Global Economics

Using Propaganda to Stop China's Strikes


Less than two years after the worker suicides at electronics giant Foxconn and a strike at Honda (HMC) suppliers in Guangdong province, labor troubles are again roiling China. On Nov. 17 around 7,000 workers at a Taiwanese-owned New Balance supplier in Dongguan protested plans to relocate production to Jiangxi province and cut bonuses. Dozens of workers were injured when police moved in, according to reports and photos posted on the Internet. Five days later, 1,000 workers halted production to protest overtime rules at a Shenzhen company that, according to its website, supplies Hewlett-Packard (HPQ). In Shanghai, women workers at Singapore-owned Hi-P International, a supplier for Motorola Mobility (MMI) and others, struck on Nov. 30 over a planned shift of part of production to Jiangsu province. (Motorola confirms the incident, and says it is not directly involved in working toward a resolution.) “We are seeing an upsurge in worker activism that exceeds anything since the summer of 2010,” says Geoffrey Crothall, communications director at China Labour Bulletin, an advocacy group in Hong Kong. Some 180,000 riots, strikes, and protests occurred in 2010, according to Sun Liping, a professor at Beijing’s Tsinghua University.

On Dec. 1 the government announced the first contraction in manufacturing since 2009. “As the environment goes from bad to worse, a lot of factories want to find a way out,” says Willie Fung, chairman of Hong Kong bra-maker Top Form International. “They want to downsize, shut down, or move somewhere else, and this sparks labor disputes.” A strike at Fung’s Shenzhen factory ended after he agreed to a holiday bonus of $189 each for 500 workers.

China’s leaders don’t want strikes to stoke broad social unrest. That could be tricky, because the new generation is ready to assert itself. The young are less tolerant of long hours and assembly line jobs and more prone to job hopping, says Christian Ewert, president and CEO of New York-based International Council of Toy Industries CARE Foundation, which monitors working conditions and whose members include Walt Disney (DIS), Mattel (MAT), and Lego.

In Shenzhen, Philips (PHG), HP, and Dell (DELL) are working with a Dutch government-supported program to improve labor conditions while raising productivity. As “labor tightens in China, the industry needs to pay more attention to the worker,” says Sonny Kwok, a Philips senior vice-president. Consultant Infact Global Partners, hired to run the initiative, is designing training programs at 100 factories employing 500,000. Infact plans to interview departing workers to find out why they change jobs so often, and get supervisors to assess themselves, says Managing Director Ian Spaulding. “In an environment where you have 10 to 20 percent turnover a month, managers start to think of workers as machines. That creates resentment on both sides.”

Ewert’s group earlier this year launched a pilot program to teach labor law to workers and middle-level managers at factories that supply overseas corporations. These local companies have codes imposed on them by the multinationals about paying overtime properly, how many can sleep in a dorm, even how much meat the cafeteria serves.

The group’s “edutainment” videos have a Smurf-like figure who introduces dramas with real workers as the actors. In one segment, a line worker confronts a manager for holding a meeting in a noisy factory. Later a guard stops the protagonist for not having a badge, leaving him seething. His pretty girlfriend and her pal, who also work at the plant, persuade him to check the regulations on the bulletin board. The manager he had berated proves a friendly advocate who takes him to human resources to plead his case: happy ending. “With a good worker-management relationship, factories can be just like home!” says the blue narrator.

These programs have their skeptics. Speaking of Infact’s efforts, Chang Kai, a professor of labor relations at Renmin University of China in Beijing, says that helping workers negotiate more effectively is a sensitive issue for the government, which fears such attempts could empower workers too much. Adds Bob Bainbridge, who until early 2011 worked for Apple policing suppliers for worker abuses, “Many times you will find some senior management that want to do the right things. But mid-level management and line managers resort back to more dictatorial ways.”

The government is expanding the Party-controlled official union—still a largely toothless organization, according to Chang Kai. Wal-Mart (WMT), Dell, and Motorola have already let the union in. Policymakers want 80 percent of all companies to have collective bargaining agreements by 2013. “We want to guide the expectations of our migrant workers,” says Yang Hongshan, deputy director general of the human resources and social security department of Guangdong province. The official union is training tens of thousands of negotiators to help workers bargain over wages.

The only sure strategy to stop strikes may be to raise pay. The latest Five-Year Plan aims to increase the average minimum wage by at least 13 percent a year. Or machines can replace workers. After Hong Kong’s Milo’s Knitwear (International) added new Japanese knitting machines at its Dongguan sweater factory, it reduced line workers from 80 to 6. “All the headaches, the riots—gone,” says Managing Director Willy Lin. “Machines don’t complain about their salaries.”

The bottom line: China’s government wants almost all companies negotiating collective wage agreements with workers by 2013.

With Bruce Einhorn
Dexter_roberts
Roberts is Bloomberg Businessweek's Asia News Editor and China bureau chief. Follow him on Twitter @dtiffroberts.

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