Manufacturing in China (MAKE) – China Series Part 4

When selecting a supplier / partner in China, it is critical to be aware of the working and economic conditions. None is more important then an understanding of the labor force. Companies sourcing from China should pay particular attention to working conditions in manufacturing facilities there. Even by official Chinese government figures, the country had more deaths from work-related illness than any other country, amounting to over 386,000 workers in 2002 (1).

The majority of these workers are known as the “Liudong renkou” – the “floating population” (2). The Liudong renkou consists of over 114 million migrant workers, who are for the most part relatively well-educated young people drawn by the promise of the big city. This group represents the growing “rural elite” of China, and has been documented by labor historians as the largest migration in human history in terms of sheer numbers. They are younger and better educated than those who stay behind. This gap is especially wide among women. A study in the mid 1990s by the Chinese Academy of Social Sciences found that 78% of female migrants had a junior high school education, while among rural women nationwide it was only 43%. Remittances sent home by migrants are already the biggest source of wealth accumulation in rural China, economists say. Yet earning money isn’t the only reason people leave. In surveys, migrant workers rank “seeing the world” and “learning new skills” as important as earning cash for the family. When migrant workers tell of why they left home, their narratives often begin the same way: “There was nothing to do at home, so I came out.” A survey of 700 migrant laborers done in the mid-1990s by a Chinese government think tank found 87% left home with a work objective in mind, either a confirmed job or an acquaintance in the city to help them.

The jobs that these workers come to are often less than optimal. In many Chinese enterprises, employers pay less than minimum wage ($50-70/month on the coast), and require more than the 49 hours of work a week permitted by law (2). Further, there are few if any benefits for pregnant or injured workers, and enforcement of labor laws is lax.

Those who are unhappy and decide to quit may relinquish up to two months of pay, and are often housed in cramped filthy “dorms.”

This young group of workers is not happy to work and continue under these conditions. In many large cities, “Talent Markets” are emerging. These are like big job fairs, and are intended for technicians and managers. Many factory workers show up at these job fairs in the hopes of talking their way into a better job. There are often companies seeking to find human resource workers or other clerk or knowledge worker positions. There are commercial schools that can offer education to make up for lost education, or photo studies for professional portraits. These fairs can offer new positions as clerks, paying $100 a month plus room and board.

In our interviews, there was also a notable problem mentioned by many Chinese managers on the dearth of talent in the mid-level manager position. The biggest problem cited was the inability of mid-level Chinese managers to be able to make independent decisions, without having direct sign-off from a senior (preferably American) senior manager. In the words of one executive: “I have to sign off on every single detail! This is a product of their Communist upbringing – when no one could make a decision independent of several levels of authority! I have a hard time finding managers who can go off and manage projects on their own, without having to come back to me on every detail. These managers also have a very hard time delegating tasks.”

References:

(1) Kahn, Joseph, “Making Trinkets in China, and a Deadly Dust,” The New York Times, June 18,2003.

(2) Chang, Leslie, “The Chinese Dream”, Wall Street Journal, Nov 8, 2004, p. A1.