This is China! blog

The Financial Times recently published two articles about the increasing number of protests in China after the Foxconn suicides and Honda plant shut-downs spotlighted employee dissatisfaction with salary levels and working conditions. I had written a few posts back how some smaller Western companies in the Suzhou area are being affected by the confidence-building actions down South; however, the FT’s coverage indicates something slightly different afoot in Suzhou’s industrial actions.

“Workers born after the 1980s and 1990s are concerned not just about pay but about safety, rights and respect,” Dong Baohua, professor of law at East China University of Politics and Law, told the FT. A strike leader at Suzhou NSG said “That strike is about pay, ours is about safety conditions,” referring to discontented worker actions in South China.  I would go so far as to proffer that Suzhou is also one of the first manufacturing centers in China to upgrade its industrial policy to attract higher-value manufacturing, R&D and outsourcing services. It began those efforts as early as five years ago: one of the reasons for the outbreak of green algae on Lake Tai (Taihu) – Suzhou pushed lower-end manufacturing westward – to cities like Yixing and Wuxi – which would take the dirtier, more labor-intensive industries like textile and plastics manufacture. Suzhou industries typically have workers with far less education levels than higher-value producers and service sector offerings. Hence, a greater focus in the Greater Shanghai region on quality-of-life aspects of work.

Interestingly, a feature protests in the Yangtze River and Pearl River Deltas share is an extreme distrust workers have for the Party-sponsored and controlled unions in the companies. The trade unions are more a function of Party control and monitoring in the Party’s interests than in either advocating employer or employee concerns. “Low union credibility is contributing to unstable industrial relations, labor analysts say, adding that more disputes are inevitable.”

Of course, further protests are inevitable for plant managers who insist on keeping their heads buried in the sand, instead of acting proactively to address possible worker concerns.

Further reading: FT

Related posts:

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China is Cracking Up

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I’m in Beijing this week attending the Clean Energy Expo China, one of the highest profile shows for foreign and domestic companies that want to throw a spotlight on what they’re up to in the clean and renewable energies sector in China. Just having come off the Offshore Wind Power China Trade Show in Shanghai, the Beijing Show will be another opportunity for one of my colleagues and I at TrendsAsia to catch up with old friends and make new contacts in the industry. While in Beijing we’ll also be interviewing movers and shakers in the industry – Chinese and foreign – same as we did at the Shanghai  show a couple weeks ago.

You can hear my interview with AVN Energy CEO Tom Weiling in this podcast. AVN Energy specializes in components for pitch hydraulics, hydraulic braking and cooling solutions, rotor locks, and hatch opening systems. Tom spoke with me about educating the Chinese buyer, many of whom have a long and steep learning curve ahead of them as the industry matures.

You can hear other podcast interviews on the downloads page of the TrendsAsia blog, ChinaEnergySector.com.

Enjoy!

An American friend and I were recently talking about the different kinds of expats one encounters in China and throughout the world: the “I don’t want to be here but the company sent me” type, who stays within his regal circle, relatively insulated from the natives; the “woohoo! here to party!” kind, who has a girl on each arm; the English Teacher, a bit oblivious to what’s really going on around them; the gone-native sort, who tries to out-native the natives; the blow-hard, who knows all there is to know about how the natives think and breed; and the cynic, who’s likely made his home in the country and is simply looking to get on with his life after the exhaustion of acculturation. I think I tend to be in the last camp, having skipped through several other of the expat lives in the list.

My friend and I agreed that for the most part expats are looking for an experience very different from the one they left behind in their home countries. Sometimes, expats as personalities simply don’t fit into the society in which they were raised as children. And other times, expats are looking for something they couldn’t find in their home country.

I told my friend one of the things I had been looking for in the States but found was rare was a sense of true mutual support between people. As a kid who spent formative years living in Hawaii in a mixed Asian neighborhood, I was deeply impressed and influenced by the way neighbors helped each other and adopted my young mother, helping raise my siblings and I. I have found something similar in China, though not amongst the Chinese. The sense of altruism and support I found amongst expats: all from different countries – like my neighbors in Hawaii – and all in a country not their own.

We’ve seen each other over the years through many adventures, trials and triumphs. They’ve been especially helpful and supportive over the past few weeks as my wife and I have shaped our lives around the newest addition to the family. Now – just as I had as a kid in Hawaii – our son will have aunties and uncles and cousins who are in no way related to him by blood, but who will love him and support him as though he were.

It’s the sort of gift that’s tough to buy off a store shelf.

An American GM of a contract manufacturing company recently told me one of his staff was highly stressed. They argued about something relatively minor, an hour after which the staff member texted the GM and apologized. “I’m just worried about 2012,” she said.

“Huh?” I said.

“Yep,” he said. “2012.”

Apparently, Chinese blogs and forums are abuzz with apocalyptic conjecture about the devastation wrought on Chinese society come a new era ushered in by a blockbuster Hollywood film of the same name. The film did phenomenonally well in China, surpassed in box office receipts only by Avatar, another other-worldly movie based on the precept of the destruction humans have wrought their own world – with the cosmos rebalancing the equation.

Nevertheless, the collective stresses and strains of a society in fast forward, transforming every aspect of its way of life and its relationship with the rest of the world is clearly beginning to surface in the collective consciousness of the entire society. As one Chinese friend said to me with the recent earthquake in the Qinghai Autonomous Region in northwest China, “I feel nothing. China is having so many problems. I have become numb.”

Nevertheless, with natural disasters aplenty – always a part of Chinese history – and man-made ones as well, what seems to be cutting through the average Chinese’s numbness are the senseless suicides and the mass murders of children. Something, the Chinese bulletin boards all agree, is not right.

It’s too late, though, to get off this speeding bullet train.

Recently on the local Chinese TV news a reporter interviewed a young female university graduate who was at her wits end trying to find a job. She had graduated last year. The story was rather ironic, in that China’s economy is booming. Isn’t it? Of course, for most of those following the economic news it’s well known that most of the nearly US$4 trillion that went flew out of bank doors in China went to the State Owned Enterprises and local governments (through the aegis of “dummy” corporations they set up specifically for the purpose of fleecing the banks). Money that actually flowed into the economy went into heavy industry and big infrastructure projects like roads and damns and railways. Though China is always inclined to put a lot of people on projects, in this instance the economies are just not labor intensive enough to absorb the bright young things graduating from the universities. Last year some 7 million fresh graduates flooded the labor pool. At the time, nearly thirty percent of the graduates from the previous year still had not found jobs.

Now, with a flood of new graduates and graduates from last year and even the year before competing in a tight marketplace, salary levels for entry level staff will be depressed even more. The downside of all the competition, however, will be perfectly good candidates who don’t know how to play the employment game well enough and will be shouldered aside. Some will commit suicide at the futility of the sacrifices they and their families made to get them into and through university.

What a terrible waste.

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An American friend recently told  me that a Western GM he knows had two of his operators openly revolt. The GM’s plant is in China, and is not very large: it only has a couple operators to run its machines. The operators wanted a huge salary increase, or, they threatened, they would walk out. My American friend, who’s lived and worked in China more than ten years now, suggested to the GM he let the operators walk. “Or, to show them who’s in charge” my friend added, “sack one guy and give the other guy a pay raise.”

Chinese over the past ten years of their boom time have been quick to play the “resignation card.” The couple times it’s been played on me as a China operations manager I’ve simply responded, “When will you be leaving, then?” Of course, they typically over-estimate their value in the organization, and are heart-warmingly shocked when their manager has not only accepted their resignation, but is helping them out the door. Usually the kind of people that play that sort of extortion card are the ones that were not very helpful in the company to begin with.

It’s inevitable that more employees throughout China will attempt to stagger their employers with walk-outs, real and threatened. The Taiwanese and Hong Kong investors deserve it: they have a terrible reputation in China for low paying, low-lying bamboo ceilings that keep Chinese staff static in an employment crouch. The Japanese and the Koreans have slightly better reputations – but only just so. The Western companies are in better stead, because they predominantly pay their workers better than their Asian counterparts and provide better working conditions in general. However, Chinese workers in general are quick “when given a nose, to take the face” – as the Chinese saying goes. Western companies, then, need to do their due diligence on market rates for staffing levels. And hold tight to them.

Related posts:

China is Cracking Up

When Anger Explodes

Managing the Return to Normalcy

There’s No Place Like Home: Worker Shortages

The apartment complex middle manager stood on the balcony of my former apartment and gestured at the apartments just in front of us. “Those sell for more than 10 million RMB each,” he said, his round face excited at the prospect that the neighborhood was on Suzhou’s high-value property map. The property he was talking about faced a medium-sized lake around which scores of other high rises had gone up. He pointed at the new construction just a few hundred meters from where we stood, where high rises in various stages of completion saw a hum of ant-like activity. The site had awoken me the last year every morning at 6am as heavy machinery prepared the site for the work of the day. “Those have all sold out, and were even more expensive.” Some of them did not even have lake views.

But the overwhelming majority of residential construction of the high-end luxury sort in China, it’s no wonder Li Daokui, a professor at Tsinghua University and a member of the Chinese central bank’s monetary policy committee, indicated in a video interview with the Financial Times recently that the Chinese property market was even more dangerously perched than the American market before the housing bubble State-side collapsed. His point was basically that while Americans were fulfilling the American “dream” of buying a home, Chinese believe home ownership a necessity. The rapid and artificially stimulated inflation of housing property values in China has left the overwhelming majority of Chinese without the wherewithal to address that necessity. If housing remains so stratospherically out of reach of average, hard-working Chinese who are trying to play by rules clearly bent to the advantage of those in power, Li’s point that such a blatant inequity could ignite social discontent on a massive scale.

Meanwhile, with an inevitable correction (of questionable level, admittedly) in the market, new-money homeowners could find their investments turned to plaster-dust.

With such a dire prognostication, it’s no wonder his video interview is banned in China.

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They’ve ripped up the road in front of my apartment complex in Suzhou. One day, two months ago, white-washed barriers topped with basketball-sized lights went up on both sides of the street. The local powers that be needed to expand the road as an on-ramp onto expressway connecting Shanghai and Nanjing. The area has been filthy with no safety barriers or warning signs of the construction sight and dangers encountered in simply crossing the street to buy groceries. Construction starts from 6am, kicking up dust and tempers, and ends around midnight, seven days a week.

The lack of a civil society is the secret of China’s success. There were no civic council meetings about the implications of the expanded roadway; no consultations about the impact the construction would have on the environment (once a rich marsh land) and no certainly no townhall meeting in which citizens could air their opinions. The project was simply done. Without previous notice, without repercussion. The project just appeared one day. We all simply walked around the rubble that had once been a relatively out-of-the way apartment block.

China’s is a donut civilization: its civil society hollowed out millenia ago – if it ever had one. It is a civilization without the “civil”: an “-ization”, a process of ebbs and flows as cyclical leaderships dictate. The citizenry merely fall in line, protecting their own, promoting their own, ignoring the rest as long as the rest at any given time does not interfere with the accumulation of wealth and extension of progeny. The lack of civil society in China is evident in unkempt public places, fights on the streets, suicides in companies, viral violence.

It’s the lack of a civil society and the channels for airing local disputes, concerns and issues that is China’s greatest strength: Chinese have for millenia been able to mobilize the masses to build some of the greatest structures in human history and to bring nearly twenty-percent of humanity out of desperate poverty into modernity in thirty years. And it is China’s greatest weakness: when everyone is headed in the wrong direction at the same time the entire society goes into decline, like lemmings, following each other off cliffs. Chinese “-ization” has given the society three generations of young people willing to perform mind-numbing work in de-humanizing conditions for long hours, days on end.

It looks as though the next generation has a lower threshold for the lack of civility that has levitated China’s rush into a wealthier future. Foreign investors need to adjust their expectations for doing business in China accordingly. As Foxconn and Honda are already learning.

Further reading: NYT

Eurobiz Magazine recently interviewed me for an upcoming article on salary pressures on China operations and CSR-related activities companies may be investing in to retain staff and brandish their image in the local community. The same day as the interview Foxconn saw its 10th suicide of an employee. Keili Stremel, Deputy Editor of Eurobiz, asked me what my take was on the suicides. I told her I believed Chinese employee expectations for their lives had altered radically in ten years: in 2000, migrant workers in the millions worked at back-breaking jobs 12- to 14-hours a day 10-days a week, with a day off. They made a pittance, worked for the most part in squalid conditions, and saved most of their meager salary to send to the family remaining in the hometown. Chinese ten years ago could tolerate this condition because life on the farm was far worse and made even less money.

Now, young people of the same age but different generation have seen what the good life has to offer. And, frankly, they are in no more a rush than anyone else in this high-strung society to take their slice of all modernity and a consumer lifestyle promise to offer. However, modernity in China has become a relatively expensive commodity, and obtaining so much of what they see on the streets and on TV frustratingly far off. In a society in which the highest values an individual can obtain involve desiring stuff, acquiring stuff and showing the stuff off – NOW! – the dehumanization of the assembly line is like an emotional lobotomy. Even if a Chinese employee has a white-collar job, so much of what he or she should be able to acquire materially while they’re still young seems so much further off than before; especially that dream home where bride and baby make three – and grandmas and grandpas make seven – a great financial weight to carry, indeed. A cognitive dissonance has arisen in which people have to want things in order for the society to work; however, they have to want the policy-acceptable things that do not present a threat to any authority figure, in business or in government.

Mind you, all of this is happening at head-snapping warp speed, 24/7, with no sense of rest or reflection.

In other words, Chinese society is cracking up – not from an infrastructure point of view – but from a humanistic one. Anyone know a good shrink?

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