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Are Chinese Workers Really Defenseless?

The average Chinese worker today pays little attention to Mao's Little Red Book. Workers have other things on their minds, like getting a better job and a higher salary to buy all of the things their Western counterparts can more easily afford.

Increasingly, they are getting better at achieving these dreams. By mobilizing within China's constraining Communist system and using pressure tools Western workers deployed decades before in Europe and North America to win substantial concessions from employers and governments, Chinese workers are moving beyond their Communist roots to secure the benefits of a capitalist economy.

If your image of the Chinese worker is that of a suppliant employee bowing subserviently before a whip cracking supervisor, you would be very far from the truth. The complete picture is a lot more complex and nuanced. Yes, workers in China still jostle for jobs, and a contract manufacturer can indeed mobilize hundreds of thousands of assembly line workers in the middle of the night to assemble the next-generation smartphones for the likes of {complink 379|Apple Inc.}, but these same employees are beginning to use the very same technology devices they manufacture to demand better working and living conditions.

In fact, the reason we know as much as we do today about working conditions in Chinese factories is because the workers are speaking out more — often at great risk to themselves and against the wishes of Communist Party rule-enforcers — and providing evidence of unfair labor practices to their employers' foreign partners, government officials, and labor/human rights campaigners.

In recent months and over the last year, workers at companies like Apple EMS provider {complink 2125|Foxconn Electronics Inc.} have doubled their wages by forcing the contract manufacturer into a corner. In one recent incident, workers at a plant in Wuhan, China, threatened mass suicide, and after a blizzard of negative news, Foxconn caved in and “settled” with the disgruntled employees who manufacture the X-Box for {complink 3426|Microsoft Corp.}

Foxconn has found itself in this position before. In 2010, the company faced intense scrutiny after 11 workers committed suicide at dormitories in one of its facilities in Hunan. The uproar that followed pushed Foxconn to renegotiate salaries with employees and even double their compensation packages. In response to the growing labor unrest the company is facing, Foxconn is reportedly trying hard to automate its operations and wants to add more than one million robots to its operations over the next few years, according to a Reuters report.

China's workers aren't targeting Foxconn because of Apple's huge visibility. All across the country, workers are finding subtle and overt ways to protest against what they consider unjust practices by foreign and local employers and even Chinese government-owned businesses and operations. Demonstrations have spiked in recent years and will likely increase as employers give in to workers’ demands, including at the toy factory protest in Dongguan.

In January, workers at a {complink 4783|Sanyo Electric Co. Ltd.} plant in Shenzhen reportedly clashed with the police over “compensation and job security.” What I found fascinating about the Sanyo protest was what the workers were up in arms over: the likely impact of a merger between Sanyo and {complink 4185|Panasonic Corp.} on compensation. This indicates these are savvy workers fighting for what employees in the West might have been able to secure via direct bargaining with the employer.

China's workers aren't limiting their protests to companies. They have forced their governments at the local to change policies and even embrace a form of Western democracy.

What does this mean for employers? If your strategy in China has been based on squeezing cost out of your operations by tapping into a deep pool of low-cost labor, enjoy it while it lasts. The “China cost” will remain competitive for quite a while, compared with wages in North America, Europe, and Japan, but if the issue of unfair labor conditions remains visible, manufacturers flocking to the country should expect to pay a bit more and satisfy a lengthening list of demands.

Of course, the workers can be ignored, for a while. Soon, though, their cries will be heard in places Western manufacturers may not want hard-built reputations sullied.

16 comments on “Are Chinese Workers Really Defenseless?

  1. Barbara Jorgensen
    February 6, 2012

    Brilliant analysis, as always. China's citizens have gained more than they have lost through joining the WTO and the stereotype of the oppressed factory worker isn't entirely accurate. There's no question conditions will improve as employee empowerment spreads.

  2. _hm
    February 6, 2012

    Good luck to Chinese employee for getting better work environment and higher wages.

     

     

  3. DataCrunch
    February 6, 2012

    It will be interesting to see if unions start popping up in China over the next 5 to 10 years.  We'll see how the workers react to automation and robots.

  4. bolaji ojo
    February 6, 2012

    Dave, They are already popping up but not in the shapes we would recognize in the West. Chinese workers are organizing in informal ways and self-appointing leaders to represent them in discussions with employers. Often, these surprisingly are members of the Communist Party — many businesses in China are required to have token workers who belong to the Chinese Communist Party.

    China's government accepts this as long as it doesn't develop into a direct challenge to the central authority. They have been known to even censure local Communist Party leaders on behalf of workers. As long as workers keep their demands and protests in line with what the government finds acceptable they are usually free to press these requests. However, knowing what the government finds acceptable is a difficult target.

  5. djlevy
    February 7, 2012

    As someone who has been running manufacturing plants in China for the past 12 years, I can tell you that workers are far from powerless these days. Things to keep in mind:

    1. It's a worker's labor market. Factories are struggling to find and retain workers these days, and it would be extremely easy for any of dissatisfied Foxconn (or wherever) worker to go out and find another job immediately.

    2. Chinese workers are more and more litigious, and courts have been siding with workers in disputes against employers more and more in recent years.

    3. As the article mentions, workers are not afraid to strike or protest poor treatment.

    If factory executives here are smart, they will stop thinking of China as a pool of cheap labor, and start thinking about strategies to benefit from it's highly productive, if no longer super cheap, industrial environment. 

    Some related posts:

     

     

  6. Daniel
    February 7, 2012

    Dave, in china there are many unions for labors welfare. They can raise their voices in appropriate forums to the government and local authorities. But they are not entitled to lead any strike or similar activities. The best part is that their voices or demands are no ware registering or accounting. If they want to register such concerns, they have to move to the Tiananmen Square and we know what happens to the students assembled there in 1989. (http://en.wikipedia.org/wiki/Tiananmen_Square_protests_of_1989)

  7. mfbertozzi
    February 7, 2012

    I would like to introduce within the discussion recent 2012 report from ILO (International Labour Organization). If you go through the document, you will see despite an high ramp on productivity in those regions from now to 2016, vulnerability conditions in the sense of limited rights and compensation per day, will still remain high. Maybe also Western is in charge of a few responsibility about.

  8. bolaji ojo
    February 7, 2012

    djlevy, Thanks for the insight. Job mobility has been increasing for Chinese workers for quite a while and many manufacturers are actually feeling the pinch because of the difficulty in retaining good employees. The links are quite revealing.

  9. prabhakar_deosthali
    February 8, 2012

    I had a chance to visit factories in China , a couple of years back while trying to source  parts for our Electric scooter project. I visited many factories around Nanjing, Shanghai, Tianjin and Hangzov areas.

    I found the working conditions in those factories normal and workers enjoying their work

    On the eve of  Chinese Labor day ( May 1), I saw the Lady manager of one of the companies addressing the workers and wishing them happy holidays.

    In our tour of the various industries I saw workers enthusiastic about their jobs and joining us for lunch along with their bosse and sharing the same table and food with us.

    So the situation is not as bad.

  10. Jay_Bond
    February 8, 2012

    It is unfortunate that a majority of people listening to the mass media believe that foreign companies operating in China are trying to undercut the employees. The company I work for has a few large plants in China. One of the newest plants actually had problems retaining employees because the company paid them so well. They would make more in a month then they did the entire previous year. So thankfully the workers decided to stay realizing how much better off they were.

    The days of cheap labor in China will end soon, but not all companies try to exploit there workers in order to make the most profit. 

  11. t.alex
    February 8, 2012

    I think Union is already a strong force in countries like China. With the rise of machines and automation, it will boil down to the cost issue. If labour is cheaper than machines, why not?

  12. Ariella
    February 8, 2012

    @prabhakar_deosthali

    The cynic in me makes me think that you may have only been shown specially selected factories. Still, that would mean that some do exist even if they are not necessarily all up to the same standard.

  13. prabhakar_deosthali
    February 9, 2012

    Not so Ariella,

    The factories were selected by us for visit after they were shortlisted by our purchase guy ,as our potential suppliers , after a month long stay in China. And it was not just a visit once but we spent a few days in each factory studying their processes, parts inspection procedures, test equipment used etc. And the products varied from  the complete Electric scooter manufactruing to  Electric motor, controller, charger and the big battery manufactruing plants, and the design houses.

  14. Ariella
    February 9, 2012

    @prabhakar_deosthali   I didn't mean that the factories you saw were misrepresenting themselves, only that the ones that were on your list may be better than average and so not necessarily represent the factory experience for the typical worker. It may be that it is, but you have to realize that just because the factory you saw looked good does not mean that we can infer that all factories are. The only way to truly ascertain that is to look into every single one.  It's rather like the mistake in diagnosis Taleb discusses in The Black Swan. Getting a negative read on a general cancer screening does not guarantee there is no cancer there because it does not cover every last tissue; it can only confirm that there was no cancer found in what was reviewed. 

     


  15. prabhakar_deosthali
    February 9, 2012

    Ariella,

     

    May be you are right.

    But that way you will find such labor exploitation and violation of human rights in every country , to some degree.

    So why single out China? Just because Apple seems to have beaten competition by   smartly using the Chinese suppliers?

     

  16. Ariella
    February 9, 2012

    That's true. I've heard that sweat shops still exist in the US, despite our complacency about workers' rights here.

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