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Hobby product prices could rise with China labor shortage

By Hal Miller
Published: March 25, 2010
In a country of nearly 1.3 billion people, one would never expect China to have a labor shortage. And yet, it’s experiencing one, though not exactly for a lack of people.

That means the cost of products sourced from there — including many hobby items — will be going up.

According to a variety of news sources, many Chinese manufacturing centers are competing for workers right now with higher pay and improved production environments. Firms there typically lose 10% of migrant workers following the annual Lunar New Year festival, however, this year companies are reporting that figure to be much higher — in some cases as much as 40%. This is happening as demand is increasing for products.

According to the New York Times, wages have risen as much as 20% in recent months, and in some isolated cases, workers are making as much as 40% than they were when the economic downturn started two years ago. Some Pearl River Delta manufacturers (Guandong-Shenzen area) are offering bonuses for signing as well as recommending relatives for employment.

The increased costs, ultimately, will have to be passed on to the global market. The biggest reason for workers not returning to the coastal manufacturing areas is the jobs being created in the interior of the country thanks to a $500 billion government stimulus program. This is enabling the labor force to find jobs closer to home. Also contributing is what economists see as a long-term trend: China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh laborers for its factories, the Times says.

For more on the story and its impact on the hobby industry, see the May issue of Model Retailer.