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Rising worker wages end 'cheap China' [Infographic]

Posted: September 11, 2012

By the look of things, it is only a matter of time before China loses one of its primary competitive advantages: inexpensive labor.

China garment manufacturers are already setting up factories in Bangladesh as high labor costs are eroding their competitiveness, according to the BBC.

Meanwhile, China's largest independent online clothing retailer Vancl, has started outsourcing to other countries in Asia due mainly to cheaper labor costs there.

Factory worker salaries in China's central and western provinces are still relatively low. But at the pace they are rising, inland wages may soon catch up with rates in coastal provinces.

For instance, 2011 salaries in Hunan, Hubei, Sichuan and Anhui provinces jumped an average 135 percent from 2006. This rapid ascent contributed heavily to the worker exodus in the past several years. In contrast, wages in the traditional manufacturing hubs of Guangdong and Zhejiang provinces rose at a relatively sedate 112 percent.

Against this backdrop, China suppliers are right in their cautious growth optimism. Rising labor and production costs, compounded by slow US and EU orders and intense price competition, are challenges they must contend with.

The map below shows 2011 salary ranges by city, and the average growth rates in key production hubs from 2006.

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