While the string of suicides at Foxconn’s giant manufacturing plant in Shenzhen, China, were gathering international media attention, the Honda transmission-factory workers in Foshan went on strike.
The workers demanded a raise and even asked to organize their own union. The strikes soon spread to another part of Guangdong Province, and among other places, to Shanghai, in Jiangsu Province, and to Jiangxi Province, where World Cup soccer balls happen to be made.
Most of the companies with labor trouble are manufacturers of world-famous brands—Apple, Honda, and others. Those companies are sole-owned or joint-ventured by foreign companies, especially companies from Taiwan, Japan, and South Korea.
These companies’ wages and working conditions are much better than those of many local Chinese companies, whether state- or private-owned.
In China, the labor rights movement, like any other rights movement, is strictly forbidden. Yet in a short span of time, many workers for many different companies in several provinces got involved in the strike and had a big impact.
In order for a strike in China to achieve something, some criteria need to be met. First, the company targeted has to be a normally operated business; it has to meet a product deadline, and the skilled workers cannot be easily replaced by new recruits.
The workers demanded a raise and even asked to organize their own union. The strikes soon spread to another part of Guangdong Province, and among other places, to Shanghai, in Jiangsu Province, and to Jiangxi Province, where World Cup soccer balls happen to be made.
Foreign Companies Targeted
Most of the companies with labor trouble are manufacturers of world-famous brands—Apple, Honda, and others. Those companies are sole-owned or joint-ventured by foreign companies, especially companies from Taiwan, Japan, and South Korea.
These companies’ wages and working conditions are much better than those of many local Chinese companies, whether state- or private-owned.
In China, the labor rights movement, like any other rights movement, is strictly forbidden. Yet in a short span of time, many workers for many different companies in several provinces got involved in the strike and had a big impact.
In order for a strike in China to achieve something, some criteria need to be met. First, the company targeted has to be a normally operated business; it has to meet a product deadline, and the skilled workers cannot be easily replaced by new recruits.
Second, most of the workers must not have much to lose and must be willing to join a strike, even without a formal organization like a union.
Third, the owners of the business must be based in a democratic country, and thus be more or less under the monitoring and pressure of the media, the law (not the law of China but the law of the country where the headquarters are located), and rights groups.
Finally, the owners or the management must be authorized to negotiate and reach a settlement.
Most workers in China’s state-run enterprises, should they go on strike, would encounter big obstacles and have much less chance to have their demands met. The most difficult part is that the management has no authority to negotiate with the workers or to reach a settlement. Moreover, in the case of state-run enterprises, the state is more likely to intervene with police suppression and retaliation afterward.
Ironically, part of the reason that the strikes could even start is the lack of any official union presence. The official union in China is the tool of the communist regime. The formal function of the union is “the bridge between the party and the workers.” In other words, the union’s job is to make sure that the workers’ activity is in line with the Party’s policy and interests.
In a state-owned enterprise, the union’s job is very clear: to help the state monitor the workers and stop any strike before it happens.
Out of instinct, the regime forced foreign businesses in China to accept the official union unconditionally. Even Wal-Mart, which doesn’t allow unions in its operations all over the world, had to accept a union in China.
Foxconn was assigned five union members from the Shenzhen General Union in 2006 to set up a Foxconn Union. However, since the business owner was not the state, the union was confused about what its position and function were. The union’s job is probably monitoring the owners, not the workers, of the business.
During the strike at the Honda transmission factory, the only physical conflict was between the workers and the union staff. When the workers and the managers couldn’t agree on the conditions for returning to work and had an argument, the staff sent by the local township union started to film the workers.
Being afraid the filming would lay the groundwork for “collecting the debt after the autumn harvest,” the workers asked them to stop filming. That’s how the physical conflict started.
Terry Gou of Foxconn decided to raise the basic wage, twice, from 900 yuan (US$132) to 2,000 yuan, a more than 120 percent increase. Because Honda raised its salaries, other manufacturers will probably follow.
As a result, some manufacturers will move inland, where the minimum wage is much lower, just as Foxconn is doing now, or partially move out of China.
Some analysts have suggested and some Chinese officials have promised that this labor strife is an opportunity for China to change the basis of its economic growth, moving out of labor-intensive manufacturing into higher-tech manufacturing that adds more value to the product. The reality is that the communist regime doesn’t hold many cards in its hand that would allow it to make such a change.
For the past 30 years of economic development, the ruling party hasn’t really had any long-term plan. The Party’s policy doesn’t encourage the private company to have a long-term plan either. The CCP’s economic strategy has always been driven by unknown forces, not well-planned strategy.
The economic opening and reform started with the bankruptcy of the country after the disaster of the Cultural Revolution. Since nobody knew what to do, the only two polices were mainly not to have a policy: Untie people’s hands and, as the slogan said, “cross the river by feeling each stone.” Once the economy started to grow, the growth rate became the only goal of the regime.
In ancient China, the emperor was called “the son of Heaven,” and heaven was the source of the emperor’s power to rule. In modern societies, the power to rule comes from the people’s vote.
The Chinese communist regime doesn’t believe in and won’t let people believe in Heaven. It claimed that its power was from the revolution. For the first 30 years of Mao’s rule, he used the slogan “continuing the revolution under the dictatorship of the proletariat” as the basis for his legitimacy.
In 1976, Mao died, and the revolution died with him. The Communist Party didn’t want legitimacy through elections. It instead chose economic growth rate at any cost. The growth rate becomes the basis for keeping the Party in power.
After 30 years of development, not a single Chinese brand name has gained recognition. The “made in China, made with the world” ad campaign refers to the big international brand names such as iPod that are made in China. What the campaign doesn’t say is, not only is the brand not from China, the contractor is also not a Chinese company.
If Hon Hai, the mother company of Foxconn, the manufacturer of the iPod, leaves China, as its owner and CEO Terry Gou indicated, the contract will leave China too, even if the factories stay in China.
This is called the “China model,” the model praised by many Western experts, media, and companies. Thirty years of development and achievement are based on cheap labor and only cheap labor. The main industries are at the lowest end of the chain of manufacturers, with no tech-value added.
While the regime accumulated wealth, it had no intention of changing the pattern of growth. When the crisis comes, there is no time to change the pattern.
Besides, who will take the lead to change it? The central CCP leaders? They are busy with the struggle for power and don’t want to make any big changes. Even if someone among the central authorities wants to make a big change, everyone knows “the order won’t go beyond the walls of Zhongnanhai [the ancient compound housing the living quarters and offices of the top CCP leaders].”
The local party and state officials don’t want to make big changes. They are only interested in selling land, building more state buildings, and making the local growth rate higher than 8 percent, which is the target set by the central authorities.
The state-owned companies are the least innovative part of China’s economy. The privately owned companies are also not prepared to introduce change. The owners are transferring their property and family members out of the country faster than ever.
The labor unrest at Foxconn and other foreign companies helps reveal the deep trouble that has been ignored by many both inside and outside China. If wages rise, the manufacturing base of the economy leaves, and the political system is not able to make the changes needed to upgrade manufacturing so that it would support higher wages.
Third, the owners of the business must be based in a democratic country, and thus be more or less under the monitoring and pressure of the media, the law (not the law of China but the law of the country where the headquarters are located), and rights groups.
Finally, the owners or the management must be authorized to negotiate and reach a settlement.
Most workers in China’s state-run enterprises, should they go on strike, would encounter big obstacles and have much less chance to have their demands met. The most difficult part is that the management has no authority to negotiate with the workers or to reach a settlement. Moreover, in the case of state-run enterprises, the state is more likely to intervene with police suppression and retaliation afterward.
Official Unions Uncertain
Ironically, part of the reason that the strikes could even start is the lack of any official union presence. The official union in China is the tool of the communist regime. The formal function of the union is “the bridge between the party and the workers.” In other words, the union’s job is to make sure that the workers’ activity is in line with the Party’s policy and interests.
In a state-owned enterprise, the union’s job is very clear: to help the state monitor the workers and stop any strike before it happens.
Out of instinct, the regime forced foreign businesses in China to accept the official union unconditionally. Even Wal-Mart, which doesn’t allow unions in its operations all over the world, had to accept a union in China.
Foxconn was assigned five union members from the Shenzhen General Union in 2006 to set up a Foxconn Union. However, since the business owner was not the state, the union was confused about what its position and function were. The union’s job is probably monitoring the owners, not the workers, of the business.
During the strike at the Honda transmission factory, the only physical conflict was between the workers and the union staff. When the workers and the managers couldn’t agree on the conditions for returning to work and had an argument, the staff sent by the local township union started to film the workers.
Being afraid the filming would lay the groundwork for “collecting the debt after the autumn harvest,” the workers asked them to stop filming. That’s how the physical conflict started.
Change Not Likely
Terry Gou of Foxconn decided to raise the basic wage, twice, from 900 yuan (US$132) to 2,000 yuan, a more than 120 percent increase. Because Honda raised its salaries, other manufacturers will probably follow.
As a result, some manufacturers will move inland, where the minimum wage is much lower, just as Foxconn is doing now, or partially move out of China.
Some analysts have suggested and some Chinese officials have promised that this labor strife is an opportunity for China to change the basis of its economic growth, moving out of labor-intensive manufacturing into higher-tech manufacturing that adds more value to the product. The reality is that the communist regime doesn’t hold many cards in its hand that would allow it to make such a change.
For the past 30 years of economic development, the ruling party hasn’t really had any long-term plan. The Party’s policy doesn’t encourage the private company to have a long-term plan either. The CCP’s economic strategy has always been driven by unknown forces, not well-planned strategy.
The economic opening and reform started with the bankruptcy of the country after the disaster of the Cultural Revolution. Since nobody knew what to do, the only two polices were mainly not to have a policy: Untie people’s hands and, as the slogan said, “cross the river by feeling each stone.” Once the economy started to grow, the growth rate became the only goal of the regime.
In ancient China, the emperor was called “the son of Heaven,” and heaven was the source of the emperor’s power to rule. In modern societies, the power to rule comes from the people’s vote.
The Chinese communist regime doesn’t believe in and won’t let people believe in Heaven. It claimed that its power was from the revolution. For the first 30 years of Mao’s rule, he used the slogan “continuing the revolution under the dictatorship of the proletariat” as the basis for his legitimacy.
In 1976, Mao died, and the revolution died with him. The Communist Party didn’t want legitimacy through elections. It instead chose economic growth rate at any cost. The growth rate becomes the basis for keeping the Party in power.
After 30 years of development, not a single Chinese brand name has gained recognition. The “made in China, made with the world” ad campaign refers to the big international brand names such as iPod that are made in China. What the campaign doesn’t say is, not only is the brand not from China, the contractor is also not a Chinese company.
If Hon Hai, the mother company of Foxconn, the manufacturer of the iPod, leaves China, as its owner and CEO Terry Gou indicated, the contract will leave China too, even if the factories stay in China.
The ‘China Model’
This is called the “China model,” the model praised by many Western experts, media, and companies. Thirty years of development and achievement are based on cheap labor and only cheap labor. The main industries are at the lowest end of the chain of manufacturers, with no tech-value added.
While the regime accumulated wealth, it had no intention of changing the pattern of growth. When the crisis comes, there is no time to change the pattern.
Besides, who will take the lead to change it? The central CCP leaders? They are busy with the struggle for power and don’t want to make any big changes. Even if someone among the central authorities wants to make a big change, everyone knows “the order won’t go beyond the walls of Zhongnanhai [the ancient compound housing the living quarters and offices of the top CCP leaders].”
The local party and state officials don’t want to make big changes. They are only interested in selling land, building more state buildings, and making the local growth rate higher than 8 percent, which is the target set by the central authorities.
The state-owned companies are the least innovative part of China’s economy. The privately owned companies are also not prepared to introduce change. The owners are transferring their property and family members out of the country faster than ever.
The labor unrest at Foxconn and other foreign companies helps reveal the deep trouble that has been ignored by many both inside and outside China. If wages rise, the manufacturing base of the economy leaves, and the political system is not able to make the changes needed to upgrade manufacturing so that it would support higher wages.
