Chinese companies face migrant worker lottery Li Weihang's order book is full. And yet the executive at Weixin Seamless Underwear Company in the eastern Chinese light industry hub of Yiwu, doesn't dare relax for the spring festival, when the country comes to a halt as tens of millions of migrant workers travel home to gather with their families. After the holiday ends next week, Mr Li will have to set about finding new workers as he expects more workers than ever before will not return - up to 30 per cent of his 140-strong workforce - as many migrants take up new jobs in inland provinces. "The only way of finding new workers will be to raise wages again - I think we'll have to raise by at least 15 per cent," he said. The lunar new year is the prime job-hopping season in China, offering signs for the direction of the labour market in the world's second-largest economy over the coming year. After two years of record jumps in wage levels and rising labour unrest, most companies expect slightly less steep increases in the cost of labour this year. But employers are resigned to a new labour reality in China where workers are scarce and wages continue to increase. Large electronics contract manufacturers like Foxconn, Quanta and Compal have built new factories inland over the past two years. Foxconn employs 100,000 workers in each of its two new plants in Henan and Sichuan, provinces which are among the largest exporters of migrant workers to coastal areas, and the headcount at those two factories is expected to reach 300,000 each. These new factories have made many smaller manufacturers in coastal areas less attractive employers to young migrants. Like Weixin, Shunchang, a small shoe industry supplier in Dongguan in the southern province of Guangdong, says the number of migrant workers who won't return after the Lunar New Year holiday will increase. "We no longer have any advantage here in Dongguan," says an executive at Shunchang. She says that many migrant workers consider a monthly wage of about Rmb1,500 ($237) in their inland home province more attractive than the little over Rmb2,000 Shunchang can offer, because the cost of living is much lower at home and they can stay close to their family. However, there are big differences between different regions and industries. Some companies, such as Rondor Housewares, a kitchen utensils factory in Guangdong, plan to introduce more automation after Chinese new year, reducing their reliance on cheap labour. Others will need fewer workers as global demand weakens. Sam Chern, marketing head at MSi, a Taiwanese manufacturer of computer systems and components, said that as global PC demand is pretty soft, the company will not need as many employees. He added that the decision of the largest PC manufacturers to move some of their capacity to China's inland provinces might help, because it spreads out the demand for workers. "That relieves some pressure on those who have remained in the coastal areas," says Mr Chern. MSi employs more than 30,000 in factories in Kunshan, close to Shanghai. Giant, the Taiwanese bicycle maker, believes the impact from the move inland on the coastal labour market is decreasing. "When [workers go back home to inland provinces] they find the lifestyle, living standard, the convenience, are not there, so more and more people are actually coming back," says Tony Lo, chief executive. So I think this year will not be as bad as last year. Companies also point out that workers from poorer provinces such as Guizhou and Guangxi are more likely to return after the holiday and are slightly less demanding than their peers from more affluent provinces such as Sichuan or Anhui because they are less likely to find employment back home. But even they, just like all younger migrant workers today who are no longer willing to take the hardships their parents" generation put up with, have become picky. Gerhard Flatz, managing director at KTC, which makes outdoor clothing like ski suits, says that factories are finding it increasingly hard to compete with white collar employers to attract the best staff