Change of Wages in Chinese Electronics Industry

Change of Wages in Chinese Electronics Industry China’s electronic industry has grown dramatically over the past decade. The sector has witnessed rapid mushrooming of electronic manufacturers. Most investors are opting for China because of its attribute as a cheap labor economy. Some of the centers that have witnessed an increase in the number of electronic investments are Shenzhen and Hong Kong. Since embracing liberation in the late 1970s, a good number of investors have injected huge amounts of electronic capital to Hong Kong. Investors were very much interested in Hong Kong because it had laid down a feasible strategy that sought to assist firms and new investors realize the full benefits of its investment capital by harnessing lowly priced labor. The electronic industry of China is booming and has high prospects of growth.

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This has enticed not only the foreign investors, but also the government investments.

This, therefore, implies that quite a number of electronic investments in China are state owned while some are for foreign investors. This report seeks to examine the change of wage in China’s electronic industry. In addition, the paper looks to document how employees who sell their labor power to the electronic industry are treated.

China is arguably one of the fast growing economies in the world. Being a home to a billion plus people, China’s economic future is very robust. This is because the native populace is providing a ready market for produced goods and services. In an economic angle parse, both local and foreign investors are looking at these juicy figures in terms of increased revenue levels and subsequent company growth. Partly, the high level of investments from foreigners is guided by the fact that their products have ready market. On the other hand, the population of China can also be viewed in labor terms. The primary objective of a firm is to maximize its profit and spur economic growth. To maximize revenue, a company needs to minimize its overheads. China, therefore, offers an unmatched location for the realization of these goals. China’s economy stomachs a billion mouths that seek to improve their standards of living. To improve their welfare, citizens have to sell their labor power to an owner of the means of production.

Considering the supply of labor in relation to demand, a firm is able harness labor at cheaper costs. This is because workers are scrambling for the few available slots. The above scramble for employment by workers often exposes them to exploitation. This is because they are willing to offer their labor services at relatively low prices, often lower than the value associated with the labor effort to survive. However, low pricing of labor is an advantage to an investor. This is because they are able to utilize less capital in the acquisition of labor; this subsequently enables them to maximize their profitability (Guan & Yunxiang, 2003).

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According to Michell (2010), over 6000 foreign electronic companies i.e. from the United States of America, Japan and the larger Europe have established manufacturing ventures in China. Some of these companies have liaised with Chinese firms through joint ventures, while others have partnered with the state corporations. The stimulus of this rapid industry growth is the availability of cheap labor, as well as the presence of a huge market potential courtesy of China large population. It is, therefore, true to say that in the contemporary business world, China is the new avenue for scramble as most electronic businesses are pilgrimaging to this growing economy, thanks to the low costs of manufacturing. For example, in China, the rewards for labor are very low. This implies that wages or salaries extended to factory workers do not match the value of their efforts because the wages are far much low. However, Chinese government has advanced a number of legislation to prevent over exploitation of its citizens by both the domestic and foreign investors. For example, a good number of manufacturing firms are extending a reward for labor that ranges between fifty to a hundred dollars a month to factory workers (Labrianidis, 2008). This pay is relatively better when compared to past rewards.

Despite the government legislation protecting workers, electronic companies have relatively strict rules i.e. there are curfews imposed to workers. However, the tough firm rules have not led to a shortage or reduction of laborers that are keen to fill in the available vacancies.

The wages offered by Chinese electronic firms are relatively high compared to those of other sectors of the economy. This is, therefore, the reason behind the increased workers desire towards the jobs. During initial stages of their establishment, electronic companies were unable to attract highly trained workers. This is because most of these establishments were based in the countryside where folks were not well versed with their operations. Therefore, firms incurred more operation costs as there was need to train these human beings on the general know how of

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manufacturing and operational issues. The lack of appropriate skills was a great disadvantage to the workers. This is because their wages were throttled to meet their training requirements.

However, this wage rate has changed rapidly with the changing times (Labrianidis, 2008). In China today, for example, quite a number of workers have enrolled in short courses to help them harness the highly required and well-priced skills. The improved skill level has not only led to increased salary levels, but has also increased the demand of workers who possess them. For example, some renowned manufacturing companies are offering housing units to its well skilled employees to encourage them continue offering their services.

Despite China being ranked an economy whose wage rate is relatively low, this assertion is expected to change with time. This is because most economies who historically offered low wages to their workers have since changed with time, and are currently offering competitive wages to their citizens. Most wages in these economies varied in accordance with the geographical setup. That is, there was discrimination in wages extended to workers relatively because of the location of the firm. For example, those firms in the countryside paid less wages as compared to those located near an urban center. The variation of payment that was showcased by once low cost labor economies is fast replicating in China. Wages differ, courtesy of geographic locations. The closer a worker lives and works in Hong Kong, the higher his/her wage rate. According to Peng (2008), the wages offered to Honk Kong workers is over four times those offered in other parts of China. This has relatively curtailed new investments in the area as firms are looking for areas where they can largely cut down their production costs associated with labor. This factor has made firms rethink their investment plans, with a good number of them opting for inland zones where wage structures are not much developed.

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The radical shift of Japan from the production of cheap commodities to that of top notch, high quality production has well been emulated by China (Michell, 2010). China is the latest economy that is moving away from the production of low end consumer products i.e. transistor radios to the manufacturing of high end electronic products. A good example for this paradigm shift is the Namtai electronics, which is a jointly owned firm with financing from Hong Kong and a Japanese technology firm, and is offering top notch assembly services in the industry (Michell, 2010). Nemtai electronics came into existence in 1975 and has transitioned from the assembly of calculators to the assembly of advanced electronic gadgets i.e. personal computers, card readers, electronic organizers, and phones among others. In wage terms, the assembly of quite a number of these electronic gadgets is done manually. This implies that almost every machine has a human as a good number of components are first inspected before they can be assembled. Despite the high levels of capital investment, most electronic firms are keen at acquiring modern equipment for assembly purposes. This implies that sooner than later, these small electronic companies will be able to wrestle it out with other well performing assemblers in the world.

Chinese electronic firms have often been accused of not providing favorable working environment to their workers. Despite the teething economic times and poor wages, workers in China are often exposed to poor work conditions by their employers. According to Labrianidis (2008), in most cases, workers are exposed to long work hours in poorly ventilated rooms. More disheartening is the fact that they are not rewarded for the additional hours worked. In addition, discrimination of Chinese workers by their foreign employers and fellow coworkers i.e. those from Taiwan is another aspect that has led to the questioning of foreign investments. Moreover, there are very poor working relations between firms’ management and its employees. The

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manner in which an employee is being treated has a direct impact in the performance of a company. For example, a company that is seeking to attract and retain the highly skilled personnel in the industry has to showcase a manner of humanity to its employees. Moreover, customers are often attracted to companies that they perceive they treat their stakeholders in a good manner.

Wages plays an important role in the motivation of company employees. With the increasing demand for highly skilled personnel, companies are advancing detailed company concepts to enable them attract and retain employees. The team concept is the primary idea that seeks to inject life to a sound employee culture that advocates for cost effectiveness. This involves allocating each individual worker to a team. In the China electronic industry, a firm is able to realize high productivity per employee by creating a team mentality. These teams do not work to outshine one another, but work in unison to achieve the goal of a manufacturing company. The analysis and subsequent evaluation of a team contribution is done once every financial year to ascertain the level of contribution of each team to the overall performance of a company. This treatment often nurtures a sense of belonging between individual teams.

Moreover, it helps diffuse team tensions that result from unnecessary competition. When workers are treated well, they are able to engage their efforts fully towards the improvement of a company performance. The relationship between the teams enable individual workers engage other members outside their team in different assignments. This, therefore, provides avenues for learning and personal growth. The sharing of intellectual knowledge by teams enhances the relationship between the worker and the employer. This is so because it often provides an avenue where workers are able to engage fellow workers, thereby eliminating isolation. An electronic company is able to achieve efficacy by employing relatively simple principles aimed at guiding

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teams towards accuracy in operations. A crucial link to company success is derived from the coordination of teams that work in the background (Labrianidis, 2008). To be fruitful, a company needs to have a well-combined team that has well internalized the cultures and objectives of a firm. A sound relationship between workers is responsible for the stability of a company. In addition, a firm needs to offer training programs to its workers to ensure that they get value for the wages the pay.

The division of workers into different teams allows a firm understand its workers better i.e. in a detailed version. The feedbacks aimed at curving company decision making relies on the cordial relationship of teams. The teams are often guided by a team leader. This individual has an excellent grasp of the team members. The management of a company is, therefore, able to document with ease the strengths and weaknesses of its workers by not only engaging the group, but also the team leader. Shortfalls in terms of skills can be identified with much ease, and at its early stages enabling appropriate measure i.e. further training to be undertaken. The promotion of workers is often swift in such kind of situations. In addition, teams boost the psychological satisfaction of a worker as it provides a sense of belonging. Moreover, new workers are able to adjust with much ease to their new working environment because they often work with the same team of a few people. Most companies operating in a capitalistic system often view workers as instruments or tools for making profit. However, with team work, instead of an electronic firm viewing workers as input units or slaves in in payroll, the ideology behind team work enables the firm to view these individuals as a team, which is a boost to worker satisfaction. The mutual working relationships between teams enhance the firm’s objective of advancing excellent services to consumers. Given that workers feel appreciated, and when they are rewarded an equal

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amount for a job done, then the feeling can be transformed to exemplary performance (Columbus, 2003).

Chinese government influence on the electronic sector cannot be understated. Despite the government owning some of the firms, it is responsible for the formulation of rules that govern firm operations. The wages paid by the government are in accordance to the ones prevailing in the market. This implies that workers can never bank on the government to fully push for an increment in wages. Therefore, the wages extended to workers rests squarely on their efforts through trade unions. Strong trade unions are better placed to bargain for an increment of worker wages and salaries. A change in government leadership often brings with it changes in electronics policy (Peng, 2008). Therefore, a faceoff between the government and the manufacturing industries often looms in relation to the ever changing policies. The aforementioned often results when there are joint ventures of firms that fail to follow the dully laid down government procedures. Chinese economy is relatively a capitalistic system. This implies that there is limited or zero government influence in market operations. The forces of demand and supply are left to decide the labor prices. Both the local and foreign investors seek to maximize their revenues by paying less for labor power. The move to pay a lower wage in relation to the value of an effort is called surplus value. In addition, workers inputs are not often incorporated in the production process, implying that he/she is being used as a tool. This often deprives them off their psychological satisfaction that comes with a rational reward for ones effort.

Electronic firms often operate like other companies in the contemporary business world.

This implies that they are manned by managers and supervisors. These individuals are responsible for the formulation of policies that seek to steer a firm towards its prospects. More

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often, these decisions fail to incorporate the interests of workers as they tend to be skewed towards shareholders. To improve their bargains, workers need to regroup into unions. Power gained collectively is able to safeguard their work related interests; that is, labor unions are able to advocate for better wages and remunerations for a given unit of labor value. Workers are also able to increase their wages and influence by participating in the elections of labor union.

Increased power and influence enables workers attract attention from company management.

This, therefore, enables them relay their concerns to company management with much ease.

Union leaders use their influence and power to engage in resistance. In addition, this power enables them to justify their actions that are often directed towards exploitative companies (Peng, 2008).

The minimum wages offered by electronic companies in China are never enough to meet the ever rising cost of living. Therefore, to enable them make ends meet, Chinese workers indulge in overtime work. This is because it is hard to survive with the normal working hour wage alone. For example, in a ‘good’ month, Hongkai electronics pays a worker $ 139 United States dollars as gross income; the same worker is left with $ 76.20 after deductions (Mourdoukoutas, 2006). Given the worker has other financial expenses to meet, it is relatively impossible to survive, and in this case a worker has no much options but to work overtime. In addition, most companies’ terms of contract are very rigid. For example, quite a number of them require employees to work for a considerable amount of time i.e. exhausts a contract first before they can be considered for a salary review. On the other hand, a number of others require a worker to first exhaust their probation and evaluation periods that often run for a period of six months before they can be eligible for wage increase. Moreover, others even curtail workers’ ability to earn wages till the lapse of a year in service. The insensitivity of these terms of work

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that are sometimes difficult to achieve reinforces the need for a worker to venture into overtime tasks to widen his wage and salary basket. However, the overtime which these workers are driven into by minimal wages does not comply fully with the Chinese government labor laws.

For example, a good number of electronic companies in China have their overtime running between 36-160 hours in a month. This is an ultimate law breaker as the legislation postulates that overtime hours need not exceed 36 hours in a month (Mourdoukoutas, 2006).

Labor intensity amongst Chinese electronic companies is rapidly very high. A case in point are the employees in the production line of an HP assembly plant, who ought to exhaust an activity every 3 seconds and standing for a record 10 hours in every given day (Columbus, 2003). Although some of these factories give a 10 minute break daily, the same is not enough for a worker to fully relax, take lunch or have a drink and visit the relieve rooms. In addition, they tend to give a break to the workers at the same time of the day. This is often irrational as there are many workers and few washrooms. Therefore, time lapses before some of them have a chance to use the wash rooms. However, in some cases, rogue line managers dictate that workers ought to use their breaks to exhaust some pending works. It is, therefore, apparent that this extremely high labor intensity exposes workers to serious health problems, both mental and physical.

Electronic companies in China often con workers during the signing of work contracts.

They fail to fully inform workers fully the contents of a labor contract. Therefore, a worker appends a signature without the good faith of his/her employer. This violates the labor laws of China that assert that such contracts that seek to exploit another party are often invalid. The signed contracts are often used against a worker when there is a labor dispute. Because of the failure of a factory to act in good faith during the signing process, the paper can never be utilized

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or else borrowed for defense by the worker. For example, given an employee gets injured at the course of duty, an employer may fail to take responsibility although they are responsible for the employment of these workers (Guan & Yunxiang, 2003).

In conclusion, Chinese electronic industry is rapidly growing, and it acts as a reminder of transformations witnessed in Japan and the United States of America. However, China has a large potential of growth compared to other industrialized nations because of its unique labor and product markets. Low cost of labor together with the availability of a ready market are the two major attractors of foreign investment; that is, companies can utilize them to not only maximize their revenues, but also widen their growth networks. However, labor prices are expected to rise with the increased levels of skills. From the above discussion, it is apparent that China is on the verge of becoming a force to reckon with in the manufacturing of electronics and their assembly.

The aforementioned is possible because of the rapid influx of foreign investors in the sector.

Moreover, the government of China has injected a considerable amount in the sector. This, therefore, will spur the growth of the sector to remarkable levels. Finally, Hong Kong is fast becoming an electronic hub with its advanced operational levels.

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References Columbus, F. (2003). Asian economic & political issues, volume 09. New York, NY: Nova Publishers.

Guan, Y. & Yunxiang, S. (2003). China's telecommunications reforms: From monopoly towards competition. New York, NY: Nova Publishers.

Labrianidis, L. (2008). The moving frontier: The changing geography of production in labourintensive industries. Burlington: Ashgate Publishing, Ltd. Michell, T. (2010). Samsung Electronics: And the struggle for leadership of the electronics industry. Beijing: John Wiley & Sons.

Mourdoukoutas, P. (2006). Business strategy in a semiglobal economy. New York, NY: M.E. Sharpe.

Peng, M. (2008). Global strategy. Stamford: Cengage Learning.