Chinese Labor Getting Too Expensive

There is an interesting labor unrest in China that involves a foreign (an American) company and Chinese workers. The U.S. president of a company that operates a factory in China is being held hostage by a group of the Chinese employees there in a labor dispute at his medical supply plant in the Beijing suburbs. It's because the workers fear he came to Beijing to fire them and that he won't give them the same severance pay that workers who were fired earlier received. In fact, he flew to the factory in China to finalize the layoff of the 30 people from the plant's plastic division,  not to fire the hostage takers. The plastic's division has moved to Mumbai, India because it is cheaper and easier to operate there than it is in China. Rising costs, including a minimum wage, have made China more expensive  for U.S. and other companies as a a labor site in recent years. The cost of out outsourcing manufacturing to China will soon be equal to the cost of manufacturing in the U.S, so look for more of those factories to exit China.

Sometimes Chinese workers hold their boss captive when wages are not paid on time. Once paid, and they let the boss go home. In this case the American president, Charles Starnes says they won't let him out of his office and that they have held them five straight days, says he feels like "a trapped animal",  has no access to his medicine, and  that he can't walk anywhere in the factory. He is surrounded by workers if he does. When he tries to walk to the gate to leave, they physically prevent him from getting to the gate. He is a prisoner in his own factory because about 100 workers erroneously think that they were also being laid off. They want the same layoff compensation packages that the plastic division workers got, despite the fact that the rest of the plant is not being closed.

Of course...the Chinese government will not intervene to assist the trapped company president. He will find the Chinese authorities not as accommodating in helping him leave as they were when they enticed him to operate a factory there. This incident and a few others like it shows that it is becoming too expensive to make products in China. It is why foreign manufactures are finding other even poorer countries with lower labor costs......India, Pakistan, Indonesia, Vietnam etc..... with fewer employee rights and wages that make it cheaper to operate there. No wonder the Chinese economy is slowing so fast. The loss of those low skilled labor factory jobs set up by foreigners is not being replaced fast enough with the the higher skilled domestic jobs the Chinese government is trying to create as a replacement.

Just this week, more than 1,000 furious migrant workers besieged a factory in Shanghai and held 18 Japanese and Chinese managers against their will for more than a day, after the workers were required to abide by unequal regulations. The labor force is restless in China. As they become more affluent, they become more demanding of the foreign companies there. The government fears that workers will  also demand more of the Chinese government . This anger along with the higher costs of doing business in China may be the nail in the coffin of the once non stop growth in the Chinese economy. I wonder what the Chinese government can or will do about this.