As for regional differences, Beijing and Shanghai have the highest wages, while southern regions have the lowest wage levels, the same as in previous years. Salaries in first-tier cities, on average, are 40 percent higher compared with those in second- or third-tier cities, according to the survey.

The auto industry has the highest wages, the machinery sector is at a level similar to the national average, while wages in manufacturing sectors are 16.7 percent lower than in non-manufacturing sectors, the report added.

"Rising labor costs are the high or medium issue for nearly 90 percent of surveyed companies, while recruitment and retaining qualified staff are equally a problem," said Zenglein.

Meanwhile, an increasing number of German companies in China are trying to boost their productivity to offset cost rises and maintain profit growth, while optimizing internal processes and better training of current employees should be the major ways to tackle labor challenges, according to the survey.

"Labor costs increased about 10 percent annually in recent years and the wages in our factories are on the whole higher than those in East Europe. We have to enhance our efficiency to offset the increasing costs," said Zhang Yilin, deputy managing director and president of the automotive unit of Schaeffler Greater China, a major manufacturer of bearings and a renowned supplier to the auto industry.

"The Chinese market is our top priority. Even though China's economic growth has slowed down, growth of 6 or 7 percent is still envied in the world and the potential of the Chinese automobile market is yet to be fully unleashed," Zhang said.