MARCH 28, 2012

China Beyond the Stereotypes
Transition From the Sweatshop of the World

For many the Retraction of the Apple story by This American Life turned Apple from a labor abuser into a corporation with best practices. Others saw this as a proof of yet another corporate cover-up and PR campaign by Apple. Meanwhile, American involvement in workplace abuses in China remains under a thick veil of ambiguity for the public.

China defies stereotypes.

In the past 30 years, China helped create an economic model that relied on low wages and labor standards, and militarized production units. That model is however in transition now. Workplace practices and labor rights are improving, although unevenly and slowly. Chinese factories and their labor standards are diverse and evolving. China has production units with 19th century labor practices, and modern factories like Foxconn that pay better wages, and have more acceptable living conditions for their workers. Human rights violations of workers however continue in different degrees in the worst, and the best factories.

Wages have sharply increased in recent years. In Shenzhen, wages more than tripled from an average of $70 a month in 2005, to $240 in 2012. Despite improvements in wages, the militaristic organization of workplaces remains even in the most modern enterprises.

In the early days of economic reform, some suppliers of large American firms in Shenzhen and surrounding cities had private jails on the factory compound. Detaining the trouble makers and physically abusing them was common. There were rare extreme cases. Militant workers disappeared. A strike leader was found dead with a bullet in his head on the roof of a Taiwanese shoe factory supplying a major American brand in the mid 1990s. Years later, in Shenzhen, a manager of the factory from that time told me the story off the record. “This is very dangerous,” he said.

Such cases of extreme violence are no longer practiced, but fear reigns even in factories supplying American brands. Factory prisons have all but disappeared. Strike leaders and militant workers are not detained. They are penalized and fired routinely. “This is everyone’s secret. The Hong Kong people know it. The Taiwanese know it. The Mainland Chinese know it. The only people who pretend not to know it are the American buyers,” the manager told me.

The owner of a medium-size chemical company supplying a leading American retailer explained how he dealt with a potential strike in 2005. He asked his workers to appoint representatives to negotiate with him. Four workers stepped forward. He fired all four the next day. There was no strike. The work stoppage would have prevented him from getting his shipment ready for the U.S market. “I get charged for late delivery,” he said.

While China’s labor practices improve, the pressure to deliver on time remains inescapable for most subcontractors. With the option to shop around and contract with the most reliable and cheapest supplier, the American buyers demand uninterrupted and on time delivery. Late delivery is costly to the subcontractors. American buyers make the local producer pay for the air freight if they are late in their delivery, an employee of a Chinese trading company told me.

The demand for timely and fast delivery is more acute for those supplying major brands like Apple. The maddening race to meet delivery deadlines for iPhones, iPads, and similar products puts Foxconn workers under insufferable stress. The spate of workers’ suicides in the past couple of years is revealing. Foxconn responded by installing safety nets in some of its establishments in Shenzhen. It recently increased the wage of some of its workers to $400 a month, more than $100 above the government-set minimum in Shenzhen. The nets prevent death, but do not remove the underlying causes of the suicide attempts. Higher wages matter a lot, but they don’t change the militaristic management style that has been pushing workers to the edge.

“A factory needs discipline. It would seize to exist otherwise,” the owner of the chemical company told me. For this, he relied on factory guards. They maintained order, and gave a “good beating” to those workers who stole from others and caused problems. I told him that the thieves are handed over to the police in the United States.” In China, we beat them up first, and then give them to the police,” he said laughing.

These practices are also changing, most visibly in large export-processing enterprises. The rising confidence of the Chinese workers and sporadic job actions has put Beijing on alert. Eager to avoid social instability, and hoping to transform the international image of China as the sweatshop of the world, the government has been supporting legislation to improve labor conditions. Low-wage export-processing industrialization is slowly giving way to higher value added exports, and the development of an expanding domestic market and a middle class society. Improving workplace practices and labor standards is integral to this process. The Chinese economic transition is in transition.