Pearl River Delta loses charm with HK businesses

Labor shortage and rising manpower costs on the mainland continue to be major concerns for Hong Kong-based manufacturers in the Pearl River Delta, a leading manufacturing base in China, a new survey said on Friday.

The labor shortage rate for Hong Kong-based companies increased from 10 percent in March-May of 2013 to 13.6 percent in the same period of 2014, said the survey conducted by the Chinese Manufacturers' Association of Hong Kong. The survey was conducted for the period from March to May and covered 274 Hong Kong-based companies of which about 55 percent have developed manufacturing businesses in the Pearl River Delta.

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Most of the Hong Kong-based companies are engaged in original equipment manufacturing in sectors like garments, electronics and hardware, the survey said. The averaged number of workers in each of the Hong Kong-based companies in the Delta region fell from 703 in 2013 to 599 in 2014, it said.

Edward Tsui, vice-president of the association, attributed the labor shortage to a more balanced economic development between the inland areas and the coastal regions on the mainland.

"Businesses in the Delta region will continue to see a labor shortage in the long term as the labor situation on the mainland has intensified with more migrant workers expected to remain in their hometowns as they can now find jobs that offer equivalent payment," Tsui said.

The rising living costs in the Delta region has also posed challenges for migrant workers, according to Tsui.

Citing the survey, which indicated that Hong Kong-based businesses in the Delta region are grappling with rising labor costs, Tsui said companies should offer more competitive salaries for qualified workers to maintain sustainable business growth.

"Workers will decide where they want to work, depending how competitive the salaries are," Tsui said.

According to the survey, 85 percent of the surveyed companies reported higher labor costs from March to May, with an average year-on-year increase of 12.2 percent.

"As the labor costs rose and they could not transfer the labor pressure to overseas clients, more companies have reported profit declines," Tsui said.