Hong Kong manufacturers operating in the Pearl River Delta may speed up relocating their factories elsewhere as the minimum wage in Guangdong is expected to nearly double the province's gross domestic product growth this year.
Stanley Lau Chin-ho, a vice-chairman of the Federation of Hong Kong Industries, who discussed the issue with the province's officials yesterday, said the wage increase would be higher than the nation's average annual rise of 13 per cent.
The Hong Kong Chinese Importers' and Exporters' Association expects a 15 per cent gain in minimum wages.
Guangdong's Ministry of Human Resources and Social Security said last week that it would announce its wage increase plans after the Lunar New Year.
A number of cities and provinces, including Beijing, Shanghai, Zhejiang and Shanxi, plan to raise minimum wages by 11 to 17 per cent this year.
Shenzhen's minimum wage is expected to rise the most in the country, averaging 20 per cent annually in the next three years. The local government has said the minimum salary must reach 2,650 yuan (HK$3,290) by 2015, up 76 per cent from last year.
Chong Shing-hum, the president of the Hong Kong Chinese Importers' and Exporters' Association, said the minimum wage in Guangdong would amount to 1,495 yuan this year as there were no increases last year.
"It's getting more difficult for us to survive in the [Pearl delta]. Appreciation of the yuan and receding prices in the US and Europe have already squeezed our profit margin. A lot of my friends are seeking to relocate their businesses," Chong said.
The expected double-digit growth in the minimum wage would come even as the provincial government cut its economic growth forecast to 8 per cent this year from 8.5 per cent earlier. The central government has stipulated that the minimum wage should increase faster than a province's GDP growth target for the year.
Despite rising wages, manufacturers in the delta are still expected to lose up to 1 million workers following the Lunar New Year holiday, according to Guangdong's human resources ministry. But it said that would amount to just 6.25 per cent of the province's total workforce.