4 Wage increases in China private-sector wages rose 12.3% in 2011 and 14% in 2012. manufacturing sector have risen 71% since 2008. Crystal Group,

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Wage increases in China

• private-sector wages rose 12.3% in 2011 and 14% in 2012.• manufacturing sector have risen 71% since 2008.• Crystal Group, an apparel producer for Marks & Spencer,

MKS.LN , Abercrombie & Fitch, ANF, and Gap, has more than tripled its staff in Vietnam over the past three years, but made only small increases in its China workforce.

• Rising manufacturing costs in China were one reason private-equity firm Grumman Hill Group LLC decided to put shoe maker Aerosoles up for sale this year.

• most manufacturers operating in China are still profitable even though their margins are being squeezed.

• http://edition.cnn.com/2013/11/07/business/china-property-bubble/

Survey in China

• Average annual income for a family in 2012 was 13,000 renminbi, or about $2,100.

• average amount in Shanghai, a huge coastal city, was just over 29,000 renminbi, or $4,700.

• The average in Gansu Province, far from the coast in northwest China, was 11,400 renminbi, or just under $2,000.

• From The New York Times• Shanghai birdview http://www.airpano.ru/files/Shanghai-China/2-2

MNCs with manufacturing operations in China

• Vietnam, Thailand, Malaysia and Indonesia may become increasingly attractive as alternative sources for global production. However, MNCs considering these sources could face challenges such as less developed infrastructure in ports, roads and facilities; shortages of skilled workers; and political instability.

• may continue to locate more production facilities in China’s interior and western regions, where wage rates and other operating expenditures are still lower than those in the eastern coastal cities.

• can reconfigure their supply chain management strategies to distribute and sell products to Chinese customers.