HP, Dell keep wary eye on big jump in China labor costs

“Hewlett-Packard and Dell Inc are keeping a close eye on a big jump in wages for workers that assemble Apple Inc’s iPhone in China, and could be forced to nudge up prices for their own products if labor costs keep rising,” Noel Randewich and Poornima Gupta report for Reuters.
“Major contract manufacturer Foxconn Technology Group — which counts Apple, HP, Dell, Nokia and Motorola Mobility among its major clients — last week raised wages for its workers in China by 16-25 percent, the third hike since 2010,” Randewich and Gupta report. “The wage increases reflect a rising trend across the Chinese electronics manufacturing industry and could pressure already wafer-thin margins at the likes of HP and Dell.”

“‘HP and Dell’s PCs could cost a bit more. Those companies have been trying to pass on extra costs. It may or may not work. Their products aren’t as differentiated as Apple’s,’ said Shaw Wu, an analyst at Sterne Agee in San Francisco,” Randewich and Gupta report. “Foxconn’s February wage hike was announced days after Apple said a U.S. non-profit labor group had begun an ‘unprecedented’ inspection of working conditions at its main contract manufacturers, including Foxconn. Foxconn’s wage increase comes as Chinese electronics manufacturers face higher costs to attract workers.”

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