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Is the Price of Chinese Labor Destined to Climb?

Is the Price of Chinese Labor Destined to Climb?

Today in international tech news: RIM can't catch a break, a German company sets out to clone Square, Reuters forecasts the end of China's supply of cheap labor, and more.

By David Vranicar TechNewsWorld ECT News Network
04/04/12 8:36 AM PT

On Wednesday Reuters published an article forecasting that China is "losing its title as the world's lowest-cost producer of everything."

Foxconn Technology's announcement that it would improve working conditions for its million-plus workers foreshadowed a permanent shift in how the nation treats workers, according to the report.

Foxconn, which manufactures iPads and iPhones, agreed to improve conditions after last week's report from the Fair Labor Association, which levied a number of charges at Foxconn ranging from excessive overtime hours to health and safety hazards.

From the Reuters article:

And after years of squeezing the profit margins of contract manufacturers making the gadgets beloved by consumers worldwide, the time is drawing nearer when big brand names may have to forego some of their profits to overcome criticism their products are built off the back of mistreated Chinese workers.

"The time of low costs and cheap labor in China has come to an end," said Jay Huang, chief financial officer of Taiwan's Wintek, a maker of touch panels for Apple and other brands with annual revenues last year of some US$3 billion.

Apple CEO Tim Cook visited a Foxconn plant on his recent trip to China, further spotlighting the company's ballyhooed workers' rights issues.

Suit in the Wound

As if last week's quarterly earnings report wasn't bad enough, BlackBerry device maker Research In Motion is now facing a lawsuit from Netherlands-based NXP Semiconductor.

NXP is accusing RIM of infringing upon six patents owned by NXP.

According to The Register,

NXP claims that RIM used its intellectual property in the development and manufacture of its BlackBerry phones and PlayBook tablets. The Dutch firm wants actual damages of lost profits and royalties from the Canadians and claims the right to the U.S.-allowed treble damages, but hasn't specified exactly how much it wants.

The Dutch firm is also asking for an injunction on RIM products.

The lawsuit is the latest bit of turmoil for Canada-based RIM. Last Thursday, the company announced a 19 percent dip in forth quarter revenue and a GAAP loss of $125 million.

Cloning Square

Rocket Internet, a German company best known for cloning websites such as Amazon , has reportedly set out to clone Square, the groundbreaking app that facilitates credit card payments via mobile devices.

According to Giga OM, the cloning of Square is a natural step, seeing as the company has shown little interest in expanding to Europe.

But the Square clone -- dubbed "Zenpay" -- likely won't be identical to the original. From Giga OM:

Technically, it's highly unlikely that Zenpay would be a straight clone of Square, however: European payment cards nearly all use an embedded chip for authentication, rather than the simple swipe that is at the heart of Square's system (though you can still use the magnetic stripe if needs be). If Zenpay copies that approach they may find themselves unable to gain the sort of regulatory approval required to operate a financial service across the EU.

Yahoo Cutbacks Hit European Offices

With an estimated 2,000 jobs on the cutting block, Yahoo is expected to nix a sizable chunk of its European staff and shuffle its operations across the Atlantic.

According to The Guardian,

Rich Riley, the managing director of Europe, Middle East and Africa (EMEA), emailed staff ahead of the meetings to outline some of the changes that will be taking place. Yahoo's EMEA headquarters in Switzerland will be cut back as part of a move to "transition more resources to being country specific as opposed to regional" ...

Riley said it was likely that different operations within sales would be merged, with a specific reference to a reduction of the company's business in Barcelona.

Not helping Yahoo's cause: On Tuesday, Facebook announced it was countersuing the company for patent infringement.

Disney UK & Ireland Partners Up With Blinkbox

Disney UK & Ireland is teaming up with British film service Blinkbox, an online retailer of movies and TV shows.

According to The Next Web,

Film and TV fans will be able to buy or rent the latest titles straight to their laptops, tablets or smart TVs and many releases will be attainable on the same day they appear on DVD.

Disney's partnership with Blinkbox figures to further solidify the company's online presence. Last week, Disney UK & Ireland partnered with Google to offer movies on YouTube and Google Play.


Tech Trek is a blog that looks at tech news from around the world. David Vranicar is a freelance journalist currently living in the Netherlands. His ECT News Network archive, with links to articles and podcasts, is available here. Follow him on Twitter @davidvranicar.


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