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In China's Cities, a Turn From Factories

Given the low starting point of wages, China will continue to capture low-end manufacturing jobs from around the world for the next decade, Anderson predicted. But by then, average wages are likely to exceed $100 a month, up from the current $50 to $60, and labor-intensive industries such as textiles and toys are likely to revert to countries now losing jobs to China, such as Thailand, Malaysia and Indonesia.

The known labor shortages are largely limited to the main exporting areas along China's coast. Nationwide, an estimated 150 million people either work on subsistence farms or in state-owned factories that are likely to be closed, and they will need jobs.

Yang Weng, a villager from outside Chongqing, has returned home jobless after failing to find decent factory work in Guangdong, a southern province. (Peter S. Goodman -- The Washington Post)

But Zhen Shengzheng, director of the Sociology and Population Research Institute at the Guangdong Academy of Social Sciences, said that increased opportunities at home have caused people to reevaluate the terms of the mass migration that sent more than 100 million farmers streaming towards cities in recent years. Once they take the costs of living in a big city into account, "fewer people are leaving the provinces," he said.

"Why go away and live far from my family when I can make the same salary here?" said Tang Changjun, 22, who earns about $125 a month at the Zhongshen Motorcycle Corp. factory, which opened two years ago in the southwestern city of Chongqing. It sits within the newly developed Erlang High-Tech Industrial zone, next to another motorcycle factory and an air conditioner plant. Tang's sister works at a computer factory in Guangdong, earning roughly the same wages. She is thinking of returning. "There are more and more opportunities here," he said.

Anderson, the UBS economist, argues that what is going on is not an overall lack of labor, but a shortage of the 18- to 24-year-old women preferred as factory workers. They are less likely to have family complications that pull them away from work and are more tolerant of poor conditions, managers say. "You have run out of this demographic," Anderson said.

Some workers say talk of shortages is merely a ruse promulgated by factory managers to attract more people to the cities and keep wages low. But factory managers insist the shortages are real and have forced them to pass up orders.

Advertisements seeking more workers plaster street corners. Banners drape most factories imploring laborers to apply for jobs. At the Baoan District Labor Personnel Department in Shenzhen, a government agency that is supposed to impartially link laborers and factories, director of human resources Ren Xuegong said some plants pay him up to $12 for each worker he sends their way.

Many factories have reluctantly begun hiring workers over 30. "We have few choices, so we have to widen the age range," said Yang Xiaojun, a manager at Starlite Holdings Ltd., whose plant in Shenzhen makes greeting cards for Hallmark and packaging materials for brands such as Microsoft and Fisher-Price. It employs 3,500 people. Yang said he could use another 500.

The Starlite chairman's office occupies more than 1,000 square feet; its leather couches look out on marble and mother-of-pearl statuary. On the factory floor, Yang Xiuli, 23, a mother of two and freshly arrived from the central province of Henan, rushed to insert 450 birthday cards per hour into boxes, first affixing yellow stickers to the back: "Wal-Mart Price $3.34." That's a little less than she earns in a day.

The company manager said it would be difficult to raise wages because profit margins are already close to zero. Major customers such as Hallmark have such huge scale they can dictate prices, forcing factories to squeeze costs where they can.

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