End To Low End Production in China?

TIANJIN, China – New labour regulations in China are forcing the bicycle industry to look for new low-cost labour areas in the world. On the 1st of January the Chinese government issued a new law for employment contracts.

As a result some 300 factories in the Tianjin area supplying low end components to the bicycle industry, ceased operations. It is said that the low-end sector will quickly disappear; even sooner than previously expected.

New Labour Regulations

The new law makes it harder for employers to lay-off employees. Every employee that is fired has to be provided with one month pay for every year he or she worked. The new law also stipulates that the employer has to provide each employee a labour contract that outlines his or her activities. If not, the employer risks a fine plus double salary payment to the employee. An employer also has to register all his employees.

Changing Names

Next to the fact that due to the new law about 300 companies stopped their activities, it is said that there are also companies operating in the low-end sector of the Chinese bike market that now are constantly changing the name of their company to avoid the labour contracts.