Chinese Wages Rise, Changes Tech Marketplace

Chinese Wages Rise, Changes Tech Marketplace

Chinese wages in manufacturing jobs are steadily rising, turning employees into global consumers while potentially driving factories hooked on cheap labor to new markets.

A recent Time report said that real manufacturing wages have been growing at 12 percent per year in China, thanks to a generally booming economy and more recently, rises in the minimum wage to offset a widening gap between rich and poor.

At the end of last year, China’s wage rate, adjusted for productivity, was about half that of the U.S.’s, up from 36 percent in 2000, according to a study cited by Time. By 2015, the report predicts it will be 69 percent of the U.S.’s figures — still lower, but growing closer to parity.

With the rise in incomes, companies like Apple are beginning to cultivate the Chinese consumer market; Apple COO Tim Cook was spotted last week at the Beijing offices of wireless carrier China Mobile, for instance. The company’s development of a lower-cost iPhone, besides expanding its audience with more price points in the U.S., would also make the handset more affordable to markets like China, as well.

This economic surge is also evident in changes to Chinese consumption patterns as newly flush workers channel disposable income into technology purchases.

When the iPhone 4 launched in the country in September, over 1,000 people lined up at Apple’s new Beijing store. Last year, Google said it would create developer tools targeting programmers in China and India to help drive adoption of Android phones in those markets. Though they may be lower-cost smartphones than are typically sold in the U.S., the announcement marked China not just as a consumer market, but one that consumes the same category of devices sold in the west.

Occasionally, anecdotes emerge that suggest Chinese consumers are embracing their role a bit too fervently. A fight broke out in a Beijing Apple store during the iPad 2 launch and a teenager reportedly sold one of his kidneys on the black market in order to purchase the latest Apple tablet.

But despite rising standards of living, other reports indicate that China hasn’t quite become the worker’s paradise. At Foxconn, which makes many Apple products, 11 workers committed suicide in less than a year. The incidents spurred the company to put safety nets up around buildings and focused global scrutiny on Apple’s production practices.

Apple’s own labor audits have found child workers in its contracted factories as well, a situation it reportedly tries to remedy. Toxic chemicals poisoned 115 of workers at a Wintek plant that made Apple displays, and though the company paid restitution, the incident highlights the sometimes dangerous working conditions that still exist in Chinese factories.

If the current trend in China continues and the labor market remains tight, workers can look forward to better conditions — the current boom is reportedly already leading to improvements. And Americans can expect to see devices being made in Cambodia or other production markets, where wages remain low.


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