Taiwan laptop maker warns of China labor shortages

A leading Taiwanese laptop maker has warned labor shortages in China’s booming coastal cities could affect the supply of computers amid an expected surge in world demand.

Ray Chen, president of Compal Electronics Inc., said the labor situation could also lead to shortages of components ranging from memory chips to hard drives to computer cases, the Economic Daily News quoted him as saying.

He said the labor shortfall could worsen following this week’s Lunar New Year holiday because many factory workers visiting their home towns might not return to the major coastal manufacturing zones where Compal and other electronics companies produce personal computers.

A year ago when the global financial crisis was battering China’s exporters, millions of migrants were told to stay home because there wouldn’t be much work in Guangzhou and other southern cities. Then, as business started picking up during the middle of last year, factories were caught short-handed.

Many businesses now say they expect labor shortages this year to be worse than previous episodes. Migrants are finding jobs closer to home as the poor interior provinces become more prosperous and the supply of young laborers is decreasing as an effect of China’s one-child policy. Fewer, meanwhile, are willing to work for sweatshop wages as their parents did.

The Economic Daily newspaper said many factory operators fear their worker numbers will not return to pre-financial meltdown levels despite offering pay raises.

But an official with Taiwan-based Hon Hai Group, the world’s largest contract electronics maker, said it would not be affected by the labor shortages. It started building several factories three years ago in China’s interior to comply with Beijing’s policy of developing the southwest.

With manufacturing being shifted elsewhere, Hon Hai’s base in Shenzhen in Guangdong province now deals mainly with research and development and logistics, according to the official, who requested anonymity because of company policy.

Compal and Taiwan-based Quanta Inc. are the world’s top two contract laptop makers.

Compal’s 2009 sales amounted to $19.8 billion, up nearly 50 percent from 2008, with the launch of Microsoft Windows 7 operating system and low-priced laptops known as netbooks propping up sales amid the global economic recovery.

Taiwanese makers account for more than 80 percent of the world’s laptop output by setting up assembly lines in China to take advantage of the mainland’s cheaper labor.

Several Taiwanese makers, including Quanta Inc. and Inventec Corp., are building factories in Chongqing in southwest China, where labor costs are estimated to be 20-40 percent lower than the coastal cities.

Associated Press

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