Life of Guangzhou - Hong Kong Firms Struggling With Chinese Labor Laws

Hong Kong manufacturers operating in the industrial hotbed in southern China's Guangdong Province are facing difficulties from higher labor costs and tough labor laws that may force some of them to close down, according to a report released Thursday.

The Chinese Manufacturers' Association of Hong Kong, representing 3,700 member-companies, conducted a survey in March on the changes in the business environment in the Pearl River Delta region.

Of the 179 manufacturers surveyed that are operating in the region, nearly half said in the past two years they saw a 10 to 20 percent rise in production costs while 36 percent of the enterprises had cost increases of more than 20 percent.

A majority of the manufacturers said they will transform into trading or move their production lines to inner parts of the province.

Eight percent said they might just shut down operations.

The association blamed a combination of tightened regulations, rising inflation, appreciation of the Chinese currency and the newly implemented Employment Contract Law for the tougher business environment.

The new law, effective from January, fosters labor rights protection by hammering out details of employment contracts that were either ignored or did not exist before.

The association urged the Chinese government to ''clarify the gray area of the Employment Contract Law as soon as possible and facilitate a proper concept of rights protection among labor.''

Industry figures showed that Hong Kong enterprises established about 57,500 factories in the region, hiring 9.6 million employees.

[More Guangdong and Pan PRD News]