Notebook upstream players that have investments in Chongqing, China - including component and notebook makers - are facing labor and electricity shortages in the city and the issues have already started to become a potential concern for the notebook industry to continue pushing investments in inland China, according to sources from upstream suppliers.

With Hewlett-Packard (HP) and Acer both picking up the pace to move their production center to Chongqing and demanding their upstream partners to follow suit, Quanta Computer, Compal Electronics and Wistron have all already expanded their capacity with Quanta set to increase its notebook shipments by 30% at the end of 2011.

However, labor shortages in Chongqing are significantly affecting these notebook makers with the sources believing that the labor shortage gap being at least more than 20%.

The second half of 2011 has not shown a strong seasonal boost as in previous years, but the industry is still suffering from a labor shortage, upstream suppliers in the notebook industry have started to show concerns about the labor ecosystem in Chongqing city.

Although downstream players such as brand vendors and notebook makers are confident about investing in inland china, upstream component makers are mostly taking a conservative attitude about such plans since the labor ecosystem in inland China is not any better than coastal area, while the order volumes from downstream clients are filled with uncertainty. However, if they refuse to invest in inland China, they will lose the orders, the sources noted.

Some component makers that have already invested in Chongqing are even recruiting from other provinces near the city to fill the labor gap. Since minimum wages in Chongqing are already at the same level as that of coastal areas, investing in inland China has not earned the makers any advantage.

Since Chongqing is also suffering from electricity and water shortages, some makers are concerned that if the economy recovers and brand vendors are accumulating their orders in Chongqing, production may start seeing serious delays.

Source:digitimes