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Chinese Professionals Enjoying Deeper Pockets Than Asian Peers

| Apr 26, 2016 09:38 PM EDT

Chinese employees are enjoying deeper pockets than their counterparts in Asia.

While China's white-collar employees are enjoying deeper pockets than their Asian peers, the country's labor cost competitiveness may be losing its luster.

According to Towers Watson's 2015/2016 Global 50 Remuneration Planning Report, entry-level white-collar workers in China pocket an annual base salary of approximately $21,000, or about 30 percent more than their counterparts in Indonesia, who receive about $16,000.

The pay advantage extends to professional and middle management levels, where average base salaries of Chinese employees are up to 2.2 times more than those in the Philippines and Vietnam, the report noted.

"The largest differential is at the middle management level, with China paying 44 percent more than Indonesia, a gap that narrows to 28 and 5 percent at the senior management and top management level, respectively," added the report released on April 21, Thursday.

For many years, China has enjoyed a labor cost advantage against other economies. But its dominance in this arena is being challenged by neighboring countries where manpower is abundant and labor wage is cheap.

"The lower salaries in these ASEAN countries give them a competitive edge and there's evidence that it is leading companies to reconsider where they locate operations once based in China, where an aging population and shrinking workforce suggest salaries will remain higher," said Sambhav Rakyan, Data Services Practice Leader for Asia Pacific at Willis Towers Watson.

However, there appears to be a silver lining amid China's graying population and rising manpower costs.

The country is banking on R&D instead, as well as higher-end production, both of which require the local workforce to acquire a higher set of skills, according to Rakyan.

"For that reason, along with proximity to other parts of the supply chain, although China is much more expensive, its more mature infrastructure and skilled workforce will likely continue to attract companies particularly when compared with ASEAN's emerging economies," the analyst said.

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