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China’s rising labor cost woes

China’s position as the world’s biggest producer of low-cost goods is at stake. Its surging wages (and other costs), as well as rapidly aging population are showing signs of undermining the competitiveness of the nation’s economy and threatening its growth potential. Investors are seeking to relocate to countries that have cheaper labor or are closer to big markets in the U.S. and Europe, such as Vietnam and Mexico.

Unless compensated by an increase in labor productivity, high wages could impede the economy’s growth potential and competitiveness. China must ensure that minimum wage growth do not outpace productivity growth. Incentives should also be provided for companies to facilitate on-the-job training and invest in new technologies.

Which companies have left China due to increasing labor cost?

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