China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher
By Ross Perlin
The suicide nets are still there. Foxconn, the giant electronics manufacturing subcontractor, installed them in 2010, a year when fourteen workers died after jumping from the ledges and windows of crowded dormitories. In addition to the wide mesh nets, stretched low over the streets of Foxconn’s company towns, the corporation has twenty-four-hour “care centers,” “no suicide agreements,” and a psychological test to screen out potentially suicidal workers, charged to the job applicant. It has raised wages significantly, but only in the face of runaway inflation, steep hikes in the minimum wage, and mounting worker unrest. Media attention and pressure from Apple, one of its main customers, backed up by a program of regular factory audits, seem to be driving incremental improvements in working conditions.
But the real Foxconn story is unfolding elsewhere. The Taiwan-based firm is rapidly expanding from China’s industrialized coast into its vast interior, establishing new production facilities in impoverished provinces such as Henan, Hubei, and Sichuan, far from the labor metropolis of Shenzhen, a dangerous Detroit in the making. Major expansion is also underway in Brazil, India, Mexico, Malaysia, and central Europe, notwithstanding the strong presence of unions in some of those locations. In a dramatic inversion, the company announced late last year that it would soon start manufacturing in the United States itself. Energy costs, access to markets, public relations, and wage stagnation in middle-income labor markets are all part of the equation. The geography of expansion also reflects a global leveling: wages in America’s “right-to-work” states, the European periphery, and the BRIC (Brazil, Russia, India, and China) countries are increasingly entering a similar range.
At the same time, the drive to automate is intensifying, with Foxconn CEO Terry Gou promising to have a million robots (dubbed “Foxbots”) working the assembly lines within the next few years. Delivering flexibility and scale at rock-bottom prices, Foxconn keeps pounding out the very real underpinnings of the New Economy, remaking global manufacturing in its own image, as did Ford or Toyota in very different times and places. Foxconn stands as the archetypal industrial firm for today’s planet of slums.
With some 1.4 million workers in China alone, the company is the world’s second-largest private employer after Wal-Mart. Its recent moves to diversify (and fragment) its labor force are a response to several interconnected pressures: rising costs, outside scrutiny, hiring and retention in an increasingly tight Chinese labor market, worker militancy, and surging demand from such customers as Apple and Samsung. Nearly all firms that manufacture for export in China are facing the same challenges and mulling their options. At stake is the Pearl River Delta’s thirty-year run as the world’s factory floor. The region will doubtless remain an industrial heartland and a crucial labor battleground for years to come, but capital is on the move again.
Designed in California, Assembled in China
Foxconn is disrupting its own model from a position of strength, atop a seemingly impregnable supply chain and flush with record profits. The iPhone and iPad, potent new symbols of globalization, are a far cry from the channel-changing knobs for televisions with which Foxconn started in the 1970s. Gou recognized early on the opportunities opening up across the Taiwan Strait and the lucrative role there for ethnic Chinese investors and entrepreneurs from outside the mainland. When Michael Dell visited Shenzhen in 1995, according to one oft-told tale, Gou offered to introduce him to local officials in return for the chance to drive Dell to the airport. One unscheduled detour to the Foxconn factory later, Gou had landed his first big American client.
The Pacific System, which has its roots in the postwar development of Japan and South Korea, describes an ever-deepening interdependence and a series of dyads: American consumption and Asian labor, American innovation and Asian manufacturing, American debt and Asian savings, American power and Asian acquiescence. In its latest form—the co-evolution of Silicon Valley and China’s Special Economic Zones (SEZs), particularly in information technology and alternative energy—it can be summed up in the words, engraved on nearly every Apple product: “Designed by Apple in California, Assembled in China.”
The dark double of Apple’s Cupertino headquarters in Silicon Valley, where several thousand highly paid engineers “design” gadgets and software, is Foxconn’s Longhua facility in the Shenzhen SEZ, where some 300,000 Chinese migrant workers do the assembling. Sometimes called Foxconn City, this immense factory town reportedly turns out 137,000 iPhones a day, or 90 per minute; 300,000 iPad cameras can be assembled in two shifts. Workers may be producing Nintendo video game consoles, Amazon ebook readers, Dell laptops, Nokia phones, or Sony televisions.
The major inland factories, established within the last few years, tend to be more specialized: iPads in Chengdu, iPhones in Zhengzhou, and so on. Salaries are far lower than on the coast, reflecting prevailing and minimum wage rates (China has no national wage floor). Provincial governments have actively courted the company, hoping to jumpstart industrialization. The company is credited with introducing to China the “labor discipline” needed for high-quality precision manufacturing.
The workers are part of China’s “floating population” of 200 million migrants, at the bottom of what Taiwanese tech entrepreneur Stan Shih calls “the smiling curve.” Controlling the upturned edges of the smile—brand, design and engineering on one side and marketing, sales, and external relations on the other—is what ensures serious value extraction, mega-profits. The curve keeps cropping up, ever more U-shaped, in industry after industry, from commodities such as coffee to complex finished goods. Apple can keep 58.5 percent of an iPhone’s sale price, according to a team of academic researchers, while most of the rest goes toward high-end materials and components and 1.8 percent to manufacturers in China, of which only a fraction ends up in the hands of workers. With its razor-thin margins, Foxconn survives by operating at tremendous scale and holding labor costs as close to zero as possible.
Most workers are in their late teens and early twenties, supplementing their family’s meager farming incomes and seeking their fortune in the big city. Lacking residence permits, they live apart from the locals and may not have access to basic services. As Ching Kwan Lee writes in Against the Law: Labor Protests in China’s Rustbelt and Sunbelt, these nongmin gong (peasant workers) remain very much distinct from the country’s traditional, class-conscious proletariat. They are arguably a labor aristocracy nurtured by Mao Zedong and other Chinese Communist Party (CCP) leaders, particularly at state-owned enterprises in the Northeast. Working mostly at private, export-oriented manufacturers in the Southeast, like Foxconn, the nongmin gong aspire to rural entrepreneurship or white-collar work. Their families’ experience of Maoism was rural, and they may embrace contingent work. Most stay at Foxconn for less than a year, seeing it as little more than a stop on the way. At Longhua alone, 24,000 workers quit every month, according to the Guardian, and large-scale recruitment and hiring are non-stop.
The work is tedious, exhausting, high-pressure. “Tasks in the electronics industry are very precise with lots of small details,” says Debby Chan Sze Wan of SACOM (Students and Scholars Against Corporate Misbehavior), a Hong Kong-based watchdog. “The main reason leading to unrest is tension in the factory. The structural problem is the production plan set by Apple and Foxconn,” she adds, explaining that holiday periods, new product releases, and customer complaints can result in several breakneck months followed by extended downtime.
Specific grievances trigger widening revolts: delayed or miscalculated wages, personal conflict, shock worker quotas, changes in the nature of the work. The only unions are ineffectual branches of the state-controlled All-China Federation of Trade Unions, although the company announced in early February that genuinely representative union elections would be held, through secret ballot, later this year—an unprecedented move for a large Chinese employer. The results remain to be seen, but this public commitment clearly foregrounds Foxconn’s strategy of being seen as a leader on labor issues within China. Both the company and the government are eager for labor peace and “bureaucratized” dissent, channeled from protest actions into grievance procedures.
Wages average from $1 to $2 an hour, including overtime and depending on location. They are attractive only by impoverished rural standards. Fifty-hour work weeks and twelve-hour shifts are typical, but up to one hundred-hour work weeks are not unheard of during peak production. Foxconn has pledged that, as of July 2013, no one will work more than China’s legal maximum of forty-nine hours a week—an unprecedented commitment to comply with the law. Workers worry about a drop in their earnings, although the company claims it will make up the difference through raises. Gou fancies himself a latter-day Henry Ford, but he has not introduced any equivalent of the pioneering $5-a-day wage, which put Model Ts in reach of those who built them. Few Foxconn workers can afford the iPads and iPhones they assemble.
In early 2012, 150 protesting workers at Foxconn’s Wuhan facility threatened collective suicide from the factory roof. It was a sign of how far things have come since the individual suicides of 2010, but managers and local CCP officials talked them down with promises of improvements. In September, a riot involving several thousand workers broke out at the company’s Taiyuan plant, apparently after workers were beaten repeatedly by security guards. Only a week later, under intense pressure to produce newly announced Apple products and conform to ever more stringent standards, up to 4,000 workers at Foxconn’s Zhengzhou plants went on strike, according to Li Qiang of the New York-based China Labor Watch.
The workers, mostly from the Onsite Quality Control team, reportedly followed their foremen off the factory floor and succeeded in paralyzing production for the better part of a day. The Taiyuan riot was only ended by the deployment of five thousand police officers. In both cases, Foxconn’s characterization of the incidents as mere worker “disputes” was unconvincing—instead, they fit a pattern of increasing worker assertiveness. “At present, all of the disputes we see involve specific grievances about pay, working conditions, and management practice,” says Geoffrey Crothall of China Labour Bulletin, a Hong Kong nongovernmental organization. “What is changing is that the workers are better organized and more able and more determined to press for their demands.”
As China’s largest private employer, Foxconn is more careful than most, but the company has a long rap sheet. Reports have uncovered repeated instances of required, excessive, and unpaid overtime. Management style and training are “military style,” says Chan, with talking forbidden on some factory floors and certain forms of corporal punishment, common in China, considered acceptable. Production targets are raised regularly without corresponding wage increases. It is not unusual for workers to be on the production line all but two or three days of a month, ten or eleven days in a row. Many workers live eight to a room in the dorms. “They don’t really know or hear what workers want or what workers are demanding,” says Li of China Labor Watch.
In 2011, an explosion left four workers dead and eighteen injured at the company’s Chengdu plant, which the company had constructed in just seventy-six days. The cause alleged by city officials—a build-up of combustible dust at a workshop for polishing iPads—had been reported by SACOM just weeks earlier and ignored. Unsafe conditions are pervasive in Chinese factories, and Apple’s supply chain has been no exception. An explosion at Riteng, which now produces the iPad Mini, left more than sixty injured, some severely disfigured. The severe poisoning of some 140 workers at Apple supplier Wintek with n-hexane, a chemical used to clean touchscreens, was the first incident that galvanized workers to hold Apple directly accountable, says Crothall.
Foxconn’s rampant use of students and minors further underlines its pursuit of cheap, flexible labor. When the fallout of the 2010 suicides left Foxconn with a labor shortage, the Henan provincial government, busy wooing the company to set up shop in the province, eagerly stepped into the breach. Giving them only nine days’ notice, the province directed 100,000 vocational students to staff the Shenzhen assembly lines as “interns” (the Chinese term shixi can also mean “trainee”). Students who failed to go—there was little in the way of education or training—were told they would not be allowed to graduate.
“Interns” have become a significant component of Foxconn’s labor force, constituting as much as 15 percent at peak times, or 180,000 interns company-wide, making it by far the largest “internship” program in the world. Teachers have been stationed in the factory compound to monitor attendance, and some interns have been as young as fourteen—by the company’s own admission—in violation of Chinese law. According to SACOM’s Chan, Foxconn and other manufacturers that use interns are now doing so “covertly” to avoid detection and culpability, hiring them through the same labor agencies that hire Foxconn’s precarious “dispatch workers,” who are thus deprived of standard benefits and protections. The casualization of Foxconn’s labor army is well underway.
Beyond better-known facilities such as Foxconn City stretches a vast network of factories whose conditions have remained largely hidden from view. The same is true of most Foxconn and Apple suppliers—indeed, the country’s “iEconomy” represents just a fraction of industrial activity and worker activism. So is China “the epicenter of global labor unrest,” as Eli Friedman wrote in issue 7/8 of Jacobin? Not yet, but the country’s labor movement, under deeply adverse conditions, has a pulse. The China Labour Bulletin tracked nearly four hundred strikes in 2012 alone, as reported in the local media, and the unreported number is surely many times that. All are effectively wildcat strikes, as Friedman points out, since Deng Xiaoping, made wary by the Polish Solidarity movement, revoked the constitutional right to strike in 1982. Today, strikes are not explicitly forbidden, but they do not enjoy the legitimacy, or even tolerant support, that they once elicited, depending on individual circumstances, in the period before Deng’s reforms.
Most strikes are short-lived “livelihood struggles,” undertaken as just one of many individual or collective strategies of survival and resistance. In this respect, worker activism follows the distinctive Chinese pattern of “mass incidents,” a vague, catchall term used by the authorities for any case of civic unrest involving a group of people. Mass incidents vary substantially in nature and in scope—from the outburst of some aggrieved petitioners to a large-scale march—but the overall number is exploding, with one sociologist at Tsinghua University estimating 180,000 in 2010 alone (the last year for which any figures are available).
Few Chinese strikes encompass demands for political reform or unionization—workers understand that this is a bridge too far. The few underground attempts to form independent unions, particularly in the wake of 1989’s Beijing Massacre have been summarily suppressed. NGOs and lawyers helping workers through individual struggles have slightly more breathing room. The number of petitions and arbitrated labor disputes has grown exponentially in recent years, as workers learn their rights under the significant 2008 Labor Contract Law. Once a laboratory for runaway capitalism, Shenzhen is now a hotbed of experimentation for labor law and activism. Yet most of the government-run Labor Bureaus responsible for enforcement “are marginalized and play second fiddle to economic and commerce bureaus,” writes Ching Kwan Lee.
So what leverage do workers have? China’s rapidly aging population, a side-effect of the One-Child Policy first implemented in the late 1970s, promises a tighter labor market for the foreseeable future. And a significant portion of today’s nongmin gong are “second-generation” factory workers, more likely to constitute a self-aware class-in-the-making. With the industrialization of the interior (by Foxconn and others), workers are now closer to their home villages and may be in a better position to build cultures of solidarity within China’s highly fractured ethnic and regional landscape.
Apple’s rise to become one of the most recognized and coveted brands in China—from almost complete obscurity even five years ago—may also play a role. When Apple’s seventh store in mainland China opened late last year in Shenzhen, it was an acknowledgment that the company had come full circle, its future resting as much with China’s white-collar consumers as with its industrial workers. What will Chinese consumers demand? “[They] are starting to care about these things,” points out Li Qiang, “but the problem is you want to buy a cell phone, you want to make a choice, but there’s no choice.”
While they leave for more permissive jurisdictions and automate the rest, Apple, Foxconn, and others are also reforming just enough to withstand the attacks. Last year, Apple finally released a list of 156 suppliers and became the first electronics firm to join the industry-funded Fair Labor Association (FLA), a nonprofit that audits factories. The attention of watchdogs such as SACOM and China Labor Watch, as well as two years in the glare of the media spotlight—including a Saturday Night Live skit and the popular, if discredited, stage monologue of the actor Mike Daisey—are also forcing Foxconn into a grudging responsiveness.
Foxconn is singled out “because it’s the biggest and the problems are most concentrated,” Li says, although it’s “not that bad” compared to other Chinese factories. The country’s worst labor conditions are almost certainly in the state-run laogai (prison labor camps) or at no-name, small- and medium-sized enterprises—illegal coal mines, construction firms, and so on—that fly entirely beneath the radar of the law and watchdog groups. Their products also find their way to the West, as when, in late December 2012, a package of Halloween decorations at Kmart was found to contain a desperate note from a prisoner doing forced industrial labor at Masanjia Labor Camp. The incoming leadership may finally be prepared to dismantle these camps.
The playbook is familiar from the anti-sweatshop movement of the late 1990s and early 2000s. Reporters, campaigners, consumers, shareholders, and watchdog groups find a high-profile target (a Nike or an Apple), galvanize media interest, compile reports, demand transparency and codes of conduct, perform audits, rinse, and repeat. The factory fire that killed 112 garment workers in Bangladesh in late November 2012 highlighted what happens when media attention and public concern wane. Many Westerners convince themselves that such factories are still “opportunities” that “lift people out of poverty” and are preferable to the status quo. The immiserating forces that created that status quo go unmentioned, as do the tragedies and deceptions that workers face on a daily basis. Nor is there always a happy ending a decade or a generation later.
Manufacturers hope to stave off genuine worker power and democracy on the shop floor with a bureaucracy of audits and a veneer of paternalism. “To be honest,” says Crothall, “the FLA audits (like all audits) have had minimal impact on workers’ actual pay and conditions.” Elizabeth Balkan, a former factory auditor who has worked in China, notes that “the FLA standards, answering to many different stakeholders, serve an important, if limited role, in improving supply chain standards. But they are not the most stringent, there are other more stringent standards in the industry.” She describes the compliance industry as “a very crowded landscape” full of competing and confusing standards and groups, with the corporations that pay the bills “unwilling or unable to come together with a unified set of standards,” given obstacles such as shareholder requirements. Dummy factories and other corrupt and deceptive practices “come up all the time,” says Balkan, although “there are real and immediate consequences” if an auditor is directly rebuffed or deceived.
Some thirty thousand factories are audited in China each year, according to Li Qiang. Besides inducing “audit fatigue,” writes Alexandra Harney in The China Price, the system helps absolve China’s own labor inspectors of responsibility and “doesn’t address ever-lengthening supply chains.” “Like many industries,” says Balkan, “it exists not to make improvements, but because there’s a demand for those services.” She adds that she started seeing factory flight from coastal China to cheaper areas as early as 2004, and that her later audits were increasingly in places such as Mauritius, Jordan, Sri Lanka, and sub-Saharan Africa, often in Chinese-owned factories staffed by Chinese workers.
Meanwhile the Chinese government is relentlessly pushing the country into post-industrial territory, promoting a consumer-driven economy based on services and innovation. The eagerness to send manufacturing offshore, or at least move it to cheaper areas domestically, matches that of Ronald Reagan’s and Margaret Thatcher’s governments in the 1980s. After all, if industrialization is just a stage—a brief national adolescence—there won’t be time for it to give rise to dangerous social movements. The production lines will keep humming, leaving barely a scratch or a smudge on our touch-screens.
Ross Perlin is a writer and linguist based in Brooklyn. He has written on language, labor, and China for publications large and small. His first book, published in 2011, was Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy.