Liu Xiaoyong looks bewildered by the attention he gets as he walks through the heart of this factory city on a Wednesday afternoon. A diminutive native of central Hunan province, he came to China's export belt five years ago looking for any job he could find. Now he's the one in demand.
"Ours is a big company! You can make 3,000 yuan (about $475) a month here!" a young woman in a miniskirt shouts at him. Intrigued, Mr. Liu stops to hear more. "We have a separate building for entertainment," continues the woman, who represents Foxlink, a large Taiwanese-owned producer of electronics parts. "The only problem is we're a little bit far from the city centre."
Mr. Liu makes an appointment to return the next day to be taken on a tour of the factory, then continues down the street, where recruiters from 20 other companies – mostly furniture factories and shoe makers – are waiting to make their pitch. The 30-year-old says he's willing to take on a tough factory job because he needs to send money back home to his wife and five-year-old son.
For the past two decades, Dongguan, a city of eight million wedged between the better-known centres of Shenzhen and Guangzhou, has been a key part of China's manufacturing and export miracle. Factories here produce 40 per cent of the global supply of some computer parts and 30 per cent of the world's toys. No city anywhere produces more shoes than Dongguan.
China's success in manufacturing has always been reliant on migrant workers like Mr. Liu toiling long hours for little pay, but now companies are being forced to go to great lengths to entice workers increasingly seeking better pay and working conditions. The changing labour demands are putting the entire economic model of Guangdong, the Chinese province long known as the "factory floor of the world," at risk.
"These days, people don't look for jobs, the jobs look for people," said a 21-year-old recruiter for a shoe factory who only gave her family name, Jia. She said she had been standing on the street all week with a sign promising workers 85 yuan (about $13.37) a day, but that few had expressed interest.
Many factories have simply hung out plaintive help-wanted signs: "Many openings for experienced and inexperienced workers! Good salaries paid on time!" read the red banner hung beside the gate of one clothing manufacturer.
That was enough for generations of migrant labourers, who fuelled China's economic rise by working longer hours for less pay than their competitors in other countries. But today's younger workers, those in their late teens and early 20s, want a better deal than their parents – or even those born a few years before them – were willing to accept.
"The younger generation is completely different from the older generation of workers that came here. On one hand, they want higher salaries. On the other, they want better working conditions. They want to work, but they also want entertainment. They want karaoke rooms and coffee shops," said Li Youhuan, a senior researcher at the Guangdong Academy of Social Sciences, in the provincial capital of Guangzhou.
"There's no growth in the international market prices, but Guangdong labour costs and other production costs are going up. That's squeezing the margins of local manufacturers and leaving them with nothing to earn. So Guangdong's whole economy is going down," Mr. Li said.
Mr. Li said a number of Dongguan's factories have closed since the onset of the 2008 financial crisis. While that should have created an army of willing workers – it's estimated that upward of three-quarters of the city's population are migrants from elsewhere – many instead returned to their hometowns, a phenomenon that caused some factories to also quit Dongguan in order to move inland and be close to their labour pool.
"The older generation are retiring, and there's no one to take their place," said Liu Xiaoyan, purchasing manager for Weige Hardware, which employs 140 people making door and drawer handles. The company for a week had a sign in its shop window offering 13 factory jobs – "no experience necessary" – without being able to fill any of them.
"The young people all have higher demands. It has to be fun and it has to pay well. The first thing those of the nineties generation ask us is: 'Is it fun to work inside? Do you have any freedom?'" explained Jiang Kaidi, a 29-year-old migrant from Chongqing, who spent three years working in a Dongguan shoe factory before she was hired to recruit for Foxlink.
Ms. Jiang says she gives the honest answer: Yes, the company now offers a basketball court, pool tables and Internet access. But no, the work itself is not fun. "These young people are the only child of their families and they've never experienced hard work. They get a job in the factory and they can't take it, so they go back home."
THE BIG SQUEEZE
Workers across China saw the minimum wage rise by 22 per cent over the past two years, following a wave of strikes in 2011. That damaged the profitability of many companies while still falling short of workers' demands. The phenomenon is pinching hardest in Dongguan, which – after two decades of frequently posting around 20-per-cent annual growth – is now in a sharp slowdown, growing just 2.5 per cent in the first half of 2012.