China News Daily reported last week that more than 2,000 workers demonstrated at a touch panel plant owned by a Taiwanese company to protest pay disputes and unsafe working conditions. According to the protesters, at least four workers have died from over-exposure to hexane, a toxic solvent used to clean the panels. Some other reports indicated that workers may have also been upset about rumors that year-end bonuses were to be cancelled.
According to the article, Chinese government officials denied that any workers had died from exposure to hazardous materials at the plant.
This is just one report of many that indicate that production costs for Chinese technology factories may start to rise. As workers protest pay and working conditions, the government is likely to start enacting — and enforcing — laws that provide more protection for workers. As one economist has stated, China has been exporting deflation to this point, but the pendulum is swinging and the country will start exporting inflation as their citizens demand a higher standard of living. The per capita income for China is just $3,200 a year, with many workers earning as little as $100 a month.
This could certainly cause the cost of our imported goods to rise, but another possibility is that the production will continue to migrate to areas of lower costs. Vietnam, India, and Brazil are all cited as countries that could take the place of China for high-tech product manufacturing.