"The global economy has been on a downward trend in the second half of this year. Orders from major customers in Africa, the Middle East, and Southeast Asia have halved. Factory profits have also decreased by nearly fifty percent. After deducting the costs of employee salary increases and welfare improvements, there is very little pure profit left," said Chen Xiaofeng, foreign trade manager of Deiwqi Sound Factory in Baiyun District, Guangzhou. However, Chen Xiaofeng believes that conditions will improve after next year's Spring Festival. With the basic digestion of inventory, there will be a large procurement wave in March to April, and at that time, he will have the opportunity to take over some orders lost by closed factories.
Regarding the issue of transferring industries inland, Chen Xiaofeng frankly admitted that for the sound industry, although labor is cheaper inland and the government provides tax support and other attractive conditions, due to the lack of a complete industrial chain and inconvenient transportation, moving inland would lead to an increase in procurement costs, so it is not easy for this industry to relocate.
"Nowadays, recruiting workers is quite difficult, with wages changing almost daily. Wages have increased from about 80 yuan per worker per day to 90 yuan, and now up to 120 yuan, with an estimate of reaching 150 yuan soon," said Hu Yuandi, chairman of Guangzhou Tama Leather Co., Ltd., who recently expressed his frustration. Despite repeatedly increasing salaries, he still hasn't been able to recruit enough skilled workers for the company. During its peak period, Tama Leather once employed more than 800 workers, but currently, only about 200 employees remain.
After randomly selecting 2,000 small and medium-sized foreign trade enterprises and tracking and monitoring them throughout the year, Shenzhen Yidatong Enterprise Service Co., Ltd. released the "Small and Medium-Sized Enterprises Foreign Trade Index Report from January to November 2011" in December. The report shows that contrary to the steady increase in orders for foreign trade enterprises at the end of previous years, orders for small and medium-sized foreign trade enterprises have sharply declined in the last two months, with a decrease of thirty percent. It also points out that the situation faced by small and medium-sized foreign trade enterprises in the first half of next year is expected to be even more severe, marking one of the toughest periods in recent years.
Such concerns are not limited to Hu Yuandi alone. Since the 2008 financial crisis, the traditional manufacturing sector represented by the Pearl River Delta has continued to face the unresolved problem of "labor shortage," which has become even more pronounced as the year-end approaches. Making matters worse, the European and American debt crises this year have led to weak international market demand, fluctuating domestic raw material prices, Renminbi exchange rates, loss of labor advantages, transfer of mid-to-low-end orders, and a persistently high proportion of short-term orders. This chilling export environment has made it difficult for many small and medium-sized enterprises to sustain themselves.
Regarding the causes of the "labor shortage," Ding Li, director of the Regional and Corporate Competitiveness Research Center of the Guangdong Academy of Social Sciences, provided another perspective. He indicated that according to the domestic labor supply pattern, the phenomenon of labor force diversion from the Yangtze River Delta and the Pearl River Delta to central and western regions in previous years should have largely adjusted by now. Therefore, apart from past factors, it cannot be ruled out that some companies, facing poor economic conditions both domestically and internationally, have proactively reduced capacity and adjusted structures. Additionally, industrial restructuring can cause imbalances in labor structure; for instance, the textile and garment industry has relatively low educational requirements for its workforce, whereas machinery, biopharmaceuticals, and LED industries require higher levels of cultural and technical skills.
"This year, I truly feel the arrival of a real crisis," said Hu Yuandi to reporters. He clearly understood the key reasons why companies were struggling to hire workers: "Firstly, it’s the end of the year, and generally, few people join factories at this time as they resign to return home for the New Year. Long-term speaking, 'difficulty in recruitment' is related to the overall downturn in small and medium-sized enterprises. Workers fear that companies might incur losses and shut down anytime, leaving them unable to recover their wages. Therefore, they prefer to sign short-term contracts and work as temporary employees to protect themselves."
In addition to the labor shortage, various data indicate that export orders for small and medium-sized enterprises are showing signs of fatigue. The import and export trade statistics for Guangdong Province from January to November 2011, published by the Guangdong Customs Sub-office, show that in the second half of this year, the growth rate of processing trade imports and exports has shown a monthly declining trend. The growth rate of processing trade exports fell from 18.4% in June to negative growth in November. Since the second half of the year, the growth rate to major markets such as Hong Kong, the United States, and the EU has also slowed.