This year forget buying your tech in the post-Christmas sales. Because a 20 per cent increase in Chinese minimum wage is gonna hike up electronics prices come January.
In fact, the increase is only hitting the Guangdong province of China. Doesn’t sound too big a deal, right?
Wrong. Because that one province has been the making of China. As a result, it’s filled with big electronics firms and state-owned companies, as well as plenty of smaller and medium-sized private firms. That means it accounts for a huge share of Chinese industrial output. It also makes it hugely influential, and means the rest of China is sure to follow suit and raise wages across the board.
The knock-on effect is that anything made in China is going to get more expensive — and that means most of the gadgets you’re planning on buying are gonna get pricier, too.
While some companies might just relocate, manufacturing products in poorer countries like Bangladesh and Cambodia, that won’t help too much. Because while there are cheap workers elsewhere, the scale of workforce can’t match that of China’s.
This comes on the back of Western Digital’s Thailand factory being flooded, creating a jump in hard drive prices.
The hard truth is that things are going to get more expensive. Best stockpile before the holidays, then.
Image: Robert S. Donovan
Jaezass
Saturday, November 12, 2011 at 10:09 AMI dare anybody to argue that those poor buggers don’t deserve or need it! Now if Australia cut the import tax it wouldn’t make that much difference to us, but I’ll stick to ordering from overseas until that happens, which is probably never!!
MotorMouth
Saturday, November 12, 2011 at 4:21 PMImport duty on most things is just 5%, which is generally much less than the cost of having something posted from overseas. It is not a reason not to buy locally, especially as a lot of the countries you’d be buying from probably have higher import duty already priced in.
Flux
Saturday, November 12, 2011 at 10:31 AMYeah, I don’t have a problem with this at all. Those workers are paid frightfully little for long hours in terrible conditions – we’ve all heard the stories. If I have to pay a little more for my toys so that the folks who build them feel less like jumping off their workplace’s roof, I’m all for that. Give ‘em a bigger payrise, I say…
moloko
Saturday, November 12, 2011 at 10:36 AMGreedy chinese, how dare they get a pay rise to make shiny things for the billion dollar companies. Looks like it’s back to child labour.
Travis
Saturday, November 12, 2011 at 10:42 AMWell I don’t see a problem here. Underpaid staff getting a sight rise. I’m fine with that.
poltak
Saturday, November 12, 2011 at 11:22 AMAs little money as I make, the rate of exploitation of workers over there is a hell of a lot higher than it is here in Aus. I’d be happy to pay a bit extra for those poor bugger’s livelihoods.
It’ll probably just make me smarter/more-conservative with my purchases (which isn’t a bad thing for me…).
Chris
Saturday, November 12, 2011 at 2:09 PMThis is terrible! Gizmodo, you make it sound like it’s such a bad thing! I’d happily pay more for my electronics If I knew that people would be better off!
..maybe you should consider un-biasing this article!
Steve
Saturday, November 12, 2011 at 2:35 PMI don’t think it’s particularly biased. It’s undeniably a bad thing that we have to pay more for gadgets. I think in a perfect world, corporate greed would relax a bit so these people can still receive raises without consumers having to cop it. But no, Apple needs its double digit profit margin, so the cost is foisted on us.
Dainbramage
Monday, November 14, 2011 at 2:19 PMI love you, no homo.
SilentWolf
Saturday, November 12, 2011 at 3:02 PMWould happily pay more if I knew that the extra I was paying actually went to the people making the product, as oppsoed to lining an executives pockets :)
Elizabeth
Saturday, November 12, 2011 at 3:03 PMThis article makes it sound like it’s bad. They deserve a pay rise, hell, 20% is LITTLE imho, they should get 50% – they work long hours for Western companies that sell stuff 700% higher than what parts are worth.
MotorMouth
Saturday, November 12, 2011 at 4:17 PMLet’s put this into perspective. According to the Herald, it costs less than $5 to make an iPhone 4, so a 20% hike in labour costs would add less than $1 to the price of an iPhone. Any company unwilling to absorb that cost doesn’t deserve your money.
Nick
Saturday, November 12, 2011 at 6:36 PMLess than $5 for the assembly cost, right?
light487
Tuesday, November 15, 2011 at 8:43 AMIt would matter if the price of manufacturing went DOWN 20%, they would still charge more for the products to match with their need to show a profit.. the wages of the manufacturing “staff” is hardly relevant.. other than a possible way for some companies to try and justify price increases: “We have no choice! They are paying our slaves..err.. that is.. our offhsore workforce more money.”
As Thomas says, the labour costs are negligable.
light487
Tuesday, November 15, 2011 at 8:44 AM“wouldn’t” matter I meant.. with the upgrade to this site, you’d think they would have allowed for editing your own posts.. :)
np
Saturday, November 12, 2011 at 11:11 PMSo they will go from $1 an hour to $1.20 an hour for a product that these companies manufacture for $10 and sell to us for $300.
Then these greedy companies (that incidentally are killing manufacturing in their home lands) will now charge us $360 for the same item.
Sounds fair.
Thomas
Monday, November 14, 2011 at 6:09 PMThis is a shallow and one sided article. Labour costs of manufacturing make up but a tiny fraction of a handsets overall cost, meaning this will have little or no effect on the pricing of electronic gadgets. Way to seek for another attention grabbing headline without delving into real analysis of the issue, Giz. This graph, though not the perfect example, shows how little of the cost consumers pay for smartphones is due to manufacturing. http://www.economist.com/blogs/dailychart/2011/08/apple-and-samsungs-symbiotic-relationship