SWOT analysis of China's labour market

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SWOT Analysis of China's Labour Market

This essay utilized China as the model country to review their present labour market status and how they dealt with critical situations. From the analysis, key trends in China's labour market were identified, how it worked and its effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess these labour market management strategies with regard to their suitability to critical situations, during which the internal capabilities of China's labour market in relation to the strategy being followed was determined also. An overall analysis of the performance and effectiveness of China's labour market was also conducted to assess and compare its capabilities with those of others. Gaps in the labour market management capabilities and environment of China were then identified.

Finally, several choices of strategies to improve the labour market efficiency of China as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic changes within China's labour market were also addressed as well.

The labor market of China emphasizes the efficient and effective implementation of the policies and tasks necessary to satisfy the country's employees and the entire labor force. It is a labor policy in China to focus on the careful management of the processes involved in the production and distribution of products and services as well as the providing enough employment opportunities and compensation to its labor force.

More often than not, small companies in China don't really have the capabilities to implement highly specific labor policies. Instead, these companies engage in activities that various schools of management typically associate with labor policies. These activities include the manufacturing of products, labor force development, production and distribution.

However, applied labor economics deals with all operations done within companies and organizations. Activities such as the management of purchases, the control of employees, logistics and evaluations are often related with applied labor economics. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, applied labor economics includes the analysis and management of internal processes.

China's labor market will be the model entity that will be used in this research based on their history in applied labor economics.

China's Labor Market SWOT Analysis

china labor market political

Strengths: Produces products that boast of a very powerful retail. This includes a reputation for value of money, convenience and a wide variety of products has grown significantly over the years, and has experienced global expansion.

Its main competence lies on the use of information technology (IT) to fully support its labor market. Therefore, the Chinese government can see how their labor forces perform within their country. IT also supports China's efficient recruitment and hiring of the best employees is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.

Its lead consultants have established a strong reputation within the market can afford to change direction quickly if its labor force management finds that their strategy is not effective has little deficits and overheads. Therefore, China's labor force can offer good value to customers on a consistent basis.

Weaknesses:

1) is one of the world's largest labor force but has a weak control of it, despite its IT advantages. This could lead to a decrease in productivity in some labor force areas where they have the least control of.

2) Since the Chinese government has a weak control across many of its labor sectors, their labor force may lack the flexibility that some of its more focused competitors possess.

3) China's labor force operates globally, but its presence is located in only relatively few countries worldwide.

4) Some of China's weaker labor force sectors lack market presence or reputation.

5) Some of the country's labor force personnel still lack the essential skills base in many areas.

6) The country's labor force is still vulnerable to the temporary losses of its vital staff and personnel.

7) The labor force's budget is unreliable especially in the early stages development.

Opportunities:

Taking over, merging, or forming strategic alliances with other labor forces while focusing on strong markets like Europe or the Greater Asian Region.

The labor force sectors of China operate only on trade in a relatively small number of countries all over the world. Thus, this would open the opportunities for future labor force sectors of China in expanding various to various labor markets, such as those in Europe and America.

The opening of new locations and branches offer the Chinese labor market the opportunities to exploit market development. This could lead to the diversification of the country's labor forces from large sectors to local-based employees.

Opportunities exist for China to continue with its current strategy of establishing large labor force markets worldwide.

China's labor force market is continuously expanding, with plenty of future opportunities to exploit for success.

The local labor forces of China are in the process of encouraging local businesses with work whenever possible.

The competitors of China's labor force may be slow to adapt to new strategies especially the ones that China uses.

Threats:

Being number one means that China's labor market is the target of competition, the one to beat, both locally and globally.

Being a global market means that China's labor force might be exposed to political problems in the countries where they have operations.

The production costs of most consumer products have the tendency to fall because of lower manufacturing costs. Manufacturing costs fall because of outsourcing to low-cost regions around the globe. This phenomenon could lead to competition in prices, which in turn would result in the deflation of prices in various ranges. Intense price competition must definitely be considered a threat .The latest developments in information technology which could possibly change the labor markets might challenge China's ability to adapt to these changes .

A slight shift in focus of a large competitor might wipe out any labor market position that China has achieved over the years. This could force the country to specialize in rapid response but good value services to local businesses. This would put so much pressure on the country's consultancy staff to keep informed with the latest changes in technology where possible.

China's labor market trends

Political Trends.

China has experienced electoral and political transitions and crises in the last 12 months. There have been at least four political trends that have emanated from these political events. These are: (a) the cry for democracy and labor market reforms; (b) increased popular and local-level assertiveness; (c) greater public accountability; (d) re-definition of the concepts of labor market. Also, the forms of political economies have slowly shifted from a bipolar (big government-big business) to a tri-polar structure (authorities - private sector - civil society).

The implementation of the ASEAN Free Trade Area, or AFTA, which laid out a comprehensive program of regional tariff reduction, will be continuously implemented in phases through the year 2008. Over the course of the next several years, the programs in tariff reductions were made broader. Efforts to eliminate non-tariff barriers and develop common product certification standards were initiated. In addition, ASEAN also was able to formulate framework agreements for the intra-regional liberalization of labor market services. Industrial complementation schemes meant to encourage intra-regional investment were also approved.

Economic Trends .

Despite the adverse economic trends in the first half of the year, the China as a whole experienced relatively robust economic growth brought about by its productive labor market. It is estimated that China posted a better-than-expected GDP growth of 4.5% last year, slightly higher than the 4.1% growth that they achieved in 2002. Last year, Vietnam was the fastest growing ASEAN country, with an estimated GDP growth of 7.3%, followed closely by Thailand with a GDP growth of 6.7%. In other countries, GDP growth ranged from about 1% to 5%.

Many ASEAN countries have also seen the risk-weighted capital adequacy ratios of their banking systems improve due to government-sponsored bank recapitalization programs, continued progress in financial restructuring, and improvements in financial risk management. The capital adequacy ratio of commercial banks in these countries is now far higher than the 8% Basle norm. It ranges from about 14% in Malaysia and Thailand to about 20% in Indonesia, with the Philippine commercial banks reporting an average capital adequacy ratio of about 18%.

Social / Cultural Trends.

There have also been social and cultural trends in China's labor market that have been evident over the last 12 months. These include: (a) the irreversible rise of labor forces; (b) the rise of the labor forces blends perfectly with a tri-polar structure of political economy; (c) the increase in the roles of intellectuals; and (d) the beginning of a period of introspection.

Technological Trends.

It is a common knowledge that China's labor market is still relatively new industry and is still in its early stages of development. However, it has shown signs of rapid growth and it is being estimated that there will be more than a million workers that will be shipped within the year. And it is further being expected that within the next years the tremendous growth and technological advancements will continue within China's labor market. Mobile commerce and multimedia terminals are just some of the technological advancements already being expected. Therefore, the continued growth and development will also make it imperative for localization to occur within China's labor market in the years to come.

Legal Trends.

Intellectual property (IP) and IP Rights (IPR) creation, commercialization, and protection have been a significant source of comparative advantage of enterprises and economies and a major driver of their competitive strategies. Indeed, China is fully aware of the pressing need for a long-term policy commitment to collectively transform its labor force into one which is largely based on knowledge, driven by innovation and sustained by life-long learning.

China has pledged to accelerate the pace and scope of IP asset creation, commercialization and protection; to improve the regional framework of its labor market policies and institutions relating to IP and IPRs, including the development and harmonization of enabling IPR registration systems; to promote IP cooperation and dialogues within the region as well with the region's Dialogue Partners and organizations; to strengthen IP-related human and institutional capabilities in the region, including fostering greater public awareness of issues and implications, relating to IP and IPRs. The new action plan on IPRs for 2004-2010 would cover all these aspects.

Critical Labor Market Improvement Factors for China

For China's labor market to become a viable player in the industry, the following improvement factors are critical:

Financial Stability

Financial stability is crucial especially in the pursuit of labor market management and development activities. It is important to remain updated with the latest labor market developments to be able to stay competitive in the market.

Labor Force Performance

The effective performance of labor markets comes as a result of well-funded labor market management and development activities. The strong performance of the labor forces of China in the market could also be linked to their cost-effectiveness. However, China has to be aware of the positioning in terms of process so as to maintain satisfactory profits margin and remain competitive in the labor market.

Marketing Strategy and Distribution

High awareness among the labour markets has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new labour market policies.

Benefits of Efficient Labor Market

Economies of Scale and Scope in labor market management and development.

Unique Quality Technology owing to heavy emphasis on Labor Market Management

A country's commitment to labor market management & development activities has always been one of the top strategies to remain competitive in the market.

Differentiated Labor Market

Through the efficient performance of the differentiated labor market originating from the labor market management and development activities, the country is able to create its own specific advantages. The continuous pursuit of labor market management and development processes enables the country to produce a steady stream of originally differentiated labor market which makes it difficult for competitors to find substitutes. Because of this differentiated approach, the country is able to market their workers worldwide, which enables them in turn to maximize the returns on labor market management and development expenditures.

China's labor market reforms

Deriving from the analysis between China's labor market, its management and capabilities of the labor forces involved, many strategic reforms would become imperative for China to implement. It is therefore essential to evaluate these strategic reforms as to whether they are appropriate to the issues addressed, whether they are feasible enough to be implemented and their acceptability to key stakeholders.

China has made a move to reconcile both the inside-out and outside-in capabilities of its labor market. While China's labor market management involves focusing on its core competencies with labor market position following its resource base, they realized that they will be put into a disadvantageous position should they choose to neglect both the macro as well as the micro environment. Therefore, China has made efforts to be aware of the latest labor market changes, as well as changes in political, economic, legal and even demographic trends in order to develop the outside-in capabilities, such as labor market sensing, customer linking, channel bonding and technology monitoring.

The advantages enjoyed by China's labor market may come in the form of increased revenues. Knowing what its labor market demands and the latest trends could help China fully exploit its research and development capabilities to come out with labor market reforms which are not only cost-effective but also high in quality. The strategic option can even be used as marketing tool where the focus is on staying close to their workers and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on China's labor market.

Nevertheless, the mentioned strategic reform seems the most practical in the wake of globalization, since there is a sudden shift towards a more integrated and independent world labour market. The key stakeholders too should not have any objections so long as China's labour market is not threatened. By virtue of China's centralized control of its labour market, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of the labour market's operations.

Understanding the strategic importance of labor market management is something that China has to be familiar with. China normally practices a centralized and globally scaled configuration of operations and capabilities of their labor market. This allows information dissemination to be retained.

The Forecast

Persuasive, albeit limited, evidence pointing to the increasing importance of education in the Chinese labor market suggests that wages of educated and skilled workers will increase at an accelerating rate throughout the next decade or so. Even where regional bottlenecks might be an impediment, anecdotal evidence suggests that talented workers are beginning to find a place in the emerging urban workforce. Also at issue with the path of skilled wages is the balance between population growth as it impacts labor supply and long-run economic growth as it impacts labor demand. In the short-run, weakening population growth and strengthening GDP growth would exert upward pressure on wages. Over the long run, economic growth might slow due to constrained labor supply.

The growing skills premium in the Chinese economy eventually will level off as the supply of educated labor continues to increase. This could take a decade; and in the meantime, China's low wage advantage in skilled labor relative to the industrialized world might narrow to an appreciable extent.

The path of semi-skilled and unskilled wages, however, is more uncertain. It is dependent upon three things--the path of labor productivity, the extent of the remaining low-skilled labor surplus in the state-owned firms, and the future status of the bottlenecks that have precluded the full absorption of migrant farm-area labor into the cities. The turnaround of recent years in the pace of innovation bodes well for the future path of labor productivity, and the likely continuation of strong FDI growth will only reinforce the upward thrust to labor productivity growth as China's technological infrastructure continues to develop and as the foreign presence yields positive spillover impacts.

The situation with the state-owned sector layoffs and regional labor bottlenecks is unclear. No one is certain about the size of the current labor surplus in the state-owned firms. As the non-state sectors (including the entrepreneurial sector) continue to develop and as convergence among the four ownership types progresses, new and existing small firms might thrive and become competitively viable. This suggests that the purging of workers from the state-owned firms in order to make these firms more competitive might take longer than many had thought. Continued layoffs from the state-owned sector will only exacerbate the labor surplus pools that surround the urban areas. Even if the household registration system were to be loosened, it seems logical that skilled worker absorption would be affected long before semi-skilled and unskilled worker absorption.

On balance, while labor productivity advances should keep low-skilled wages on a continued upward path, persistent state-firm layoffs and regional labor absorption difficulties suggest that China's huge advantage in semi-skilled and unskilled labor costs is unlikely to narrow any time in the next generation.

China's labor market and the future

China's tie-up with various labor markets offers tremendous benefits in terms of access to their labor market management policies, infrastructure and even their resources. However, China must not lose sight of the core competencies of its labor market while pursuing these tie-ups. Otherwise, the image of their labor market might be put in jeopardy.

Meanwhile, the collaboration of China's labor market with its major competitors can be seen as a ridiculous move at first. However, upon close examination, this move could pave the way for China's labor market to improve even more their labor market management. The bottom line is both sides would be able significantly gain in such an alliance. China's strengths in labor market development combined with the operations management capabilities of their competitors can transform them suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the labor markets involved. Another possible setback could be whether any of China's competitors has the need to form alliances.

The third option also focuses on alliances, but this time with either one of the leading players specializing in labor market management. The benefits of these alliances should outweigh the costs in the long run.

In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether China and its labor market could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any alliances may also involve the sharing of expertise. China has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on the labor market's values and culture as well as the resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects. Somehow, China will be able to overcome this barrier in managing strategic changes in the process of implementing any of the above mentioned strategic options.

Conclusion

The results of the analysis carried out on the labor market of China indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that China's labor market could still be expected to improve faster than average.

The SWOT analysis of the capabilities and resources of China's labor market revealed very little inconsistencies regarding its strategies. This is coherent with its traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for China's labor market.

The analysis of China's labor market environment as well as its management and capabilities revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of China's labor market.

Also, China has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.

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