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ABOUT March 2010
This page contains all entries posted to PN China Blog - English in March 2010. They are listed from oldest to newest.

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March 2010 Archives
March 1, 2010

Quantify China's labor shortage

Let the numbers tell the story. Just in Guangdong province, there are shortages of 800,000 workers in Shenzhen, 200,000 in Guangzhou, and 150,000 in Quanzhou. Up north in Wenzhou city, Zhejiang province, that number has hit a million, according to labor bureaus.

The steaming hot labor market has turned 180 degrees from a year ago, when factories laid off millions of workers. For the time being, at least, it looks like many of the migrant workers who lost their jobs and went back to their home villages are not returning to the host cities.

"You can walk into any factory and get a job," a New York Times report quoted a 22-year-old plastics worker in Guangzhou saying.

Manufacturing giant Foxconn Technology Group said it had 50,000 vacant positions after the Chinese New Year. In order to solve the problem, the company told Xinhua News Agency, a referral system was put in place, with on-site recruitment open even during the holidays.

Companies and government officials expect more migrant workers to return after the Feb. 28 Lantern Festival. Shenzhen city is planning to organize 573 job fairs in the next two months.

March 2, 2010

Decipher China's labor shortage

By definition, a labor shortage forms when the number of jobs outnumbers available workers. On the surface, the giant gap between the two variables has been created in China by fast recovering businesses and unmatched supply of migrant workers.

A Wall Street Journal article looked into the issue in depth and summarized four factors:

1. Structural problem: "Many of the outstanding job vacancies are due to a lack of skilled workers as segments of China's export industry crawl up the value chain." Meantime, younger migrant workers aren't interested in low-paying, physically demanding work.

2. Growing income at home for farmers. "Farming is becoming more rewarding than cleaning skyscraper windows in some places." Some farmers live on rental income of their farmland to large state agricultural enterprises.

3. "...The construction boom and fast economic growth in second-tier inland cities such as Chongqing, Wuhan and Nanchang. Many migrant workers prefer these places because salaries are in some cases almost on par with Shanghai's and it's simply closer to home."

4. Generation gap. While migrant workers in their late 40s or early 50s are gradually returning home, their children, who have been raised in relatively good conditions, are under much less pressure to make hard money in order support themselves or their (smaller) families, thanks to the one child policy.

The analysis is solid, but nonetheless incomplete. A quick glimpse of the 74 comments (all written in Chinese, some by self-claimed migrant workers) on this article reveals one simple, pragmatic problem: low wages and lack of protection.

(To be continued.)

March 4, 2010

Continue to decipher labor shortage

The particular lifestyle of Chinese migrant workers usually is marked by these characteristics:

1. Low base salary, long (paid) overtime all year round;

2. Undesirable living conditions: shared dorm rooms, lousy cafeteria food, etc.;

3. None or insufficient health insurance, social security and other benefits;

4. Difficulty in children's schooling: They are charged extra, lofty fees to go to public schools in the city;

5. Ineligibility for local government-subsidized housing for low-income households;

6. Oftentimes, separation from spouse and family.

During the heydays, migrant workers coped with these hardships, believing the pay back was worthwhile and hoping things would get better. As the global financial crisis battered the export sector, however, their hopes were shattered, leading them to rethink their jobs and life paths.

Here are some thought-provoking readers' comments from the WSJ article I mentioned in my previous post.
The most direct cause of the labor crisis is the fact that many factory owners in the Pearl River Delta vanished overnight. [In 2009, many such cases occurred. Local governments had to intervene and compensate abandoned workers for their overdue wages.]
I live in Shenzhen, where basic-level factory jobs pay 1,000 yuan [US$146.5] a month. That's about twice as much as 15 years ago. But during the same time period, GDP grew fivefold, consumer prices doubled, and housing prices increased 10 times. Therefore, being a migrant worker here is most exhausting and hopeless...
The labor shortage doesn't have much to do with the one-child policy. You can see a lot of people idling around and playing Mahjong, no matter where you go. [It's because the pay is too low.] Government employees make more than 10 times than a factory workers. Unless you are desperate, [who would want to work in a factory?]
Living standards in rural areas have improved a lot. Farmers' income is catching up with low-level city jobs, while the living expenses are very low in small towns and villages. Plus, living in your home village is very relaxing and stress-free. I regret going to college and staying in a big city. My life could have been happier if I had stayed in my hometown.
The so-called labor shortage is a blessing. It shows that people are defending their rights to live a decent life. My company also suffers from lack of workers and we can't finish order on time. But I still am glad for the future of China.
Other comments argued that some college graduates in cities are paid not much more than factory workers, hinting that labor wages are fair. But that's a story for another day - the oversupply of college graduates across China.

March 9, 2010

Sichuan firm expands export to ASEAN

A bio-plastic manufacturer in Chengdu, Sichuan province, is ready to take advantage of the China-ASEAN (the Association of Southeast Asian Nations) free trade agreement and increase its export of bio-resin film.

Ye wenbin, general manager of Sichuan Corn-T Biology Technology Co. Ltd., has come up with a business plan to export PLA film to ASEAN countries, where the film is processed into bags and then exported to Europe.

Under the free trade agreement, which started on Jan. 1, China and the six richest ASEAN members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- eliminated tariffs and barriers to investment on more than 90 percent of the products traded between China and ASEAN, or more than 7,000 products. The zero-tariff status is expected to extend to the four new ASEAN members -- Cambodia, Laos, Myanmar and Vietnam -- by 2015.

Thanks to the zero-tariff, Ye told the Western China Metropolis Daily, orders from Singapore, Thai and Malaysia are on the rise.

Corn-T makes both PLA resin and film, according to a speech Ye gave last year. The company priced PLA film for 30,000 yuan (US$4,394) per metric ton and claimed annual sales of 6 million yuan (US$878,818).

The China-ASEAN free-trade agreement is the world's third-largest regional agreement in terms of economic value, after only the EU and NAFTA.

March 12, 2010

Toray expands film production in China, S Korea

Tokyo-based Toray Industries Inc. is launching production of PET film for use as a substrate for LCD screen backlight in China. The company also is doubling its manufacturing capacity for such film in South Korea.

According to a Nikkei BP report, the company decided to start making the PET film in China because global LCD display manufacturers expanded there to meet growing local demand.

Toray plans to move a 6,600-ton-per-annum production line from Gifu, Japan to Yihua Toray Polyester Film Co. Ltd., a 50:50 Chinese joint venture with Sinopec Yizheng Chemical Fiber Co. Ltd. in Yizheng, Jiangsu province. The line is scheduled to start running by July 2011.

Toray's wholly owned subsidiary in South Korea, Toray Saehan Inc., will double its annual capacity of the PET film to 36,000 metric tons by adding one production line. Toray said the South Korean government's policy to encourage the use of locally produced materials drives demand.

Total investment for both moves is reported to be 10 billion yen (745 million yuan or US$110 million).

March 20, 2010

"Free" is the message

It was obvious that the food storage product manufacturers at the International Housewares Show didn't want anything to do with BPA. They made aggressive marketing effort to state their BPA-free status.

The "BPA-free" label is tagged on virtually any type of food-service item on the show floor: PP containers and lunchboxes, PET bottles, acrylic canisters, and increasingly popular glass jars.

For anyone in the plastic industry, marking a PP container "BPA-free" is probably a little redundant. But, it may be necessary and informative for the average consumer.

That's why when I saw a manufacturer of acrylic storage containers who named themselves -- yes, the company, not just the products -- Free Free USA Inc., I thought they are incorporating the BPA-free message into their name.

But, I was wrong. Apparently, the parent company, Free Free Industrial Corp., was founded in Taiwan back in 1984. And the US division, Free Free USA, was established in 1994.

In 2005, the company changed its name to Felli Housewares, while still doing business as Free Free.

On its Web site, Free Free Industrial claims to be the largest manufacturer of acrylic canisters in the world and sells to more than 70 countries. It owns two injection molding factories on mainland China and one in Taiwan.

Out of curiosity, I tried to find the company's Chinese name and see what exactly the "free free" means. It probably means free as in freedom. It can't mean free of charge.

But I'm not sure. The company's Web site is in English only and my search on Google didn't have any results either.

Regardless, they could definitely leverage the branding potential of the name they picked up 25 years to appeal to chemical-conscious consumers. Why not?

March 23, 2010

LG enters US floor care market

South Korea's LG Electronics has launched its first vacuums - two full-size bagless uprights -- in the U.S. under the LG brand. The company, absent from the recent International Home + Housewares Show in Chicago, claims that it is already a leader in the vacuum category in other markets.

The new units - LuV200 and LuV300 -- feature a radio-frequency wand that allows consumers to control the vacuum remotely when the wand is detached from the base, Homeworld Business magazine wrote in an article published during the housewares show.

The top of the line, LuV300B, touts the industry's longest clean reach with a 40-foot cord and a 15-foot hose as well as certification by the Asthma and Allergy Foundation of America.

LG's entry will intensify the already fierce competition in the U.S. floor care market.

Also in the home appliances category, just days before the March show, a Delaware district court found LG guilt of infringing upon Whirlpool's patent for a refrigerator door ice maker and awarded Whirlpool nearly $1.8 million in damages. Whirlpool said it will seek a permanent injunction against LG when the judgment is finalized later this year.

March 24, 2010

Consumers' expectations for plastic totes

Brand owners and plastic manufacturers constantly come up with new designs of plastic storage totes, to use the most popular colors, shapes, volumes and other details. But, how much do these features matter to consumers?

A latest online survey coupled with a discussion group by the Homebusiness World magazine presented these interesting findings:

1. Transparency

Transparency is deemed a desirable feature in the discussion group. However, the majority of the survey respondents (67 percent) don't think it is important to see through the tote when storing seasonal clothes.

2. Function vs. fashion

Among the survey respondents, 57 percent believe it is "NOT important" that their laundry storage incorporates a fashion element or coordinates with their home décor, 32 percent "somewhat important", and the rest 11 percent "very important".

Meantime, consumers request a variety of shapes and sizes to best fit their available space and also find tight fitting lids and easy-to-grab handles two musts.

I would like to add one factor that's important for me: the availability of the same model in the near and midterm. Plastic totes are so durable that I still have some from five years ago. It'd be nice to add the exact same units when I need to expand my storage, even if they don't have the latest design features. But that's just me. A survey may just prove that most consumers don't care about it.