According to a survey by the Zhejiang team of the National Bureau of Statistics, 52 percent of companies in the province expect a hard time filling jobs after the Spring Festival.

In Wenzhou, an industrial city known for its small- and medium-sized enterprises, the labor shortage may reach 800,000 to 1 million, said Zhou Dewen, vice-president of the China Association of Small and Medium Enterprises.

Wu at the Guanghua School of Management says many companies in China's manufacturing centers are reluctant to raise wages.

"The prospect of a higher wage bill is not the only increasing cost they face," he said, adding land and raw material prices are going up.

"The only way forward for them will be to invest in technology and move up the value chain. They will then be able to pay higher wages."

Zhong Jiyin, an economist at the Chinese Academy of Social Sciences, said the labor shortage will affect the performance of manufacturers in the short term.

"It is a real problem at the moment. In the longer term, however, manufacturers will have to upgrade their technology. That is the only way they will survive in the export markets in the longer term," he said.