Another outing to forget for Foxconn International. The world's biggest contract maker of mobile phones was already the worst performing stock in the Hang Seng index this year, down 38 per cent. It then slid another 7 per cent on Wednesday, having warned that first-half losses would be wider than last year's.

The shine had been coming off the stock for a while. Competition from the likes of Florida's Jabil Circuit and Elcoteq of Finland had eroded gross margins, which held at around 9 per cent between 2004 and 2007, to 6 per cent by 2009. But Tuesday's profit warning, the fourth in a row since the second half of 2008, was the first unanticipated one. Improving global handset demand means almost all players in the electronics manufacturing services sector were expected to report year-on-year earnings growth in the current period – not least the market leader.

In blaming pricing pressures, the Taiwan-owned company emphasises that it remains hostage to the fortunes of wobbling clients like Motorola – preparing to spin off its handset business – and Nokia, which has pulled more manufacturing in-house. But there are more fundamental forces at work too. The ease with which workers at the vast Shenzhen compound have extracted wage hikes of at least 30 per cent suggests that, faced with a shrinking pool of labour in China's export heartlands, manufacturers need to start paying up. Beijing seems clear that the days of foreign-owned enterprises treating Chinese human capital as just another input, are over.