But the developments at both Foxconn and Honda show industrial relations are fast becoming an important consideration for multinationals operating on the mainland, as well as for Beijing.

Several factors have emerged to put labour issues higher on the agenda.

The mainland's demographic changes and one-child policy mean that the window for cashing in on the demographic dividend - the rise in economic output as the percentage of working people increases - is closing fast.

The composition of the work force is also changing. Young migrants from one-child families currently dominate the work force. They expect more than just a monthly salary, and their pampered upbringings make them unprepared to work under conditions in which they are treated like a robot.

Terry Gou, chairman of Foxconn, has denied his Shenzhen factories are sweatshops, while other company officials have pointed to modern dormitories, swimming pools, internet cafes and other recreational facilities for workers within the company complex.

But critics have rightly argued that the company's military-style management and discipline are the main factors behind the suicides, because the workers are left with no time or energy to relax.

Mainland authorities' attitudes towards Foxconn and Honda have been ambiguous at best. Government officials have refused to criticise Foxconn in any way, merely urging the company to show more 'humanity' towards workers.

They should be heartened by Foxconn's announcement that it will raise workers' wages by an average of 20 per cent this year.

Staff at the Honda factory walked off the job on May 17 demanding better pay, but authorities have not taken any action to persuade or force workers to end the strike.

Privately, many mainland officials have voiced hope that the two developments would be a catalyst for better wages nationwide.

In March, Premier Wen Jiabao pledged in his work report that allowing workers to share in the mainland's rising prosperity is now a top priority for the government.

The mainland has come a long way since the days of its misguided, 'red and expert' policy for grooming new talent, which began during the Cultural Revolution and continued until the early 1980s. The policy called for emerging talent to be 'red' first - meaning loyal to the Communist Party - before being recognised as expert.

Predictably, this policy stifled innovation and contributed to a brain drain of talented scientists and researchers migrating to the US or Europe in the past 30 years.

Now, the mainland leadership has set out ambitious goals and is dangling strong remuneration packages to lure some of those people back. A key part of the effort has been the 'thousand people' plan, launched by the central government at the end of 2008.

It aims to attract about 2,000 of the world's top-notch scientists, researchers, bankers and others to pioneer innovation and research at the mainland's leading universities and research institutes, as well as to set up their own hi-tech ventures or work at leading financial institutions. So far, 662 people from overseas have joined the scheme, according to state media. They include about 448 mainland Chinese with foreign passports and 20 foreigners who used to work at institutions such as Harvard, MIT, Boeing, General Electric and Morgan Stanley.

The fact that Beijing's plan, launched more than 11/2 years ago, drew only one third of its target probably has a lot to do with its stringent requirements for age, academic qualifications and achievements.

Those who return are offered 1 million yuan (HK$1.1 million) as a one-off, tax-free signing bonus. Other benefits include multiple-entry visas for their dependents, access to the mainland's pension and medical schemes, stock options and housing, relocation and education perks. But those generous benefits are unlikely to persuade many to return and work on the mainland if they take a close look at the personal tax regime.

The mainland, despite being a developing country, has adopted a progressive tax regime commonly seen in developed countries. It carries a maximum rate of 45 per cent. This tax regime has long been known as one of the biggest disincentives for so-called overseas returnees and foreigners setting up shop and working on the mainland.

Instead, most move to Hong Kong and travel to the mainland for work. Even those required to be stationed on the mainland for longer periods make sure, or their employers do, that their cumulative number of working days does not exceed 90, so that they don't have to pay the mainland tax.

It is high time mainland officials began simplifying the personal income-tax regime.