According to Chinese media reports, several provinces including Jiangxi, Heilongjiang and Shaanxi have recently announced that they will raise the minimum wage from April this year, and other provinces including Jilin, Tianjin and Chengdu are also considering the increase. The hidden cost increase test.
China last year because of the impact of the Epidemic, a comprehensive freeze on labor wages, but with the epidemic gradually slowed down, the provincial governments follow the “minimum wage regulations” to raise labor wages, Jiangxi, Heilongjiang, Shaanxi has been determined and promulgated the relevant minimum wage regulations, the average minimum wage this year by 8-10%.
Among China’s 31 provinces, Shanghai’s monthly minimum wage has reached RMB 2,480 yuan (about NTD 10,675 yuan), Guangdong, Beijing, Tianjin, Jiangsu, Zhejiang and other monthly minimum wages are also more than 2,000 yuan (about 8,609 yuan).
With the rise of labor wages, also let the labor-intensive electronic foundry face huge labor cost increase pressure, past Taiwan factory Honghai, Quanta, PEGATRON, Wistron (3231-TW), Compal (2324-TW), Inventec (2356-TW) have taken into account the labor costs have to set up factories in the west, but with the economic takeoff in China in the past few years, labor costs rise year by year, also forced foundries to rethink Global layout.
The electronics foundry industry said, in recent years, China’s labor costs increased, coupled with the U.S.-China trade war catalyst, the supply chain is accelerating to the global factory, to spread the risk, among them, India, Southeast Asia has become the first choice, but the short-term Chinese supply chain is still the most complete, but in the long term, global manufacturing, close to assist customers has become a trend.
In addition to labor costs, electronics foundries used to be called “gross three to four”, although the scale of revenue, but the gross margin is only 3-4%, therefore, to improve operations, electronics foundries are also actively strengthening the automation of production lines, lights off factories, etc., while the layout of high-value products to enhance profitability.
Observe the recent layout of the major foundries, Hon Hai (2317-TW) will reach into the server market, while the preparation of MIH platform, strong attack on the future of the huge business opportunities of electric vehicles, PEGATRON also locked in the field of automotive, one after another won the tesla (TSLA-US) central control system, charging pile orders, Quanta continues to sprint for high-end laptops, white server business opportunities, Wistron, Inventec, Compal also respectively In the server, medical, 5G base stations and other areas of active layout.
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