Biel, supplier to tech giants, counters rising labor cost

As wages rise, labor-intensive manufacturers in China are faced with a dilemma: Should they stay or should they go?
Biel Crystal Manufactory (HK) Ltd, however, is happy it stayed put.


Based in Huizhou city in the southern province of Guangdong, Biel produces the outer screen glass used for Apple and Samsung 


smartphones.


It was just over two years ago that Biel president Yeung Kin-man had to weigh up the pros and cons of relocating his production 


facilities, which employed 70,000 people, to somewhere in Southeast Asia. All around him, firms were leaving Guangdong enticed by 


lower operational costs that would get their products more bang for their buck.


Wages in the Pearl River Delta region in southern China have risen significantly since 2014. This, along with commodity price volatility 


and the slowing growth of the global smartphone market was threatening profitability at Biel.


"Wages in the River Delta region are three times as much as in Myanmar or Vietnam, and will double in the next five years." said Li 


Peideng, Biel chief operating officer.


This trend, rising wages, can be seen across the region, forcing many labor-intensive factories - from clothes and furniture to electronic 


parts - to move to more affordable locations abroad or in China's hinterland. Those still based in the region speak of how their factory 


floors - once bustling centers of industry with thousands of employees - are lucky if they have a few hundred.


Despite this, Yeung chose to stay, but, not without setting major changes in motion to counter rising labor costs and ensure the company 


had a future.


Therefore, it was out with the low-end products and in with the tech-intensive offerings, which have a wider profit margin.


As chance would have it, as Biel was shaking up its business model along came a product that fit its "tech-intensive, high-profit" brief: 


Curved glass. The company had actually begun to research curved glass back in 2011 and mass production - of products that were 


destined for major smartphone models, such as Samsung's Galaxy Edge series - followed in 2014.


Biel said curved glass generates the largest portion of its profits. Orders for curved glass increased the company's revenue by 55 


percent year-on-year. The product saved Biel.


"We have actually had to turn down some orders because we couldn't handle them," Yeung said.


To accommodate mounting orders and contain overhead costs, Biel is expanding its production base in Huizhou and increasing 


production-line automation.


It will also increase its 600-member research team to 1,000.


The article transsshipment from China Daily