Costs of Manufacturing in China Likely Heading Up SoonPosted: July 6, 2010
The New York Time reports in “Supply Chain for iPhone Highlights Costs in China” that manufacturing costs in China are likely heading upward soon:
“Soaring labor costs caused by worker shortages and unrest, a strengthening Chinese currency that makes exports more expensive, and inflation and rising housing costs are all threatening to sharply increase the cost of making devices like notebook computers, digital cameras and smartphones…
…Wages in China have risen by more than 50 percent since 2005, analysts say, and this year many factories, under pressure from local governments and workers who feel they have been underpaid for too long, have raised wages by an extra 20 to 30 percent.”
Manufacturers in China are already moving production away from the traditional electronic hub in Shenzhen to lower-cost regions in the country.
The article goes on to reveal that the lowest cost components on the iPhone come from the manufacturing and assembly of the various electronic components. This low-margin business is getting tougher and tougher and growing out of favor:
“…there is growing skepticism about China’s manufacturing model after years of pressing workers to toil six or seven days a week, 10 to 12 hours a day.”
Expect soon to pay more for Chinese-made goods at a store near you.