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- 11 Jun 2010
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Is the Luxury Industry Facing an Impending Labour Crisis in China?

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A number of international companies including Shiseido Co. are encountering labour disputes in China as workers demand higher pay and better conditions.

Earlier this week, the global media turned its attention to the manufacturing situation in China as Taiwanese high tech firm Foxconn, which counts Apple among its clients, raised wages a staggering 67%. The dramatic pay-rise followed 11 suicides among its approximately 400, 000 employees, and a shocking expose from Chinese newspaper Southern Weekly which revealed the brutal treatment of employees. In what seemed like closely linked industrial action, about 2,000 workers at the KOK Machinery factory in Kunshan outside Shanghai also went on strike, demanding better pay and improved working conditions.

Luxury Japanese cosmetics company Shiseido Co. believes that rising labour costs are now inevitable.

Masaru Miyagawa, chief officer of the company’s China division, stressed that the changing demographic structure in China would undoubtedly impact on his organisation: “We have to consider the upward pressure on the labour costs in China.”

Shiseido has plants in Beijing and Shanghai, and regularly faces potential industrial action: “We have labour disputes once or twice a year in China. But these disputes are mainly caused by wage differences between regular workers and part-time workers,” Miyagawa said. “Because we addressed the complaints quickly, they didn’t become a serious problem.” In other words, Shiseido’s management view is that crisis can be averted through co-operation.

While demands for higher wages put an unwelcome strain on companies, the All-China Federation of Trade Unions argues that the action is not unjustified on the basis that nearly a quarter of Chinese employees have not had a raise in five years.

It is also worth noting that the economic surge and consequential demographic shift which is driving these demands, is also benefiting luxury companies who are finding themselves with a growing, aspirational demand for high-end goods and services. Shiseido themselves saw overseas sales account for 36.9% of their total sales, driven largely by growth in China.

Sources
Daily Tech
Google News