Wage hikes worry PC firms
By Zhu Shenshen |
June 9, 2010, Wednesday
|
Print Edition
Print Edition
FOXCONN'S doubling of workers' wages in the wake of 10 suicides is raising concerns for personal computer firms and made-to-order electronic makers.
The "butterfly effect" of Foxconn's decisions could mean price hikes for phones and PCs, increases seldom seen in the consumer electronic industry.
Ultimately, the electronic makers may have to move production to regions with lower labor costs, industry officials said yesterday.
"It has probably caused a domino effect and we are concerned about it," said an official from one of the world's top three PC makers, who declined to be identified.
"It's hard to explain to consumers why you are going to give a higher price of PC models," said the PC company official.
Foxconn is the world's No. 1 made-to-order electronics maker. Its clients cover almost all top brands, including Apple, HP and Dell.
The Taiwan Electrical and Electronic Manufacture Association, with 3,800 member firms, reacted to Foxconn's wage hike by advising Taiwan firms to set up plants in India and Vietnam if they are forced to provide higher wages in the Chinese mainland, Taiwan media reported.
Taiwan-based Quanta Computer, which produces laptops for Apple and HP, increased pay by 15 to 20 percent in the Songjiang plant in Shanghai in the first quarter, Quanta told Shanghai Daily.
A Taiwan-based electronics maker, which has plants in Jiangsu Province, said it faced "great pressure," given Foxconn's leading market position in the industry, and had increased wages 20 to 25 percent in the first quarter already.
"It's a sample and it's difficult to deal with it. We haven't the bargaining power with clients and we probably have to take the cost by ourselves," said a company official yesterday.
The "butterfly effect" of Foxconn's decisions could mean price hikes for phones and PCs, increases seldom seen in the consumer electronic industry.
Ultimately, the electronic makers may have to move production to regions with lower labor costs, industry officials said yesterday.
"It has probably caused a domino effect and we are concerned about it," said an official from one of the world's top three PC makers, who declined to be identified.
"It's hard to explain to consumers why you are going to give a higher price of PC models," said the PC company official.
Foxconn is the world's No. 1 made-to-order electronics maker. Its clients cover almost all top brands, including Apple, HP and Dell.
The Taiwan Electrical and Electronic Manufacture Association, with 3,800 member firms, reacted to Foxconn's wage hike by advising Taiwan firms to set up plants in India and Vietnam if they are forced to provide higher wages in the Chinese mainland, Taiwan media reported.
Taiwan-based Quanta Computer, which produces laptops for Apple and HP, increased pay by 15 to 20 percent in the Songjiang plant in Shanghai in the first quarter, Quanta told Shanghai Daily.
A Taiwan-based electronics maker, which has plants in Jiangsu Province, said it faced "great pressure," given Foxconn's leading market position in the industry, and had increased wages 20 to 25 percent in the first quarter already.
"It's a sample and it's difficult to deal with it. We haven't the bargaining power with clients and we probably have to take the cost by ourselves," said a company official yesterday.
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