Not that long ago products slapped with the label “Made in China” were considered below par – cheap imitations of goods produced with more advanced technologies elsewhere in the world. Nowadays, it has become much harder to find fault in terms of the quality of products “Made in China” – most of our top-notch electronic equipment is produced here and process technologies are no longer “cutting corners” either as a rising number of Chinese plants have acquired western licenses and even commercialised a very “local” methanol-to-olefins production technique. Nevertheless, many of the products “Made in China” are still cheaper than those manufactured in Europe or the United States – a fact that has a lot to do with production costs, in which wages play a key role.

But those days are coming to an end. According to a new report from the Hong Kong Trade Development Council (HKTDC; www.hktdc.com), 21 Chinese provinces had raised their minimum wage by an average 22% year-on-year by September 2011. And the increases are set to continue in 2012, including in one of the leading plastics hubs – Guangzhou. Another key production region in the People’s Republic, Shenzhen, had raised minimum wages by 13.6% year-on-year in February 2012.

It increasingly looks as though the expressions “cheap production” and “Made in China” will no longer be mentioned in the same breath in the not too distant future. According to HKTDC statistics, workers in China’s Guangdong province, where several foreign companies have also set up shop, received an average 11% salary increase in 2010, and pay rose by another 12% in the first three quarters of 2011. Up until September last year, the average Chinese worker saw his or her salary rise by almost 15% year-on-year, statistics indicate. The wage rises are putting manufacturers in a bind – forcing them to either raise salaries or lose their workers to other, better-paying regions. And for the average Chinese migrant worker it probably holds little importance whether he or she is working in a huge manufacturing hub in the country’s south, east, north or west – there is not much that differentiates the city-like hubs of producers like Foxconn from one another.

This development has not gone unnoticed by western players, either. The news were recently awash with the supplier responsibility code enacted by computer giant Apple in the wake of numerous complaints about working conditions at Foxconn, one of its largest Chinese suppliers. According to the review of Foxconn working conditions, conducted by the Fair Labor Association, employees worked 56 hours a week on average, 6% of them were between the ages of 16-18, some worked seven day shifts without a mandatory 24-hour break and several complained that they did not get proper remuneration for overtime. The report has reverberated not just across western, but also Chinese media.

Workers’ rights are becoming increasingly important in China, in terms of working hours, conditions and wages, too. In a way it seems as though communism has come full-circle – as the Chinese proletariat demands more rights, sparking off what could ironically be called the country’s “iPad revolution”. As wages and regulations rise, foreign players may in future think twice about outsourcing their production to China – lower-cost countries such as Indonesia, India and Vietnam may become more popular. In a way, the ball has already got rolling – German household goods manufacturer Fackelmann (Hersbruck; www.fackelmann.com), for example, pulled the brakes on some of its Chinese manufacturing sites last year, shedding more than 1,000 jobs as part of what it called a rising trend to “insource” production once again.

These developments should not catch anyone off-guard. Dismal working conditions, poor wages and pollution were some of the root causes of workers’ revolts in the West. Why should Chinese employees be content with less? What remains to be seen is how the country will cope with rising wages and increasing environmental concerns, prompting more sustainable – and often also more expensive – production methods. Will those products “Made in China” maintain their competitive edge amid these rising production costs or will we see the country’s exports suffer? One thing is for certain: Exciting times lie ahead, both for the plastics industry as well as other manufacturing sectors.

Leonie Schultens