China loses competitive edge as its wages climb

LOW WAGES may have been the foundation of China’s economic boom, but its competitive advantage in the space is disappearing, according to a report from KPMG out yesterday.

Other south and south-east Asian countries like Bangladesh and Indonesia are now significantly cheaper locations for manufacturing activities.

After years of high growth, wages have increased – a development encouraged by the government, which seeks to boost the minimum wage as part of its 12th five year plan.

The consultancy’s study also reports that Indonesian footwear exports increased by 42 per cent in 2010, topping $2bn.

“Sourcing goods in China purely because of ultra-low costs is a thing of the past,” KPMG’s Nick Debnam said. “But it is going to be impossible to avoid the challenge of rising wages entirely wherever you are in the region.”