African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4094

Full Length Research Paper

Has low-paid advantage of Chinese factory disappeared after the explosion of labor revolution?

Ming-Yuan Hsieh* and Chaang-Yung Kung
Department of International Business, National Taichung University of Education, Taiwan, Republic of China.
Email: [email protected]

  •  Accepted: 18 November 2010
  •  Published: 04 April 2011

Abstract

 

This research employs the Social Cognitive Theory (SCT) and the Fuzzy Theory (FT) with the Multiple Criteria Decision Making (MCDM) methodology to evaluate four hierarchical relations for the purpose of initiating an innovative strategy that addresses the domino effect of the labor revolution currently transpiring in the hypercompetitive Chinese manufacturing industry. First, the most contributed conclusion is that the “change original business at the raising compensation policy” (CBRCP) is the best choice for Taiwanese manufacturers operating in China because it is the highest scores of three assessed measurements in the CBRCP. This conclusion further indicates that manufacturing enterprises have little leverage, in the interim, but to increase employment compensation and benefits to satisfy the demands from the ongoing Chinese labor revolution even though it brings about an incremental expenditure in their manufacturing costs. In response, many of the Taiwanese manufacturing enterprises have or are reconsidering shifting their manufacturing factories from the developed coastal Chinese cities to the developing interior subordinate cities or outside of China to the undeveloped low-pay countries in the Southeastern Asia region such as Vietnam, Laos, Myanmar, and so on. However, this employment revolution completely conforms to the economic development policies of the Chinese government because it increases the average level of employment compensation and develops the interior subordinate cities in order to diminish the poverty gap among cities. The second conclusion is that the Chinese laborers have shifted their focus from solely on salary to other workplace factors such as employee benefits, work safety, location, and job satisfaction. Further, a significant number of the questionnaires from the laborers clearly pointed out an expressed desired to move back to their hometowns because of generally the lower cost of living but they wish to retain their current compensation levels. Additionally, throughout the review of relative literatures, in terms of macroeconomic consideration, these enterprises can choose to transfer the increment cost of compensation to the final customer in the form of higher prices to enhance or maintain profits but this may affect the balance of the world’s inflation-control mechanism.

 

Key words: China labor revolution, Social cognitive theory (SCT), Multiple criteria decision making (MCDM).