Wednesday, June 2, 2010

Cheap Labor Fighting Back in China

As the global race to the bottom for private industry labor continues, it seems the younger Chinese laborer - many of which are exposed to the rest of the world via the internets (sic) - is beginning to have enough. While not a new issue [Feb 28, 2008: China Raising Minimum Wage] the very high profile suicide cases at mega contract manufacturer Foxconn along with strikes at Honda plants in China are bringing this issue to the forefront of public conscience. Even Apple's Steve Jobs is concerned:
  • Apple Inc Chief Executive Steve Jobs finds "troubling" a string of worker deaths at Foxconn, the contract manufacturer that assembles the company's iPhones and iPads, but said its factory in China "is not a sweatshop." "It's a difficult situation," Jobs, dressed in his customary black turtleneck and jeans, said on stage. "We're trying to understand right now, before we go in and say we know the solution."
  • “The situation at Hon Hai is negative for Apple, so they need to work together to try to resolve this,” said Jenny Laia technology analyst at CLSA Ltd. in Taipei. About 70%of Apple’s products may be manufactured at Hon Hai’s facilities, she said.
Not everyone agrees with Mr. Jobs, who is obviously biased:
  • Foxconn is a sweatshop that “tramples” the rights of workers partly because it pays about 900 yuan ($131) a month, forcing factory employees to do overtime to support themselves and their families, according to Li Qiang, founder and executive director of New York-based China China Labor Watch.

While this is a positive for "humanity" you can almost hear the siren call of other countries, such as Vietnam, [Apr 7, 2010: Vietnam Begins to Lure Business Away from China] beckoning for the world's corporations to exploit their workers if the Chinese won't have it.
  • “We have been seeing wage inflation over the past several months,’’ said Chris Ruffle, who helps manage $19 billion as China co-chairman of Martin Currie Ltd. Rising salaries may prompt businesses that operate plants in China to move to lower-cost countries such as Vietnam and Cambodia, Ruffle said.
One can only wonder what nation's workers will be left to exploit circa 2025 when the Vietnamese and Cambodian worker inevitably rises up as the Chinese are doing. If only Africa had government stability! Perhaps North Korea will be willing to open its doors.


Via AP:
  • Global manufacturers struggling with life-or-death pressures to control costs are finding that the legions of low-wage Chinese workers they rely on have limits. A strike at Honda Motor Co. and the official response to a spate of suicides at Foxconn Technology, a maker of electronics for industry giants such as Apple, Dell and Hewlett-Packard, suggests China's leaders are at least tacitly allowing workers to talk back.
  • Over the weekend, the top communist party leader in Guangdong province visited Foxconn's sprawling factory where 10 workers have committed suicide and urged the company to adopt a "better, more humane working environment" for its mostly young workers, state media reported.
  • "The 80s and 90s generation workers need more care and respect and need to be motivated to work with enthusiasm," said Guangdong party chief Wang Yang. (my assumption is he meant those workers born in the 80s and 90s)
  • That transition is taking hold across China. Manufacturers, under pressure to deliver low prices in home markets, are struggling to attract and keep young workers who, brought up in an era of relative affluence, are proving less willing than earlier generations to "eat bitterness" by putting up with miserable working environments and poor wages.
  • The strike at Honda also reflects broader trends of growing dissatisfaction among China's long-suffering workers with lagging wages and generally harsh working conditions. Employers in Shanghai complain of difficulties in finding and keeping young workers, both skilled and unskilled. Contractors were obliged to pay heavy bonuses to keep workers on the job during the lunar new year as they rushed to finish construction for the Shanghai World Expo, which runs for six months until Oct. 31.
  • "Our economy can no longer rely on squeezing labor benefits, because workers are unwilling to accept it anymore. I have to say the squeeze is very cruel now," said Chang Kai, a labor expert at Beijing's Renmin University.
  • Foxconn says it is installing safety nets on buildings and hiring more counselors at its 300,000-worker factory in Shenzhen, the boomtown bordering Hong Kong in Guangdong province that became the epicenter of China's first waves of cheap-labor export manufacturing in the 1980s-90s.
  • The factory campus has air conditioned production lines, palm-tree lined streets, fast-food restaurants and recreation facilities. But labor activists accuse the company of demeaning and dehumanizing workers with a militaristic management style, excessively fast assembly lines and overwork that have overwhelmed some laborers in their late teens and early 20s and away from home perhaps for the first time.
  • (in the Honda plant) "Most of the employees on strike at the plant have agreed to new wages, and some production started there from today," said Honda spokeswoman Yasuko Matsuura in Tokyo. She said "almost all" of the striking workers have agreed to increasing the total starting wage by about 24% to 1,910 yuan ($280) per month.
  • China outlaws unauthorized labor organizing, limiting such activities to the government-affiliated All China Federation of Trade Unions and to company branches of the ruling Communist Party. But in recent years authorities increasingly appear to be tolerating sporadic, peaceful protests by aggrieved workers.
  • "Wages have been rising in recent years, but compared with soaring prices they remain very low," said Li Qiang, founder of New York-based China Labor Watch. "The government recognizes that problem, so even if strikes are still illegal some are tacitly condoned, though the strikes and protests have to stay within certain limits," he said.
  • Working conditions vary widely across China -- from modern factories in full compliance with Western standards to slave labor brick kilns. Yet another of those was reported after 34 migrant workers were freed by a police raid in northern Hebei province, the state-run newspaper China Daily said Monday.

  • "The Foxconn incident shows one big problem: people are not machines," Jin Bei, head of the industrial research institute of the Chinese Academy of Social Sciences, said in a commentary Monday in the China Business Journal.
Ah, if only they were! The need for sleep is such a human weakness - Sincerely, HAL9000.


Another story via Bloomberg on this problem re: People are not robots.
  • Ah Wei has an explanation for Foxconn Technology Group Chairman Terry Gou why some of his workers are committing suicide at the company’s factory near the southern Chinese city of Shenzhen. “Life is meaningless,” said Ah Wei, his fingernails stained black with the dust from the hundreds of mobile phones he has burnished over the course of a 12-hour overnight shift. “Everyday, I repeat the same thing I did yesterday. We get yelled at all the time. It’s very tough around here.”
  • Conversation on the production line is forbidden, bathroom breaks are kept to 10 minutes every two hours and constant noise from the factory washes past his ear plugs, damaging his hearing, Ah Wei said. The company has rejected three requests for a transfer and his monthly salary of 900 yuan ($132) is too meager to send money home to his family.
  • At least 10 employees at Taipei-based Foxconn have taken their lives this year, half of them in May, according to the company, also known as Hon Hai Group. The deaths have forced billionaire founder Gou to open his factories to outside scrutiny and apologize for not being able to stop the suicides.
  • Foxconn’s Longhua complex outside Shenzhen spans three square kilometers (1.16 square miles) and is criss-crossed by tree-lined streets with a water fountain at the center of the facility. Workers wearing polo shirts emblazoned with ‘Foxconn’ in Chinese characters over their hearts walk along the streets. Men wear blue, women wear red. Security personnel wear white. The complex boasts its own hospital, a collection of restaurants and a swimming pool surrounded by palm trees.
  • The workers, 86% of whom are under 25 years old, live in white dormitories with eight to ten people sleeping in a room. The living quarters have stairs running up the outside walls and the company has begun covering them with nets to prevent people from jumping.
  • About 80% of the front-line production employees work standing up, some for 12 hours a day for six days a week, according to Liu Bin, a 24-year-old employee.
  • “It’s hard to make friends because you aren’t allowed to chat with your colleagues during work,” Liu said at Shenzhen Kang Ning Hospital where he was seeking help for insomnia. “Most of us have little education and have no skills so we have no choice but to do this kind of jobs. I feel no sense of achievement and I’ve become a machine.” (somewhere HAL9000 is smiling)
  • The fundamental problem for Foxconn and other Chinese factories is that their business model relies on a low-cost workforce sourced from rural areas of China,” said Pun Ngai, a professor of applied social sciences at the Hong Kong Polytechnic University “Due to its size, Foxconn has to be that much tougher than other factories, and has to become more emotionally detached from its employees than others.”
  • Foxconn raised pay for workers by 30 percent to 1,200 yuan from 900 yuan a month, spokesman Ding said today. The additional money may not be enough to stem the suicides, according to Xiao Qi, a college graduate who works at Foxconn in product development. He earns 2,000 yuan a month, yet gets no joy from his job, he said. “I do the same thing every day; I feel empty inside,” said Xiao, who said he has considered suicide. “I have no future.
In a totally unrelated note, Walmart just cut prices on all Chinese sourced merchandise another 8%. Rejoice American shopper!

[Aug 15, 2008: NYT - Cost Cutting in New York City, but a Boom in India]
[Dec 8, 2007: Do the Bottom 80% of Americans Stand a Chance?]

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