Acer Complains of Labor Shortage in China

Acer Inc., the world's third largest PC vendor, said Friday that it is keeping an eye on a labor shortage in China that could affect PC production.

"There is a labor shortage in China, which is new to me," said J.T. Wang, chairman of Acer, during the company's third quarter investors' conference in Taipei. "China has 1.4 billion people, how can they have a labor shortage?" he asked rhetorically.

Acer's China-based component suppliers and PC assemblers have said that in some cases they have lost 1,000 workers overnight, and have had to seek new employees. The Taiwanese company will work with suppliers on new strategies to make sure the issue does not affect production, Wang said.

He characterized the concern as small, and unlikely to become a major issue in the near term.

There has been a growing shortage of skilled labor in the East coast cities of China, in part due to government efforts to develop the nation's inland areas, said one analyst. Many factory jobs used to be filled by migrant workers, but now that many companies are building factories in China's interior, people feel they can stay at home and work instead of traveling to the coast.

Acer president Gianfranco Lanci said factories tend to move to new places when production in a certain region becomes difficult, and he expects that will happen if companies continue to see labor shortages in China.

A number of electronics firms have started investing in Vietnam. Taiwan's Hon Hai Precision Industry, the world's largest contract electronics manufacturer and maker of gadgets including iPods, PlayStation 3 consoles and Nokia mobile phones, in August announced a plan to spend US$5 billion over the next five years to build a base of electronic components factories near Vietnam's capital, Hanoi. Until now, the company's major investments have all been in China.

Taiwan's Compal Electronics, the world's second-largest laptop PC maker and another major investor in China, has also announced plans to build a notebook computer factory in Vietnam.

Companies have started to look outside of China for new factory investments, the analyst said, and while Vietnam, India and other countries boast low-cost labor, they will only win investments if their workers are educated and investment incentives and regulations attractive.