Archive for ‘labour shortage’


Poetry of a Former Foxconn Worker in China Evokes Images of Factory Life – Businessweek

Before he took his life in late September, 24-year-old Xu Lizhi was a regular contributor of poetry to Foxconn People, the internal newspaper at his sprawling factory complex in Shenzhen. Only after he died did his writing find a wider audience, as factory friends collected his poems for publication in the Shenzhen News.

Safety netting posted around a building in Foxconn City in Shenzhen, China

Like millions of other young Chinese, Xu left his home in rural Guangdong province in 2010 to find work in the big city; he had been working intermittently on Foxconn (2317:TT)’s electronics assembly line for four years.

Following a series of 14 suicides in 2010, the Taiwanese manufacturing giant installed safety nets to prevent workers from jumping off dormitory roofs at its Shenzhen plant. It tried to improve life for its workers: The company raised basic wages and installed basketball courts and Olympic-size swimming pools for recreation. Worker suicides declined but did not disappear.

Xu’s poetry gives voice to the alienation he and many others of his generation feel on the assembly line: “I swallowed a moon made of iron/ They refer to it as a nail/ I swallowed this industrial sewage, these unemployment documents/ Youth stooped at machines die before their time/ I swallowed the hustle and the destitution/ Swallowed pedestrian bridges, life covered in rust / I can’t swallow any more/ All that I’ve swallowed is now gushing out of my throat/ Unfurling on the land of my ancestors/ Into a disgraceful poem.”

A frequent theme is how he felt the monotony of factory life sapping away “the last graveyard of our youth.” In one poem, Xu wrote: “With no time for expression, emotion crumbles into dust/ They have stomachs forged of iron/ Full of thick acid, sulfuric and nitric/ Industry captures their tears before they have the chance to fall.”

Xu also described the desolate conditions of his rented room: “A space of ten square meters/ Cramped and damp, no sunlight all year/ Here I eat, sleep, sh–, and think/ Cough, get headaches, grow old, get sick but still fail to die/ Under the dull yellow light again I stare blankly, chuckling like an idiot.”

via Poetry of a Former Foxconn Worker in China Evokes Images of Factory Life – Businessweek.


Samsung’s China Labor Problems Persist – China Real Time Report – WSJ

Samsung Electronics Co.’s latest sustainability report, published Monday, is a rare look inside the operations of the company. Among the takeaways: Samsung is still struggling with poor labor conditions at its Chinese suppliers.

A third-party audit of 100 of Samsung’s suppliers in China last year showed that 59 failed to provide sufficient safety equipment, like earplugs and protective goggles, or did not monitor workers to ensure they were using such equipment, according to the report.

The report lists a series of other problems found by the audit, including issues related to wages and benefits and emergency preparedness. The audit also found that a majority of the suppliers do not comply with China’s legally permitted overtime hours. Samsung said it has demanded its suppliers address all the violations found by the report.

The results follow a vow made by Samsung in 2012 that it would address unfair labor practices at its Chinese suppliers, including overwork and denial of basic labor rights. On multiple occasions, the company has been accused by New York-based non-profit organization China Labor Watch of malpractice at some factories that do work for Samsung.

In a separate statement on Tuesday, Samsung said: “We have adopted a multi-year, multifaceted supplier management plan since 2012 to address the findings of internal and independent audits of Samsung supplier companies in China.”

“If any suppliers are found to have not made progress, Samsung will constantly call for corrective actions to ensure the issue is resolved in the shortest time possible,” it said.

Maintaining a safe and fair working environment for its staff and those of its suppliers around the globe has been a growing challenge for the world’s largest maker of smartphones, TVs and memory-chips. The company has come under scrutiny over related issues not only in China but also in Brazil and at home in South Korea.

via Samsung’s China Labor Problems Persist – China Real Time Report – WSJ.


A Neglected Problem in China’s Education System – China Real Time Report – WSJ

China’s top two leaders recently presided over a rare discussion on vocational education where they pushed for major changes to the country’s retrograde technical schools.

Political leaders everywhere are known to pay lip service to the need for improvements in education, but concern over China’s vocational schools is likely more than that just political bluster. That’s because the quality of the country’s lower-level technical schools could have a major impact on the country’s future economic growth.

As China looks to climb into the ranks of developed nations, one of its main goals is to evolve beyond serving as the world’s factory floor. One barrier to achieving that goal, analysts and education officials say, is the country’s lack of highly-skilled workers.

Premier Li Keqiang emphasized that point at Monday’s meeting, saying a “massive skilled labor force” was needed to upgrade the “made in China” label, “from ‘adequate’ to  ‘high-quality’ and ‘premium’” (in Chinese).

Mr. Li was talking at an unusual national-level work conference on vocational education – only the 3rd such conference to be held in China since 1978. China’s President Xi Jinping gave the opening remarks, according to the state-run Xinhua news agency, signifying the level of importance China’s leadership places on the topic.

The attention is warranted: China’s vocational programs — which teach practical skills ranging from carpentry to forestry and encompass more than 29 million students, according to Xinhua — have been badly neglected when compared with the country’s rapidly multiplying universities. Often criticized for being poorly equipped, they are also poorly managed and have trouble finding qualified teachers, experts say.

“In the vast majority of vocational education schools in China, kids are not learning anything, especially in rural areas,” said Scott Rozelle, director of Stanford University’s Rural Education Action Program, which studies China’s vocational schools. “In studies in central and northwest China, we found dropout rates of 50% in the first two years of these programs.”

Mr. Rozelle said that China’s vocational schools are the only segment of China’s educational system that lacks an evaluation system, so it is difficult to tell which schools are good and which subpar.

China is currently home to 13,600 vocation schools and colleges, which provide a large chunk of the country’s workers in labor-intensive industries. According to government estimates, they are expected to attract more than 38 million students by 2020.

The government is now pushing a number of changes to the vocational school system, including requiring local government to allocate a standard budget for vocational schools as they do for regular colleges, according to Xinhua. Private investors and non-governmental organizations are also encouraged to sponsor vocational schools, and private vocational schools will enjoy preferential loans from banks.

The state-run China Daily newspaper called the government’s recent attention to vocational schools “unprecedented”. But the devil is in the details. It won’t be clear until later how much money local governments will actually budget to upgrading the vocational school system and what kind of incentives there will be to improve.

via A Neglected Problem in China’s Education System – China Real Time Report – WSJ.


Labour unrest: Danger zone | The Economist

THE Pearl river delta in the southern province of Guangdong is no stranger to strikes, most of them small and quickly resolved. But a walk-out by workers at factories owned by a Taiwanese company, Yue Yuen, the world’s largest maker of branded sports shoes, including big names such as Nike and Reebok, has been remarkable for its scale and duration. It began on April 5th and has grown to involve tens of thousands of employees. On a sprawling industrial estate, angry workers watched by riot police rage about an issue few cared much about until recently: their pensions. For bosses and officials, this is a worrying sign of change.

The government has imposed a virtual news blackout on the unrest in the city of Dongguan, a place synonymous with the delta’s manufacturing heft (nearly 80% of its 8.3m people have moved there from other parts of China over the past three decades, or are the children of such migrants). Foreign journalists have been allowed onto Yue Yuen’s main estate in Gaobu township, a Dongguan suburb, but strikers complain that Chinese media are kept away. This contrasts with a relatively free rein given to Chinese reporters in 2010 to report on a large strike over pay by workers at a factory owned by Honda in Foshan, another delta city. That incident involved putting pressure on a Japanese company, an uncontroversial target for most Chinese. This latest, bigger strike (one of the largest in years involving a non-state enterprise in China) has touched a more sensitive government nerve.



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The workers accuse Yue Yuen of failing for years to make due contributions to their pensions, which are administered by the local government. Lax application of social-security laws is common, since local authorities do not want to drive away business. “The government is corrupt,” calls out one man among a group of strikers who have gathered near a row of factories. Such comments—directed at local officialdom, not Beijing—are almost as commonly heard as tirades against Yue Yuen itself. Workers fume at the heavy deployment of police, and the beating of some of the thousands of strikers who have been marching through nearby streets, most recently on April 18th (see picture).

Many employees say they are now too afraid to march again. Their protest has become a silent one: they clock in each morning, but then leave the factory and do no work, coming back to clock out when their shift is supposed to end. Workers say all 40,000 employees at Yue Yuen’s seven factories in Gaobu are on strike. A member of Gaobu’s Communist Party committee, Su Huiying, says 40% of them are at work and the rest are only on a “go-slow”. Her assertion appears unconvincing.

A Taiwanese manager at the company says “progress” is being made towards settling the strike. Yue Yuen has offered to make up social-security contributions that it has failed to pay; it has also agreed to start making full contributions from May 1st. But as they listen to repeated broadcasts of the company’s offer through loudspeakers, strikers respond with howls of derision. They also tear up copies of a letter from the government-backed trade union which is mediating in the dispute. The missive calls on workers to go back to work and acknowledge the company’s “sincerity”. “The unions aren’t like the ones in the West,” says one worker. “Here they just represent the government.”

Such anxieties about pension provision among a workforce in Guangdong mostly made up of young migrants may sound surprising. But they are becoming increasingly common as factories try to cope with a growing shortage of young workers from the countryside by retaining employees for longer. Many of Yue Yuen’s workers are in their 30s or even 40s, and many say they have been with the company for a decade or more. Geoffrey Crothall of the Hong Kong-based China Labour Bulletin says this has been the largest strike in a non-state factory over social-security payments, but protests over such issues are becoming more common.

via Labour unrest: Danger zone | The Economist.

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China’s Migrant Workers Lack High-End Skills – Businessweek

China is already facing the challenge of a shrinking labor force. Its working age population—16 to 59—declined by more than 2 million people, to about 920 million last year, compared with 2012. And while the total number of migrant workers is still increasing slowly, up 2.4 percent, to 269 million, last year, many lack needed skills. That’s despite the fact that wages keep rising, up about 14 percent, to around 2,600 yuan ($427) a month last year.

China's Migrant Workers Lack High-End Skills

“It is difficult to hire general workers, which reflects the limited supply of migrant workers. Despite China upgrading and restructuring its industrial base, there are difficulties in recruiting enough skilled technicians to work in these fields,” said Yang Zhiming, deputy minister of Human Resources and Social Security, at a press conference Thursday in Beijing, reported the Global Times.

China is aiming to shift its economy to higher-value-added industries and lessen its reliance on low-end, low-skill manufacturing of shoes, clothes, and toys, a process officials have dubbed tenglong huanniao, or “clearing the cage and changing the bird.” To meet the skills gap, the government will offer more training programs and educate at least 10 million migrants a year. Beijing intends to provide training by 2020 for the entire “new generation” of migrant workers, or those born after the 1980s, which now number about 100 million, according to Yang.

via China’s Migrant Workers Lack High-End Skills – Businessweek.

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Global hunt for top skills accelerates –

China will speed up the exploration of immigration policies this year to attract skilled foreign workers, a senior official said on Thursday.

However, Zhang Jianguo, head of the State Administration of Foreign Experts Affairs, did not give details on when the policies will be introduced.

Experts said Zhang\’s remarks show that China may, for the first time, single out skilled workers as a special category in its general immigration polices, as the country faces a shortage of such workers.

Wang Huiyao, director of the Center for China and Globalization, said the government urgently needs to revise its immigration policies to attract more highly skilled foreigners.

\”China\’s population is aging quickly and we also need more skilled workers for our economic upgrading,\” he said. China needs to loosen its immigration policies, including giving citizenship to skilled foreign nationals, he added.

Such immigration policies are common in Western countries, which roll out favorable measures for the skilled foreign workers they lack.

China has experienced a talent \”deficit\” for years. In 2012 alone, more than 148,000 Chinese obtained overseas citizenship, while just 1,202 expatriates were granted permanent residency in China, according to a report by Wang\’s center on Wednesday.

China usually grants its version of green cards to foreigners in certain categories: Businessmen who have invested at least $500,000 in the country; technical personnel such as managers; people with skills \”needed by the State\” and spouses of Chinese nationals, providing their marriage has lasted at least five years and they have lived in China for at least nine months in each of those years.

via Global hunt for top skills accelerates –

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Spotted Again in America: Textile Jobs –

More signs that the era of ‘cheap’ Chinese manufacturing is on the wane.  See –

“Zhu Shanqing, who owns a yarn-spinning factory in Hangzhou in China\’s Zhejiang province, is struggling with rising costs for labor, energy and land. So he is boxing up some of his spindles and moving.

To South Carolina.

Mr. Zhu is one of a growing number of Asian textile manufacturers setting up production in the U.S. Southeast to save money as salaries, energy and other costs rise at home. His company, Keer Group Co., has agreed to invest $218 million to build a factory in unincorporated Lancaster County, not far from Charlotte, N.C. The new plant will pay half as much as Mr. Zhu does for electricity in China and get local government support, he says. Keer expects to create at least 500 jobs.

There is another benefit. As costs continue to increase in China, Keer can ship yarn to manufacturers in Central America, which, unlike companies in China, can send finished clothes duty-free to the U.S.

The move by Mr. Zhu and others will scarcely revive a once bustling Southern textile industry. But it illustrates how shifts in global trade are creating advantages for U.S.-based manufacturing.

China Real Time

Why One Chinese Textile Maker Sees His Future in the U.S.

\”We are on the leading edge of a mature cycle\” with rising costs pushing Asian companies to consider moving to the U.S., said Robert Hitt III, South Carolina\’s commerce secretary.

In October, Mumbai-based ShriVallabh Pittie Group announced it would build a $70 million yarn operation in rural Sylvania, Ga., bringing 250 jobs. The company wants to avoid paying U.S. duties and to secure \”cheap, plentiful and importantly reliable\” energy, crucial in yarn production yet erratic in India, said Zulfiqar Ramzan, vice president for international development. Yarn spinning runs 24 hours a day, seven days a week, for most of the year, and any energy disruptions cause substantial delays and waste, he said.

In April, Alok Industries, 521070.BY +1.88% another Mumbai textiles producer, said it would build a yarn-spinning factory in the South, though it hasn\’t said where. The company expects to save on duties by making yarn in the U.S. and pay less than 10% of what it pays for energy in India, said Chief Executive Arun Agarwal.

In September, JN Fibers Inc. of China agreed to build a $45 million plant in South Carolina that turns plastic bottles into polyester fibers used to stuff pillows and furniture. That investment is expected to create 318 jobs. Development officials in South Carolina and Georgia say more Asian textile manufacturers have contacted them this year.”

via Spotted Again in America: Textile Jobs –


Christmas 2013: Inside a Chinese toy factory – Telegraph

Please note the last sentence in this abstract: “… an even bigger problem, which will hit in four to five years’ time, is that workers do not want these jobs any more. It’s not so much about the money, they just don’t want them.”

Good news for next level countries seeking to manufacture for developed countries.

“Yang Jiandong is a Chinese Christmas elf; toys and gadgets division. Here in steamy South China, 6,000 miles away from your front room, the trim and sprightly 39-year-old runs one of the thousands of factories that make the iPads and Furbies, Transformer robots and LeapPads that will soon be waiting under our Christmas trees.

English: Remote Controlled Car

English: Remote Controlled Car (Photo credit: Wikipedia)

This year, his favourite gadget is a remote-controlled flying battle drone from the movie Avatar. He giggles when, after navigating it around the showroom, it crashes into the wall. “No problem,” he smiles. “These ones are hard to break”. His company, Attop, turns out 800,000 remote-controlled helicopters a year but also makes accessories for Barbies, puzzles and Hot Wheels cars for Mattel.

In his biscuit-coloured factory, hundreds of workers man the production lines: teenage boys with spiky orange-dyed hair and studded leather jackets, old aunties in woollen trousers and young women who diligently focus on snapping together the shell of the toys or soldering the electronics inside.

One floor down sit the £100,000-a-piece injection moulding machines that crank out the plastic components. Two floors above sit the painters, the most skilled and highly-paid workers in the plant.

They spray the toys with colour or stamp them before moving them to another line for final testing and then boxing.

In the warehouse, boxes of remote-controlled helicopters are marked to go to Costa Rica and Guatemala while Hello Kitty toys are bound for Brazil. “The shipment to the UK left a while back,” a worker says.

There are two commonly held beliefs about Chinese manufacturing. The first is that Chinese factories only churn out cheap, disposable tat.

The second is that they resemble Dickensian workhouses.

But while small, dirty, polluting factories do exist in South China, they are increasingly being squeezed out of the market by well-run, advanced plants like Mr Yang’s.

A recent Chinese scandal which found medical waste being melted into plastic for new toys actually helped Mr Yang’s business, he said. “We had to write to our customers to let them know we did not have any problems,” he says. “Now more buyers turn to trust-worthy companies like ours”.

There is a 100-seat “business academy” with lessons for workers after their shifts, a grand piano in the hallway (“Anyone can play it over lunch”), a mini farm for workers to “relax by growing their own vegetables”, and a research and development department that designed all the Avatar toys in house.

Other plants are even more impressive. Three years ago, a spate of suicides at Foxconn’s Longhua factory convinced the world that the giant factories making our iPhones and iPads are vast, alienating and uncaring.

Today, after intense public pressure, Longhua has become a model factory, with football pitches, reduced working hours and a robot-assisted production line.

Behind the change is consumer pressure. “Ten years ago,” says Mr Yang, “Foreign companies would pick you to make their toys if you could give them a cheap price. They did not care about certification or research and development. But now the first thing they do is check whether you have safety certificates, and whether you are able to certify new toys. It costs huge amounts to get these tests done each time.”

At Attop, the managers believe the smaller toy makers, the ones who have provided cheap toys for years, will soon hit the wall. Christmas next year will be more expensive, and so will the Christmas after that.

“The golden years of the toy business were 1985 to 2000 but since then it has gone really downhill,” said Dave Cave, the British founder of Dragon-i toys in Hong Kong. “First the EU demanded to have all these tests in place. It has made the toys safer, but it has also made them more expensive.”

“Then the Chinese government decided to pay factory workers a fair wage, which of course I support. But costs are rising. And an even bigger problem, which will hit in four to five years’ time, is that workers do not want these jobs any more. It’s not so much about the money, they just don’t want them.””

via Video: Christmas 2013: Inside a Chinese toy factory – Telegraph.


China’s Bosses Size Up a Changing Labor Force

This post about the workforce and another posted today about houses-for-pensions show how fast China is catching up with the developed nations; not always for the good of its citizens.

BusinessWeek: “John Liu is the 31-year-old founder and owner of Harderson International, a small factory in southern China that applies paint and decals to ceramics and glass. His showroom includes samples of tinted perfume bottles made for Ralph Lauren and Kate Spade.

Chinese workers on a television set assembly line in Shenyang, Liaoning Province in 2012

A 2006 graduate of Wuhan University in central China, Liu is not much older than the 20-somethings and late teenagers who come to work on the assembly line. But generational cohorts in China are extremely compressed, and Liu sees a vast gap in expectations between himself and those a decade younger. “When I finished school, I felt I needed to find a good stable job quickly and earn money,” he says. “But living conditions in China have improved quickly. Young people now don’t have to work so hard to earn a living, and many have parents who will support them. … A lot of those born in the 1990s can’t stand this kind of repetitive work, so they choose to stay home or do very simple cashier work, even though it pays less.” The upshot is that, for a small factory, it’s “getting harder to find workers.”

Last year the total size of China’s working-age population began to decline, according to figures from China’s National Bureau of Statistics. As the Economist ominously noted, China’s moment of “peak toil” has passed. Yet it’s not only demographics that are changing. Today’s Internet-savvy young workers have different ideas and higher expectations than their predecessors, and not only regarding pay. In response to an evolving workforce, factory managers at a handful of small and midsize plants in China’s Pearl River Delta say they must now offer better conditions to attract and retain workers—or else look for opportunities to automate.”

via China’s Bosses Size Up a Changing Labor Force – Businessweek.

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China’s Manufacturers Seek Ways to Cut Costs

Wage inflation and shortage of skilled labour is making outsourcing less easy to justify.

BusinessWeek: “In the southern Chinese city of Zhuhai, two hours by ferry and car from Hong Kong, there’s something new on the rooftop of the large factory complex owned by outsourcing specialist Flextronics International (FLEX): solar panels.

A worker on a communications equipment assembly line in Shenzhen, China

Flextronics first opened shop in Zhuhai in 1999, when the area was a backwater compared with Shenzhen and other industrial hot spots closer to Hong Kong. Today the company’s 50,000 Zhuhai workers produce Microsoft (MSFT) Xbox game consoles, Hewlett-Packard (HPQ) printers, Nike+ (NKE) FuelBands and other electronics. With wages rising quickly throughout Guangdong province along the coast, Flextronics managers must save money wherever they can. “Instead of paying the electric company, I’m able to generate my own electricity,” says Melinda Chong, general manager in charge of infrastructure operations.

A little savings here, a little there—that’s the new focus for multinationals that manufacture in the Pearl River Delta and other coastal export hubs. The country’s one-child policy is taking its toll. The number of working-age Chinese in 2012 fell by 3.45 million, to 937.27 million, according to the National Bureau of Statistics. While that’s just a small drop, it’s the first decline since record-keeping began and marks “the start of a trend expected to accelerate in the next two decades,” the Hong Kong-based China Labour Bulletin wrote in a June 11 report. “China no longer has an inexhaustible supply of young workers.”

China’s government is also mandating big raises: In 2012, 25 provinces increased the minimum wage by an average of 20.2 percent. The current five-year plan ending in 2015 calls for base wages to increase by an average 13 percent a year, part of a policy to address growing income inequality. Coping with mandated wage increases is “very tough,” says Carmen Lau, Asia vice president of human resources for Flextronics. Even when companies offer higher wages, they still find it difficult to hire workers since fewer young people are interested in toiling on factory floors. “We have a smaller and smaller pool” of potential recruits, Lau says.

Some of the biggest electronics manufacturers have relocated to other parts of China where workers are more plentiful and there’s space to grow. “They can’t get land in the Shenzhen area, so they have to be somewhere else,” says Cynthia Meng, an analyst in Hong Kong with Jefferies (JEF). Foxconn Technology (2354), the Taiwan-based maker of iPads and iPhones for Apple (AAPL), has expanded away from the coastal regions. There are 250,000 to 300,000 workers at a Foxconn plant in Zhengzhou in the central province of Henan, according to the company and Bloomberg Industries. Hiring in the interior has helped the manufacturer boost its workforce in China by 50 percent in two years, to 1.2 million.

Wages are going up in the interior, too. “The cost differential is merging very, very fast,” says Jitendra Waral, a Bloomberg Industries analyst in Hong Kong. “If you move inland, it’s not really saving you costs any which way.””

via China’s Manufacturers Seek Ways to Cut Costs – Businessweek.

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