% growth, 1995 – 2005
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005*
Cambodia
6.7
5.5
3.7
1.8
5
5.4
5.3
5.5
5.2
6.0 (e)
2.4
Indonesia
8.2
7.8
4.7
-13.1
0.8
4.8
3.3
3.7
4.5
5.1
5.4
Laos
7
6.9
6.9
4
5.2
5.9
5.5
5.9
5.3
6.5 (e)
7.0
Malaysia
9.8
10
7.3
-7.4
5.8
8.3
0.4
4.2
5.3
7.1
6.0
Myanmar
6.9
6.4
5.7
5.8
10.9
6.2
-
-
-
-
-
Philippines
4.7
5.8
5.2
-0.6
3.3
4.0
3.4
4.4
4.7
6.1
4.5
Singapore
8
7.5
8.5
0.1
5.9
10.3
-2.0
2.2
1.1
8.4
4.5
Thailand
9.3
5.9
-1.4
-10.8
4.2
4.6
1.8
5.2
6.8
6.1
5.8
Vietnam
9.5
9.3
8.2
4.4
4.7
6.1
5.8
7.0
7.2
7.5
7.5
ASEAN
8.4
7.4
3.5
-9
3.1
5.9
1.9
4.8
5.3
5.8
5.5
Source: Asian Development Bank, World Bank and other sources
Social / Cultural Trends
There have also been social and cultural trends in China’s labor market that have been evident over the last 12 months. These include: (a) the irreversible rise of labor forces; (b) the rise of the labor forces blends perfectly with a tri-polar structure of political economy; (c) the increase in the roles of intellectuals; and (d) the beginning of a period of introspection.
As implied in Table 1, countries such as Laos and Vietnam are just still beginning to feel the effects of their flourishing economies in the aftermath of political unrests.
Technological Trends
It is a common knowledge that China’s labor market is still relatively new industry and is still in its early stages of development. However, it has shown signs of rapid growth and it is being estimated that there will be more than a million workers that will be shipped within the year. And it is further being expected that within the next years the tremendous growth and technological advancements will continue within China’s labor market. Mobile commerce and multimedia terminals are just some of the technological advancements already being expected. Therefore, the continued growth and development will also make it imperative for localization to occur within China’s labor market in the years to come (Dunning, 1993).
Legal Trends
Intellectual property (IP) and IP Rights (IPR) creation, commercialization, and protection have been a significant source of comparative advantage of enterprises and economies and a major driver of their competitive strategies. Indeed, China is fully aware of the pressing need for a long-term policy commitment to collectively transform its labor force into one which is largely based on knowledge, driven by innovation and sustained by life-long learning (Bjorkman et al. 1997).
China has pledged to accelerate the pace and scope of IP asset creation, commercialization and protection; to improve the regional framework of its labor market policies and institutions relating to IP and IPRs, including the development and harmonization of enabling IPR registration systems; to promote IP cooperation and dialogues within the region as well with the region’s Dialogue Partners and organizations; to strengthen IP-related human and institutional capabilities in the region, including fostering greater public awareness of issues and implications, relating to IP and IPRs. The new action plan on IPRs for 2004-2010 would cover all these aspects.
Critical Labor Market Improvement Factors for China
For China’s labor market to become a viable player in the industry, the following improvement factors are critical:
· Financial Stability
Financial stability is crucial especially in the pursuit of labor market management and development activities. It is important to remain updated with the latest labor market developments to be able to stay competitive in the market.
· Labor Force Performance
The effective performance of labor markets comes as a result of well-funded labor market management and development activities. The strong performance of the labor forces of China in the market could also be linked to their cost-effectiveness. However, China has to be aware of the positioning in terms of process so as to maintain satisfactory profits margin and remain competitive in the labor market (Best, 2001).
· Marketing Strategy and Distribution
High awareness among the labour markets has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new labour market policies.
Benefits of Efficient Labor Market
· Economies of Scale and Scope in labor market management and development.
· Unique Quality Technology owing to heavy emphasis on Labor Market Management
A country’s commitment to labor market management & development activities has always been one of the top strategies to remain competitive in the market.
· Differentiated Labor Market
Through the efficient performance of the differentiated labor market originating from the labor market management and development activities, the country is able to create its own specific advantages. The continuous pursuit of labor market management and development processes enables the country to produce a steady stream of originally differentiated labor market which makes it difficult for competitors to find substitutes. Because of this differentiated approach, the country is able to market their workers worldwide, which enables them in turn to maximize the returns on labor market management and development expenditures (Christensen, 1997).
CHINA’S LABOR MARKET REFORMS
Deriving from the analysis between China’s labor market, its management and capabilities of the labor forces involved, many strategic reforms would become imperative for China to implement. It is therefore essential to evaluate these strategic reforms as to whether they are appropriate to the issues addressed, whether they are feasible enough to be implemented and their acceptability to key stakeholders.
China has made a move to reconcile both the inside-out and outside-in capabilities of its labor market. While China’s labor market management involves focusing on its core competencies with labor market position following its resource base, they realized that they will be put into a disadvantageous position should they choose to neglect both the macro as well as the micro environment. Therefore, China has made efforts to be aware of the latest labor market changes, as well as changes in political, economic, legal and even demographic trends in order to develop the outside-in capabilities, such as labor market sensing, customer linking, channel bonding and technology monitoring (Hill, 2002).
The advantages enjoyed by China’s labor market may come in the form of increased revenues. Knowing what its labor market demands and the latest trends could help China fully exploit its research and development capabilities to come out with labor market reforms which are not only cost-effective but also high in quality. The strategic option can even be used as marketing tool where the focus is on staying close to their workers and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on China’s labor market (Doz et al. 2001).
Nevertheless, the mentioned strategic reform seems the most practical in the wake of globalization, since there is a sudden shift towards a more integrated and independent world labour market. The key stakeholders too should not have any objections so long as China’s labour market is not threatened. By virtue of China’s centralized control of its labour market, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of the labour market’s operations.
Understanding the strategic importance of labor market management is something that China has to be familiar with. China normally practices a centralized and globally scaled configuration of operations and capabilities of their labor market. This allows information dissemination to be retained.
CHINA’S LABOR MARKET and the FUTURE
China’s tie-up with various labor markets offers tremendous benefits in terms of access to their labor market management policies, infrastructure and even their resources. However, China must not lose sight of the core competencies of its labor market while pursuing these tie-ups. Otherwise, the image of their labor market might be put in jeopardy.
Meanwhile, the collaboration of China’s labor market with its major competitors can be seen as a ridiculous move at first. However, upon close examination, this move could pave the way for China’s labor market to improve even more their labor market management. The bottom line is both sides would be able significantly gain in such an alliance. China’s strengths in labor market development combined with the operations management capabilities of their competitors can transform them suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the labor markets involved. Another possible setback could be whether any of China’s competitors has the need to form alliances (Hobday, 1995).
The third option also focuses on alliances, but this time with either one of the leading players specializing in labor market management. The benefits of these alliances should outweigh the costs in the long run.
In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether China and its labor market could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any alliances may also involve the sharing of expertise. China has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on the labor market’s values and culture as well as the resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects. Somehow, China will be able to overcome this barrier in managing strategic changes in the process of implementing any of the above mentioned strategic options.
CONCLUSION
The results of the analysis carried out on the labor market of China indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that China’s labor market could still be expected to improve faster than average.
The SWOT analysis of the capabilities and resources of China’s labor market revealed very little inconsistencies regarding its strategies. This is coherent with its traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for China’s labor market.
The analysis of China’s labor market environment as well as its management and capabilities revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of China’s labor market.
Also, China has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.
REFERENCES
Amsden, A. 2001. The Rise of “The Rest”: Challenges to the West from Late-Industrializing Economies. New York: Oxford University Press.
Arora, A., Fosfuri, A. and Gambardella, A. 2001. Markets for Technology: The Economics of Innovation and Corporate Strategy. Cambridge, MA: The MIT Press.
Asian Development Bank Statistics, retrieved March 26, 2006 at <www. Adb.org
Bartlett, C.A. and Ghoshal, S. 1989. Managing Across Borders: The Transnational Solution. Boston: Harvard Business School Press.
Baumol, W. 2002. The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism. Princeton, NJ: Princeton University Press.
Bjorkman, I. and Forsgren, M. 1997. The Nature of the International Firm. Copenhagen Business School Press.
Best, M. 2001. The New Competitive Advantage: The Renewal of American Industry. New York: Oxford University Press.
Christensen, C. 1997. The Innovator’s Dilemma: When New technologies Cause Great Companies to Fail. Cambridge, MA: Harvard Business School Press.
Cahuc, P. and Zylberberg, A. 2004. Labor Economics. The MIT Press.
Doz, Y., Santos, J. and Williamson, P. 2001. From Global to Metanational: How Companies Win in the Knowledge Economy. Boston, MA: Harvard Business School Press.
Dunning, J. 1993. Multinational Enterprises and the Global Economy. Addison-Wesley.
Hill, C. 2002. International Business: Competing in the Global Marketplace. Boston, MA: McGraw-Hill Irwin.
Hobday, M. 1995. Innovation in East Asia. St Martins Press.
www.imf.org. Retrieved March 24, 2006
www.ceicdata.com. Retrieved March 24, 2006
APPENDIX
Table 2. Population, Labor Force, and Employment, 1980–2002
1980
1990
1995
2000
2001
2002
Population, in millions
987.1
1,143.3
1,211.2
1,265.8
1,276.3
1,284.5
Urban
191.4
301.9
351.7
458.4
480.6
502.1
Rural
795.7
841.4
859.5
807.4
795.6
782.4
Working age population (15–64)
594.1
763.1
829.0
888.0
894.3
903.0
Labor force
429.0
653.2
687.4
739.9
744.3
751.3
Participation rate (in percent)
72.2
85.6
82.9
83.3
83.2
83.2
Employment
423.6
647.5
680.7
720.9
730.3
737.4
Unemployment
5.4
5.7
6.7
19.1
14.1
13.9
Sources: China Statistical Yearbook, various years; CEIC database; and authors’ estimates.
Table 3. Total Wages of Staff and Workers and Related Index, 1978–2003
TOTAL WAGES (100 million yuan) INDICES
Year
Total
Total
State-owned
Urban
State-owned
Urban
Units of
Units
Collective-
Units
Collective-
Other
owned Units
owned Units
Types of
Ownership
1978
568.9
468.7
100.2
110.5
110.1
112.5
1980
772.4
627.9
144.5
119.4
118.6
123.3
1985
1383.0
1064.8
312.3
122.0
121.6
123.0
163.9
1989
2618.5
2050.2
534.4
113.1
113.5
109.6
157.7
1990
2951.1
2324.1
581.0
112.7
113.4
108.7
135.7
1991
3323.9
2594.9
658.6
112.6
111.7
113.4
153.0
1992
3939.2
3090.4
743.2
118.5
119.1
112.8
150.0
1993
4916.2
3812.7
849.9
124.8
123.4
114.4
240.2
1994
6656.4
5177.4
1023.3
135.4
135.8
120.4
179.7
1995
8100.0
6080.2
1182.0
121.7
117.4
115.5
140.0
1996
9080.0
6792.7
1241.0
112.1
111.7
105.0
119.4
1997
9405.3
7211.0
1253.4
103.6
106.2
101.0
123.6
1998
9296.5
6812.5
1021.6
100.2
95.8
83.1
156.9
1999
9875.5
7160.8
962.7
106.2
105.1
94.2
119.8
2000
10656.2
7612.9
919.0
107.9
106.3
95.5
121.3
2001
11830.9
8355.6
864.6
111.0
109.8
94.1
122.9
2002
13161.1
8948.6
828.1
111.2
107.1
95.8
129.6
2003
14743.5
9693.8
829.4
112.0
108.3
100.2
124.7
Sources: China Statistical Yearbook, various years; CEIC database; and authors’ estimates.
Table 4. Employment, by Industry, 1980–2001
(Items, In Millions)
1980
1990
1995
2000
2001
Farming, forestry, animal husbandry, fishery
291.2
341.8
330.2
333.6
329.7
Mining and quarrying
7.0
8.8
9.3
6.0
5.6
Manufacturing
59.0
86.2
98.0
80.4
80.8
Electricity, gas, and water
1.2
1.9
2.9
2.8
2.9
Construction
9.9
24.2
33.2
35.5
36.7
Geological prospecting, water conservancy
1.9
2.0
1.4
1.1
1.1
Transport, storage, post and telecommunication
8.1
15.7
19.4
20.3 20.4
20.3
Wholesale, retail trade and catering services
13.6
28.4
42.9
46.9
47.4
Banking and insurance
1.0
2.2
2.8
3.3
3.4
Real estate, social services, health, and education
18.5
26.3
27.0
30.7
31.5
Government, party agencies and social organizations
5.3
10.8
10.4
11.0
11.0
Others
5.9
18.0
44.9
56.4
58.5
Sources: China Statistical Yearbook, various years; CEIC database; and authors’ estimates.
Credit:ivythesis.typepad.com
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