Archives 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.

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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.

and….

* “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.

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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.”

Chinese Honda Strike a Wake-Up Call for Japan

By HIROKO TABUCHI

TOKYO — The strike that has crippled production at Honda Motor’s factories in China has come as a wake-up call to Japan’s flagship exporters as they seek to remain competitive and push into China’s burgeoning market with the help of low-wage workers.
Related

The strike by Chinese workers to protest pay and working conditions has cost Honda, Japan’s second-largest carmaker after Toyota, thousands of units in lost production in the world’s biggest auto market. The walkout began on May 17 at a Honda transmission factory in Foshan, in the southeast, and has shut down all four of Honda’s factories on the mainland.

“Honda takes the situation very seriously,” said Yasuko Matsuura, a spokeswoman for Honda in Tokyo. The company “is working toward reaching a resolution as soon as possible.” On Tuesday, there were conflicting accounts by the company and Chinese employees about how soon workers might return to their jobs.

In Tokyo, the strike has driven home a salient point: as Chinese incomes and expectations rise in line with the country’s rapid growth, while Japan’s own economy falters, the two countries face a realignment that could permanently alter the way their economies interact.

To complicate the picture, Japanese companies see the Chinese as crucial consumers of their goods to make up for a shrinking and aging market at home. Some of the most profitable Japanese companies, like Fast Retailing, which runs the budget clothing line Uniqlo, have relied on production in China since the 1990s to keep prices low.

“Japan is starting to realize that the age of cheap wages in China is coming to an end, and companies that looked to China only for lower costs need to change course,” said Tomoo Marukawa, a specialist on the Chinese economy at Tokyo University.

Despite the consequences for production costs, a rise in wages and standards of living in China would be welcomed by many Japanese exporters. The same companies that produce in China have also moved to sell their wares there, moving factories to the mainland to reduce costs further and meet the needs of local customers.

In Uniqlo’s case, as incomes in China rose, it followed up with local stores in 2002; the company has opened 64 outlets in China and aims to open 1,000 stores there in the next decade.

And yet, for Honda, prices of its cars in China may have to drop considerably before the company can truly tap into the market.

The strike by 1,900 workers at Honda’s Foshan factory came as a particularly big shock to Honda, which had announced just days before that it would increase production in China to meet demand.

Honda’s chief executive, Takanobu Ito, had said the automaker would begin major expansions at two joint ventures in China, Guangqi Honda and Dongfeng Honda, increasing capacity by 30 percent to 830,000 cars and minivans by 2012.

In April alone, Honda made 58,814 cars in China, a 28.7 percent increase from the same month the previous year and a monthly record.

Five of six Japanese car manufacturers with factories in China broke production records in April.

“The wave of motorization in China will not abate for the foreseeable future,” Mr. Ito said last week. He said that Guangqi Honda would introduce a compact car intended especially for the Chinese market that would be produced there in 2011.

The rise in output in China has been driven by a strong economic recovery in that country, which is buoying auto sales more than in any other major market. The rebound has been good news for Japanese automakers, hard-pressed to cut costs as they seek to return to profit after a collapse in car sales because of the global economic crisis.

Auto sales in Japan have remained sluggish, and sales in the United States and Europe have not rebounded to precrisis levels.

In China, Japanese carmakers are also racing to catch up with rivals after arriving relatively late in the market. The first Honda rolled out of a plant in Guangzhou in 1999, while Toyota did not produce in China until 2002.

Though sales have grown rapidly since then, Japanese carmakers are still struggling against local rivals because of a dearth of small, low-cost models, which are driving market growth in China.

Honda’s least expensive model sold in China, the Fit compact car with a 1.3-liter engine, is priced at about 83,000 renminbi, or about $12,500. A Chery QQ 1.3-liter minicar from the Chinese carmaker Chery Auto sells for about half the price of the Fit.

Given that the average monthly income in China s is 2,050 renminbi, about $300, the price of a Chery QQ is around 19 months’ salary, while the Honda Fit requires more than 40 months. The Honda Accord 2.4-liter sedan, meanwhile, sells in China for about $35,000, far beyond the reach of most workers.

For Honda, the promise of access to a huge, growing market in China was as much a factor as cheaper labor in luring it to open factories there. A 25 percent import tariff on foreign cars is also a major incentive for foreign automakers to produce in China.

More quickly than any other major Japanese automaker, Honda has started exporting cars made in China to third countries. A small plant in Guangdong makes its Jazz model for export.

Besides complaining about their pay, Honda’s striking workers complain about a wage gap: the company’s Japanese employees in China are paid about 50 times what local Chinese workers receive.

Experts say that at the factory level, Japanese companies will need to start changing the way they work with employees — giving them fair pay, benefits and a chance for promotion in line with those accorded to employees from headquarters in Japan.

“Japanese manufacturers need to raise morale by making sure that local staff can also climb within the company,” said Tatsuo Matsumoto, Asia researcher at the Japan Center for International Finance.

The dilemma of female college graduates in China

Studying abroad, pursuing a Master’s Degree, entering the civil service sector and marriage are most common choices of female college graduates in China nowadays. Finding private sector employment is the choice of only a small proportion of female students. The National Women’s Association released the results of a survey which indicated that 90% of female college graduates had sensed gender inequality and discrimination when seeking job opportunities.

Recently, MyCOS, a third-party research agency completed a survey of female students. The survey showed that the employment rate for female college graduates is 21%, which is much lower when compared to the 29.5% for male students.

It is common knowledge that female students have unequal opportunity in the job application process. Because of the physical limitations of female applicators, some employers are more inclined to recruit men. A few employers even put up whiteboards indicating “Positions for men”, “Priority – Boys” or even “We don’t accept girl students”. There is also invisible discrimination against females in the selecting of resumes and even though employers may not have specified a gender requirement in their job descriptions, they do not consider the resumes of girl students after accepting their CVs.

Female students are often asked private gender-related questions such as the status of their relationship, intention to marry and have children. Some are even asked to not get married for five years on being offered the job. Because of the unique business culture in China, questions like “Can you drink?” or “Can you travel a lot for business?” are also not rare.

Apart from the recruitment process, discrimination is also present with regard to the occupations and positions offered to female students on their employment. Compared to men, women are usually employed in service and labor-intensive industries, including education and health care, diet, secretary and performing arts industries. On March 3rd this year, a job fair for female college graduates held by the Beijing Graduates Employment Service Centre attracted more than 3,000 women applicants. However, disappointingly, more than 600 of the job posts were secretarial, accounting and customer service positions. In terms of promotion, priority is also always given to men in some companies. Men do core operational work while women often do civilian work in a company. Besides this, there is also a difference in income between men and women in the same positions requiring similar capabilities.

The reasons for the dilemma of female college graduates are as follows:
The overall employment situation in China is not that satisfactory.
Sexual discrimination against women in the job market and incomplete social assurance for women’s childbirth security has not harnessed women’s employment and development.
There are limitations in the selection of professions among female students themselves. Many are inclined to work in hot sectors like financial and media, and prefer to work in major cities rather than 2nd and 3rd tier cities.
There is gap between the needs of the job market and the existing allocation of majors and research areas in college.
To alleviate some of these concerns for companies and women, the government is expected to pay for maternity leave.

Companies and civil organizations are expected to work with colleges to establish institutions for female undergraduates to offer vocational training and courses on practical business operation. Voluntary service is also a good approach to improve the capacity of female students. Some celebrities are calling for the release of a national regulation on voluntary services to guarantee the rights and interests of volunteers, making voluntary services more complete and using it as a building platform for social practice for female students before their employment.

Companies can consider working with influential and experienced partners on campus. Since 2009, the National Women’s Association has promoted entrepreneurship on campus. The organization organized lectures and tours of women entrepreneurs, conveying a new philosophy of employment and entrepreneurship, encouraging female students to set up their own business by applying for micro-finance loans. It has also promoted the construction of social practice base for female students. Based on a partnership with a number of reputational and responsible enterprises, they offer a great deal of internship opportunities that lasts for 3 months to half a year for female students annually.

by Elyse Chen

Vocational school graduates popular in China’s job market

BEIJING, May 26 (Xinhua) — Almost 96 percent of China’s secondary vocational school graduates found jobs on graduation last year, the Ministry of Education announced Wednesday.

It was the fifth straight year that the vocational graduate employment rate exceeded 95 percent.

The high employment rate reflected the huge market demand for medium-level technicians, said Wang Jiping, vice director of the ministry’s Department of Vocational and Adult Education.

Last year, 6.08 million students graduated from secondary vocational schools, and 95.99 percent of them were employed on graduation.

Wang said the qualifications in highest demand were manufacturing, information technology, civil engineering, trade and tourism, and transportation.

However, the threshold pay for graduates was relatively low.

A sample survey earlier this year in secondary vocational schools across China showed that a quarter of threshold pay was lower than 1,000 yuan (146 U.S. dollars) a month.

Wang said vocational schools across China should tailor curriculums to the demands of specific industries.

At the same press conference, ministry official Song Yonggang said 66,000 teachers would be recruited this year to work at rural schools in central and western China where teachers are in short supply.

The recruitment, under a program initiated in 2006, would see the central government guarantee the teachers equal pay with urban counterparts in their first three years.

Previously, teachers were reluctant to work in rural areas because the pay, funded from local budgets, was lower than in cities.

CHINA Public Service recruitment strengthened

Moves to strengthen

China’s Public Service recruitment systems have commenced, with the Deputy Director of the State Administration of Civil Service calling for improvements.

The Deputy Director, Yang Shiqiu said the Public Service written exam and interviews needed to be strengthened to make the system more competitive. Mr Yang said assessments of candidates and open selection also needed to improve to ensure the most talented applicants were recruited into the ranks of the PS.

He said a constant effort should be made to improve the selection of staff and that Departments and Agencies should make plans well before carrying out competitive recruitment. Mr Yang said Agencies should make personnel allocation of mid-level cadres and below clear at the beginning of every year and make annual arrangements in line with directions from the Central Government.

He said any Agencies that had not carried out competitive employment processes needed to learn from those which had. Mr Yang urged all to adapt the competitive employment system and to implement it as soon as possible.

He said organisations that had already adopted the system should continue to improve it. He said Agencies should avoid carrying out competitive employment sporadically and should implement it at all times, not just when requested to do so by higher authorities.