According to an article on EMSnow.com, labor costs in China are rising fast due to pressure from human right organizations but also from government regulations to avoid social unrest and rising middle class expectations. CBA forecasts that the costs might keep increasing in the next two or three years. According to the article, electronics manufacturing data shows that there is not an unlimited supply of cheap labor in China, despite the huge population.
Moreover, according to the Economist, the increase of the costs has started in the coastal provinces where factories have clustered. In 2012, an investment bank has released a survey which stated that wages had already risen by 10% that year. According to Dale Weathington from Kolcraft (an American firm that uses China contract manufactures to make baby stollers in southern California), China’s coastal provinces are losing their power to draw workers out of the hinterland. In previous years 95% of Mr Weathington’s contract staff returned to work after the Chinese new year, compared to only 85% in 2012.