Jun 10, 2010
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Shiseido sees rising labour costs in China

Jun 10, 2010

TOKYO, June 10, 2010 (AFP) - Japan's top cosmetics maker Shiseido Co. said Thursday 10 June it was aiming for 20 percent annual sales growth in China but warned of rising labour costs following a wave of recent wage disputes there.

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"Shiseido regards the Chinese market as the driver of its growth," said Masaru Miyagawa, chief officer of the company's China division, adding however that "we have to consider the upward pressure on the labour costs in China."

Shiseido, which entered China in 1981, has a roughly 10 percent market share in the country's cosmetics market, along with other industry giants Procter & Gamble and L'Oreal, Miyagawa said.

"We have labour disputes once or twice a year in China. But these disputes are mainly caused by wage differences between regular workers and part-time workers," Miyagawa said.

"Because we addressed the complaints quickly, they didn't become a serious problem," he said.

The company has a plant in Beijing and another in Shanghai.

Overseas sales accounted for 36.9 percent of Shiseido's total in the financial year to March, driven largely by growth in China.

As China's economy surges, demands for higher wages are posing a headache for overseas companies facing higher costs but could also be a boon for others banking on rising incomes to spur demand for high-quality goods.

A number of foreign companies have faced recent labour disputes in China, including Japan's second-largest automaker Honda.

According to the All-China Federation of Trade Unions, nearly a quarter of Chinese employees have not had a raise in five years.

Taiwanese high tech firm Foxconn -- which counts Apple, Hewlett-Packard and Sony among its clients -- raised wages 67 percent for its hundreds of thousands of workers in China after 11 suicides, 10 of them in southern Shenzhen city.

Earlier this week, about 2,000 workers at the KOK Machinery factory in the city of Kunshan outside Shanghai walked off the assembly line, demanding better pay and an improved working environment, the China Daily reported.

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