China Braces for Fallout of Labor Law

New regs may drive manufacturers out in search for cheaper workers
By Jim O'Neill,  Newser User
Posted Jan 1, 2008 2:21 PM CST
In this photo released by China's Xinhua news agency, kiln boss Wang Bingbing speaks as he stands trial in the forced labor scandal at the Linfen People's Intermediate Court in Linfen City, north China's...   (Associated Press)
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(Newser) – Olympus, Nike, and other manufacturers operating on low margins may close up shop in China after the government’s new labor law protecting workers comes into effect today, reports Bloomberg. The law improves worker security, limits overtime, sets minimum wages, and makes it more difficult to hire temporary workers, among other provisions. It "will definitely raise our costs," says one electronics manufacturer's rep.

"We are likely to see more factory closures next year,'' said an exec of an industry group. Companies already are considering moving factories to lower-cost areas like Vietnam, and some asked employees to sign new contracts ahead of the law’s introduction. China’s largest manufacturer of telecommunications equipment, Huawei Technologies, offered new contracts with benefits to about 7,000 workers.