Soaring wages equals rising prices
- Published: 3 Apr 2013 at 11.55
- Online news:
Koda Ltd Executive Director Ernie Koh has a message for clients in 50 countries who complain about the Singapore-based furniture maker's first price increase in two years: Take it or leave it.
Koda's factories in China, Malaysia and Vietnam are battling rising costs as governments in Asia increase minimum wages to curb discontent over a widening wealth gap. While weak global growth and increased competition limited the ability of producers to raise prices during the past five years, Koh says they cannot go on absorbing the additional expenses.
"We aren't even passing on the full costs," said Koh, who counts United States retailer Williams-Sonoma Inc (WSM), owner of Pottery Barn, and Cost Plus Inc among customers. "Wage escalation in China these past few years has been crazy. We have collective bargaining with the union in Vietnam, and in Malaysia there is a big outcry among manufacturers over the minimum wage."
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