Chinese Manufacturers Battle Trade War Fallout with Wage Cuts
Chinese manufacturers, like Mike Chai, are cutting wage costs and implementing temporary contracts to remain competitive amidst international trade tensions and tariffs. Many Chinese workers face underemployment, reduced shifts, and lower incomes as companies strive to maintain their global market presence against economic adversities.
Mike Chai, owner of a kitchen cabinet factory in Foshan, China, is taking drastic measures to cut wage costs by 30% to stay competitive amid shifting global trade dynamics. Chinese firms, undercut by tariffs in the U.S., are targeting Chai's Australian clientele, triggering a re-evaluation of his workforce strategy.
Facing dwindling profitability, Chai has halved his workforce since the pandemic, employing strategies such as shortened shifts and unpaid leaves to mitigate costs. Despite China's stable unemployment figures, experts suggest underemployment is rising, driven by industrial overcapacity and high tariffs, undermining workers' earning prospects.
As Chinese exports pivot from the U.S. to markets like the European Union and Australia, temporary contracts become prevalent. Workers face uncertainty and lower incomes, amplifying concerns about economic deflation. The move reflects broader trends within China's manufacturing sectors grappling with a challenging economic landscape.
(With inputs from agencies.)
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