U.S. firms in China say their No. 1 fear is rising labor costs

  • Article by: BLOOMBERG NEWS
  • Updated: March 30, 2013 - 9:27 PM
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Pedestrians walk past Best Buy, the No. 1 U.S. consumer electronics retailer, Thursday Dec. 28, 2006, in Shanghai, China.

Photo: Eugene Hoshiko, Associated Press - Ap

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U.S. companies operating in China cited rising labor costs as the biggest risk to their business in the country for the first time, an annual survey by the American Chamber of Commerce in China (AmCham China) showed.

Among 325 businesses surveyed, 47 percent said rising labor costs were their biggest risk, just above the number that said slowing economic growth in China was the major concern, the China Business Climate Survey said. More than a quarter of respondents said they had been the victim of data theft.

The report’s findings highlighted the fact that China’s labor pool has shrunk by almost 33 million in five years even as industry added 30 million jobs. New premier Li Keqiang this month promised to open the economy more to market forces as leaders seek to shift away from exports and toward domestic consumption to drive growth.

“As China enters a new period geared toward higher-quality GDP growth, our member companies are adjusting to structural shifts in the economy,” AmCham China Chairman Greg Gilligan wrote in the report.

Shortages of employees and managers, as well as labor costs, had never before appeared among the top five concerns, the group said.

China’s pool of 15- to 39-year-olds, which supplies the bulk of workers for industry, construction and services, fell to 525 million last year, from 557 million five years earlier, according to data compiled by Bloomberg News from the U.S. Census Bureau’s international population database.

The number employed in industry rose to 147 million from 117 million in the five years through September.

About 72 percent of companies responding to the survey this year said enforcement of intellectual property rights was either ineffective or totally ineffective, an increase from 59 percent in 2012 and 58 percent in 2011.

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