one of China’s most economically vibrant regions and has the highest GDP in the country. But its dependence on manufacturing – which earned it the moniker “the factory of the world” – has exposed the province to competition from lower-cost jurisdictions both inside and outside of China. As labour and land costs continue to rise, many investors are choosing to relocate the manufacture of low-value and labour-intensive products to lower cost areas in western China.

Even with the most recent minimum wage increases though, the lowest wage tier in Guangdong is still less than the lowest tier in far less developed regions of the country, such as Sichuan, Guizhou and Xinjiang. The relatively modest wage rises for the lowest tiers also suggest the provincial government remains concerned about its economic competitiveness going forward, despite the region’s strengths

Like most areas of China, Guangdong sets different minimum wage tiers based on the development levels of its urban clusters:

  • Group A comprises the province’s most developed cities. Included here is Shenzhen, which increased its monthly minimum wage from RMB 2,130 (US$322.58) to RMB 2,200 (US$333.18). This compares with Guangzhou as a whole, which saw minimum levels rise from RMB 1,895 (US$286.99) to RMB 2,100 (US$318.03);
  • Both Shenzhen and Guangzhou now have hourly minimum wages of RMB 20.3 (US$3.07). Shenzhen’s minimum increased from RMB 19.5 (US$2.95) and Guangzhou’s from RMB 18.3 (US$2.77);
  • Group B consists of cities such as Dongguan, Foshan, Zhongshan, and Zhuhai. Here monthly wages have risen from RMB 1,510 (US$228.68) to RMB 1,720 (US$260.49), and hourly wages from RMB 14.4 (US$2.18) to RMB 16.4 (US$2.48);
  • Group C includes cities like Huizhou, Jiangmen, Shantou, and Zhaoqing. Monthly wages here increased from RMB 1,350 (US$204.45) to RMB 1,550 (US$234.74), and hourly wages from RMB 13.3 (US$2.01) to RMB 15.3 (US$2.32);
  • Group D consists of smaller cities such as Chaozhou, Maoming and Qingyuan. Here monthly wages rose from RMB 1,210 (US$183.25) to RMB 1,410 (US$213.54), and hourly wages from RMB 12 (US$1.82) to RMB 14 (US$2.12).

Minimum wage increases across Guangdong as a whole are more or less in line with the minimum wage growth experienced across other regions of China. For example, earlier this year, Shandong province – another wealthy coastal region – boosted its monthly minimum wage to RMB 1,910 (US$289.26) at the highest tier and RMB 1,550 (US$234.74) at the lowest. Last year, 20 out of 32 regions in mainland China, including Shenzhen, took a similar tack.

 

This article was first published on China Briefing

By Alexander Chipman Koty, editor.

Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and ASEAN, we are your reliable partner for business expansion in this region and beyond. For inquiries, please email us at info@dezshira.com. Further information about our firm can be found at: www.dezshira.com.

 

Guangdong’s provincial government has boosted statutory minimum wages across the region for the first time in three years - a relatively long time when compared with the rest of China.

Until now, minimum wages across one of China’s wealthiest provinces have been frozen at 2015 levels in an effort to maintain its economic competitiveness – although the city of Shenzhen, which administers its wages separately, did increase its minimum wage last year. The move will see minimum wages across the region rise by around RMB 200 (US$30.30) per month.

Guangdong is one of China’s most economically vibrant regions and has the highest GDP in the country. But its dependence on manufacturing – which earned it the moniker “the factory of the world” – has exposed the province to competition from lower-cost jurisdictions both inside and outside of China. As labour and land costs continue to rise, many investors are choosing to relocate the manufacture of low-value and labour-intensive products to lower cost areas in western China.

Even with the most recent minimum wage increases though, the lowest wage tier in Guangdong is still less than the lowest tier in far less developed regions of the country, such as Sichuan, Guizhou and Xinjiang. The relatively modest wage rises for the lowest tiers also suggest the provincial government remains concerned about its economic competitiveness going forward, despite the region’s strengths

Like most areas of China, Guangdong sets different minimum wage tiers based on the development levels of its urban clusters:

  • Group A comprises the province’s most developed cities. Included here is Shenzhen, which increased its monthly minimum wage from RMB 2,130 (US$322.58) to RMB 2,200 (US$333.18). This compares with Guangzhou as a whole, which saw minimum levels rise from RMB 1,895 (US$286.99) to RMB 2,100 (US$318.03);
  • Both Shenzhen and Guangzhou now have hourly minimum wages of RMB 20.3 (US$3.07). Shenzhen’s minimum increased from RMB 19.5 (US$2.95) and Guangzhou’s from RMB 18.3 (US$2.77);
  • Group B consists of cities such as Dongguan, Foshan, Zhongshan, and Zhuhai. Here monthly wages have risen from RMB 1,510 (US$228.68) to RMB 1,720 (US$260.49), and hourly wages from RMB 14.4 (US$2.18) to RMB 16.4 (US$2.48);
  • Group C includes cities like Huizhou, Jiangmen, Shantou, and Zhaoqing. Monthly wages here increased from RMB 1,350 (US$204.45) to RMB 1,550 (US$234.74), and hourly wages from RMB 13.3 (US$2.01) to RMB 15.3 (US$2.32);
  • Group D consists of smaller cities such as Chaozhou, Maoming and Qingyuan. Here monthly wages rose from RMB 1,210 (US$183.25) to RMB 1,410 (US$213.54), and hourly wages from RMB 12 (US$1.82) to RMB 14 (US$2.12).

Minimum wage increases across Guangdong as a whole are more or less in line with the minimum wage growth experienced across other regions of China. For example, earlier this year, Shandong province – another wealthy coastal region – boosted its monthly minimum wage to RMB 1,910 (US$289.26) at the highest tier and RMB 1,550 (US$234.74) at the lowest. Last year, 20 out of 32 regions in mainland China, including Shenzhen, took a similar tack.

 

This article was first published on China Briefing

By Alexander Chipman Koty, editor.

Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and ASEAN, we are your reliable partner for business expansion in this region and beyond. For inquiries, please email us at info@dezshira.com. Further information about our firm can be found at: www.dezshira.com.