One of the most pressing issues for UK companies is the variability in quality standards across China’s diverse manufacturing landscape. With thousands of factories ranging from cutting-edge facilities to smaller, less experienced operations, the risk of receiving subpar products is real. Inconsistencies can occur, particularly in smaller or less experienced operations, often due to the use of cheaper materials or inadequate workmanship. This can spell trouble for UK firms, whose customers expect products that meet rigorous British and European standards. To counter this, thorough supplier vetting is essential. Regular audits, supported by third-party inspection firms, ensure suppliers maintain consistent quality, fostering long-term partnerships built on trust.

Communication barriers further complicate quality control. Language differences and cultural nuances can lead to misaligned expectations, resulting in products that miss the mark. Miscommunication can lead to incorrect specifications, production errors, and ultimately, defective products. This means investing in clear, detailed communication channels. Hiring bilingual project managers or working through intermediaries that can offer translation and cultural advisory services can help bridge the gap. Detailed contracts and quality control checklists also help align expectations, ensuring that specifications are met precisely. By establishing robust communication from the outset, UK firms can reduce the risk of costly errors and maintain product integrity.

Scaling production in China often amplifies quality issues, especially in high-volume runs where small defects can snowball into significant problems. Problems that might be negligible in small batches can become significant when producing large quantities. This is particularly critical for UK companies importing goods into the EU, where regulations like the Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) demand strict compliance. Adopting advanced technologies, such as AI-driven inspection systems, can help. Advances in artificial intelligence, machine learning, and automation are enabling manufacturers to improve the accuracy and efficiency of quality control processes. UK firms can encourage Chinese suppliers to integrate these technologies, drawing inspiration from global players like Siemens, which have successfully implemented smart manufacturing solutions in China. Consultancies can also guide businesses in embedding these tools into their supply chains, reducing rework and ensuring consistency at scale.

Regulatory compliance adds another layer of complexity. China’s “Made in China 2025” initiative pushes for higher quality and innovation, but aligning with UK and EU standards, such as those governing product safety and traceability, remains challenging. The need for UK manufacturers importing to the EU to appoint a ‘responsible person’ to ensure compliance is a sensible requirement but adds both cost and operational burden. This is especially relevant for goods entering Northern Ireland, which adheres to EU single market rules. To navigate this, UK businesses can turn to legal experts who specialise in international compliance or leverage CBBC’s regulatory advisory services to stay abreast of China’s evolving policies. Clear labelling and documentation, aligned with both Chinese and international standards, help ensure products meet market requirements and avoid costly rejections.

Labour shortages in China’s manufacturing sector also pose a threat to quality. In 2023 a report claimed that 67% of companies struggle to find skilled workers, which can lead to production errors. For UK firms, this underscores the need to verify that suppliers have access to trained staff. Collaborating with manufacturers to implement training programmes, can address skill gaps. CBBC’s network can connect UK businesses with industry clusters in China, where specialised sectors benefit from concentrated expertise, ensuring a more skilled workforce and higher-quality output.

Rising costs and supply chain disruptions further complicate the picture. With Shanghai’s minimum wage at 2,690 RMB per month as of January 2025 and manufacturing wages outpacing those in countries like Vietnam, some suppliers may cut corners to manage costs, risking quality. Geopolitical tensions, such as US-China trade tariffs, also create bottlenecks that disrupt production schedules. AI-driven predictive analytics can enhance supply chain visibility, helping firms anticipate and address disruptions before they impact quality.

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So, what is the minimum wage in China in 2023? Currently, Shanghai has the highest monthly minimum wage among China’s 31 provinces (RMB 2,690/£303 per month) and Beijing has the highest hourly minimum wage (RMB 26.4/£2.97 per hour). Sixteen regions – Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Shandong, Henan, Hubei, Guangdong, Chongqing, Sichuan, and Shaanxi – have surpassed the RMB 2,000 (£225) mark in their monthly minimum wage standards. At the lowest end of the wage spectrum, Liaoning has the lowest monthly minimum wage level in China at RMB 1,420 (£160)

How does China determine minimum wages?

Minimum wage standards are determined by provincial governments, taking into consideration factors such as the minimum living costs of local employees and their dependents, the consumer price index of urban residents, social insurance premiums, and the local employment situation.

It should be noted that the minimum wage excludes things like overtime pay, allowances for night shifts or special working environments, and subsidies for meals, transportation and housing.

In most regions, China’s minimum wage standards do include the social insurance premiums and housing fund contributions paid by employees. In fact, it is possible for an employee’s take-home pay to be lower than the corresponding minimum wage standard. Only a few regions, such as Shanghai, clearly stipulate that their local minimum wage standards exclude social insurance premiums and housing fund contributions.

Local governments in China are generally required to update their minimum wages every few years but have the flexibility to adjust wages according to local conditions.

Most provinces set different classes of minimum wage levels for different areas depending on the given region’s level of development and cost of living. For example, a higher minimum wage class is established for the provincial capital and the most developed cities in the province, whereas smaller cities and rural areas fall under a lower wage class.

How do minimum wages impact labour costs in China?

As China’s economy moves up the value chain and makes the transition to innovation and services, most workers employed by foreign-invested enterprises already earn above the minimum wage. For example, workers in Shanghai made an average of RMB 10,338 (£1,164) per month through 2020 – nearly four times the local minimum wage.

Employer social insurance and housing fund obligations add around an additional 37% to employers’ labour costs on top of the employees’ gross salary.

For foreign investors, rising wages are an unavoidable feature of doing business in China. Yet when other factors like productivity, infrastructure, transportation costs and access to a massive domestic market are considered, China may still emerge as the more cost-efficient option compared to countries with lower statutory labour costs.

When comparing locations for foreign investment into China, minimum wages are a helpful barometer to gauge labour costs across different regions. From there, identifying industry-specific wage levels, availability of talent and access to regional incentives offer a more nuanced view of the labour costs within a given region.

For a full breakdown of minimum wages in China by province and city, see this article by China Briefing

A version of this article was first published by China Briefing, which is produced by Dezan Shira & Associates. 

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