Wages is one of the things that many companies are taking into account when choosing a location for their business. It affects the cost of production, and for that reason, companies are going to areas where they can get cheap labor. In China, many companies are doing well while others are struggling as a result of high cost of labor. For that reason, some are moving to other countries while others are relocating to areas where they can get cheap labor in the country. Costs of labor vary with regions in China. Below is a brief discussion of all you need to know about wages in China.

Do we have minimum wage laws in China?

This questing is asked by many companies who want to start operating in China. The answer is yes. China government have given local governments a chance to make laws and regulations that check minimum wages in their areas. They come up with minimum wage laws according to their local conditions. The rules include how often the minimum wages can be increased. Most of the local government review minimum wages once in three years. The national government also checks the wages to ensure that there is competitiveness in labor.

Policy tradeoffs and the Minimum wage

China is one of the countries that is facing tradeoffs between competitiveness and wage growth. The country has experienced some challenges as the high labor cost is discoursing factories to start operations in the country. Most factories are moving elsewhere they can get labor at a lower cost. As a result, China through her ministry of labor is coming up with strategies that will help in controlling wages and improve competitiveness. Also, the country is upgrading its production base and working hard to make her economy service and knowledge-based.

With such strategies, the country is making cheap labor less important in the development of the economy. On top of that, many leaders in the economy are encouraging the companies to shift in making high-end products. Manufacturing of low-end product requires cheap labor. When manufacturers shift to high-end products, cheap labor will be less necessary as companies will require trained workers. On top of that China is encouraging companies to use machines and automate their operations which will significantly reduce the number of laborers needed.

Minimum wages in different cities

Provinces are in charge of increasing wages in China. Some cities have relatively high minimum wages compared to others. Cities like Shanghai, Beijing, and Tianjin have high minimum wages of RMB 2,300, RMB 2,000, and RMB 2,050respectively. Cities in western China have relatively low minimum wages. For that reason, many factories are moving to these areas so that they can benefit from cheap labor. Shanghai has the highest minimum wage in China.

Conclusion

With the increasing wages in China, factories must employ right strategies and get professional to help in identifying best locations for starting businesses. Companies are moving to cities like Yunnan, Jiangxi, and Hunan as labor cost are relatively low.

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