The shortage of qualified labour is a top concern for small and medium-sized exporters in China. Workers are demanding higher salaries to meet rising living costs in big cities, and rising operation costs are making it harder to earn profits.

Xu Liang started his business one year ago. He put all his savings into this LED company, and is now struggling to make ends meet. He can��t find enough workers, so only one assembly line is running.

Xu Liang said "We have just one-fifth of the 50 or more people it takes to work all the assembly lines."Poor earnings have plagued his company since day one. The economic slowdown is partially to blame, but the biggest strain on his balance sheet are the increasing demands from his employees.

Xu also said "The salary we offer is 500 yuan more than last year. But when you take housing expenses into account, my workers can barely save money."

Xu and his employees are doing everything they can to save money. Here, no company canteen, everybody eats at a roadside restaurant.

Xu continued "The owner gives us a discount as we come here frequently, each of us can save one yuan per meal."

Xu has advertised positions available in his company but has received few applicants so far.Xu said "Job hunters nowadays have more requirements, we��ve received few calls, and the most we can offer is 2500 yuan per month."

One application Xu did receive was for a management position. The job had been vacant for some time, and only after raising the salary did he find someone. But it didn��t work out all that well.

He said "This graduate didn��t have the proper qualifications. We need someone who can use Microsoft Office. His degree from a vocational school didn��t live up to our expectations."Preferential policies for export companies are expected to help solve the dilemma.He told us "We are looking forward to some tax exemption policies, instead of just tax rebates. This could improve our liquidity."

But policies might come just too late for Xu Liang. With expenses soaring 40-percent year-on-year, he says, the light at the end of the tunnel has now been switched off.