Compal Electronics Raising Wages In China

World's largest contract laptop maker said that China's labor shortage and rising wages will pose a big challenge to it amid the recovery in the computer market.

TAIPEI, Taiwan (AP) -- Compal Electronics Inc., the world's largest contract laptop maker, said Friday that China's labor shortage and rising wages will pose a big challenge to it amid the recovery in the computer market.

But instead of moving to lower-wage countries, Compal will increase the wages of its Chinese workers and try to improve their working environment, said company chairman Hsu Sheng-hsiung.

He said the wages will increase by a "small amount" but refused to elaborate.

Compal churned out 38 million laptops last year -- 23 percent of the world total -- mostly from its production base in the Chinese city of Kunshan, near Shanghai.

With computer sales expected to increase 20 percent this year, Hsu said Compal will set up several facilities in China's interior to meet demand.

"By 2030, 80 percent of China will be urbanized," he told a shareholders meeting. "Wages are still low in the west, but will catch up rapidly. Corporations must not relocate for the sake of wage concerns like nomads chasing new grasslands."

With an economic recovery in full swing in China, workers have begun demanding significant wage increases and showed far less tolerance for harsh work conditions than their predecessors did only five years ago.

The problem of poor worker morale in China came into stark relief earlier this month amid a spate of suicides at the giant electronics facility of Taiwan's Foxconn Technology Group in southern China. Stung by the suicides, the company promised to raise basic wages at the facility from 900 yuan ($130) to 2,000 yuan, beginning in October.

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