February 13, 2008

Shoemakers Walking Away from South China

More than 1,000 shoe factories in southern China have closed in the past year — half of them just in the past 12 weeks — and many more will be shutting down in the coming months, according to news reports.

Hong Kong’s Asia Times reports that about 10,000 factories of different types are expected to close in the region this month, as wages increase and environmental and employment regulations tighten.

About half the companies leaving Guangdong are moving to other provinces of China, according to Hong Kong’s Asia Times.

At least 25 percent of them are moving to other Asian nations such as Vietnam, where labor is cheaper and regulations looser, according to the newspaper.

China’s new Labor Contract Law, which was implemented last month, is seen as a major factor in the mass exodus of industry.

Leung Ka-yiu, a factory manager in Guangdong, was quoted by Asia Times as saying, “The labor law can be said to be the last push for me to leave. If the law is strictly followed, my factory’s labor cost will increase by 20 percent, which many shoe factories like mine can not afford, given our profit margin of about eight percent.”

In an entirely different take on the situation, Britain’s Daily Mail reported that labor costs are going up because China’s migrant workers will no longer put up with low wages and poor working conditions.

“In the past, workers would just swallow all the insults and humiliation they suffered,” said workers’ rights activist Jenny Chan, according to the Daily Mail. “Now they resist and there are a lot of innovative ways for them to fight back.”

–Will Crain/Newsdesk.org

Sources:

“Last call for Guangdong shoemakers”
Asia Times, February 5, 2008

“The day China’s sweatshop workers rose up in mutiny and looted the plant”
Daily Mail, February 9 2008

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