Source : Procurement Leaders
Technology giants Hewlett-Packard and Dell are keeping a close eye on rising wages amongst their Chinese suppliers with both unsure where these costs will be absorbed.
Foxconn Technology Group, supplier to Hewlett-Packard and Dell, as well as Apple, raised wages by 16-25% in the wake of Apple’s announcement that a labour group would be inspecting working conditions amongst its suppliers.
Meg Whitman, HP chief executive, told Reuters that “If Foxconn’s labour costs go up, their product cost to us will go up."
"But that will be an industry-wide phenomenon and then we have to decide how much do we pass on to our customers versus how much cost do we absorb," she added.
Dell’s chief financial officer Brian Gladden, told Reuters that “It’s not clear to us how that will play out in terms of our costs.
"It remains to be seen how that flows through the overall supply chain. We will continue to watch that."
Foxconn has stated that wages for a junior worker in Shenzhen have risen to 1800 yuan per month and if they pass an exam could rise further to above 2200 yuan.