India’s Code on Wages Bill, Auditing Suppliers in Vietnam – China Outbound
Our weekly round up of other news affecting foreign investors throughout Asia.
India’s parliament recently passed the Code on Wages Bill, 2019. The Bill will enable the federal government to fix minimum statutory wage for millions of workers.
It is the first in a series of four labor codes that will rationalize India’s 44 labor laws and improve the ease of doing business in the country. The code on wages subsumes relevant provisions of the previous laws pertaining to workers’ wages, equal remuneration for men and women, payments, and bonus. The remaining three codes will deal with social security, industrial safety and welfare, and industrial relations.
The article delves into how Russian businesses can benefit by setting up a subsidiary company in the ASEAN region. Russian firms can take advantage of relevant ASEAN rules of origin for import-export and benefit from the region’s relatively lower cost of labor.
China-based manufacturers have been relocating part or all of their businesses into the ASEAN region – the manufacturing hubs in Cambodia, Laos, Indonesia, Malaysia, Myanmar, the Philippines, Thailand, and Vietnam – for much of the past two years.
Partially this is driven by the US-China tariff war, which does not impact businesses based in ASEAN. Another reason is that Chinese wages have grown, and countries such as Cambodia, Laos, and Myanmar can offer rock bottom wages albeit at a production cost of lower productivity. Others, such as the Philippines, hit a sweet spot; low wages, but improving infrastructure that will only get better over time.
With a significant amount of manufacturing and supply chains shifting to or based in Asia, it is easy for foreign firms to get caught in an oversight that result in significant losses. This is particularly true for countries like Vietnam, where laws are still catching up with mature supply chains of the US or Europe.
This is especially true for brands that manufacture in Vietnam and export their products using unreliable suppliers or factories. It is imperative for businesses to evaluate suppliers to prevent any supply chain issues that may affect business as normal.
China Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Dalian, Beijing, Shanghai, Guangzhou, Shenzhen, and Hong Kong. Readers may write to firstname.lastname@example.org for more support on doing business in China.