Chinese Manufacturing Part 1: The System

19 March, 2012 § 1 Comment

This is a guest post by Alexis S.

Alexis has a formal academic education in Chinese government, politics, and economics, is fluent in Chinese, and has lived in China*. As it happens, I have these credentials as well, and I’ll be fielding questions in the comments (although, if she likes, Alexis is welcome to as well.)

(* I say this to establish her credentials to talk about this topic, not to shut down discussion. Feel free to disagree with us.)

I (Ben) have edited this essay. I take responsibility for all errors.

If you follow news about China or NPR, you have already heard the recent story about Mike Daisey. If you haven’t, you can go here or here to get details, but the quick summary is that monologuist and Apple fan Mike Daisey wrote and performed a one-man show called “The Agony and the Ecstasy of Steve Jobs,” where he told stories of traveling to Shenzhen and interviewing workers at Foxconn, the Taiwanese-owned company that Apple and other tech companies rely on for much of their manufacturing. The show got some attention, but the real surge seems to have come after This American Life devoted an episode to it, airing an excerpt from the show and then interviewing Daisey. They included some corrections, but overall presented the show as true. And then yesterday NPR Marketplace and Ira Glass admitted that they had discovered some problems: some of Daisey’s stories were exaggerated, some were second or third-hand stories he had recast as personal experience, and some were just not true. Daisey says his stories are entertainment, not journalism. A predictable fuss has occurred.

I had only gotten around to hearing the TAL episode two weeks ago, and the problems I had with the show are largely unaffected by the veracity of any given story of Mike Daisey’s. When I heard the episode, I assumed his anecdotes were his actual experiences, and the things that felt wrong or inaccurate to me were because his experiences were filtered through the mix of confusion, prejudice, patronizing sense of superiority, racism, and deep ignorance that characterizes so much of the American debate on China. Now we know many of these stories are false, so the personal experiences are removed from the equation, but all the issues remain, and those are what I want to discuss.

This is the story Daisey tells: Since Deng Xiaoping came to power, the Chinese Communist Party has sold the bodies and souls of Chinese workers in exchange for the trappings of wealth and modernity. The workers are cruelly and needlessly exploited by factory owners out of a combination of laziness and greed, until the workers are crippled or killed. The American companies turn a blind eye because it keeps costs down, and American consumers remain ignorant because we want cheap phones and iPads, and because somehow it never occurred to us to think about where our products were made.

This is a compelling story, because it tells us what we want to hear and it reinforces beliefs many of us already hold. But it’s not true.

First, the CCP. It’s easy to hate the CCP. They block wikipedia and the New York Times, imprison artists, threaten Taiwan, and commit all manner of atrocities against Tibetans (and against the Xinjiang Uighurs, not that anyone pays attention to a bunch of Muslims). It’s natural to implicate them in the labor abuses. So what’s wrong? A couple things: the CCP is not a monolithic entity, and the CCP actually takes steps to help and protect workers at times.

We like to think of China as a dictatorship (Daisey calls it “a fascist country run by thugs”), where the evil Communists (or evil ex-Communist traitors, depending on the politics of the speaker) control everything with an iron fist. Hu Jintao probably daydreams about that being true, but it isn’t. Beijing isn’t aware of everything that goes on at the local level, and Beijing’s priorities don’t necessarily match up with the priorities of local cadres.

Nor is the central government completely uniform. The CCP is comprised of anti-corruption reformers, of hardline authoritarians, of economic growth proponents, Mao nostalgists, hawks (especially on Taiwan), urban and rural partisans, and others. What they share is a desire for the CCP to stay in power. This means no rebellions, no military coups, no invasions. Setting aside coups and invasions, which aren’t the focus of this piece, the central government knows they need to keep people happy enough that the country won’t break out into revolts. That’s one reason China tries to keep a tight grip on economic growth, keeping the economy growing, but not too quickly. It also means that when workers do get angry at local cadres (small-level government officials) or factory owners, the central government will often step in and throw money at the workers to placate them. And then sometimes they arrest the leaders of the protests, because they’re also a threat to stability. The central government’s role is complex, and there are plenty of times when siding with laborers against factories is in its best interest, so that’s what it does. Corruption, size, and structural inefficiencies all make it hard for the central government to have the local control they would like, so they’ve adopted a strategy of waiting until things get bad, then coming in with a combination of harsh scapegoating for obviously corrupt officials and potentially powerful organizers, and compensation and apologies for everyone else.

So the government sometimes sides with workers. They even passed a labor law in 2007 to give more protections to workers. Do you know who fought long and hard against that bill? If your knowledge about the issue only comes from that TAL podcast, you probably don’t, because it never mentions one of the major anti-labor forces in China: the foreign business lobbies. The US Chamber of Commerce and the US-China Business Council argued against worker protections such as restricting non-compete clauses and limiting periods of unpaid on-the-job “training.” The European Union Chamber of Commerce made regretful noises about being forced to leave China if their workers were granted these basic rights. I’m all for blaming the CCP for their part in human rights abuses, but it strikes me as unfair and inaccurate to call the body that passed labor reforms “thugs” and never mention the Western interest groups that fought to weaken those reforms. If we, as Americans, are going to condemn the abuse of workers in China, why don’t we blame our own civil society groups?

(Some of you may be wondering whether a labor law is actually important, or if it would just be ignored. The laws are important, for reasons I explain more in the next part.) (ed: the next part will be posted tomorrow.)

Another cause of labor abuses in China that often goes uncriticized is the structure of manufacturing in China. I have some sympathy for Daisey here– it’s hard to critique a system and still be entertaining, and entertainment is his priority. Nonetheless, this system is important. Much of Chinese manufacturing, both high-tech stuff like computers and low-tech stuff like shirts, is subcontracted. Apple does not own the factory that makes iPads. Foxconn does, and also makes electronics for other companies, including laptops, cell phones, and video game systems from American, European, and Asian companies.. This strongly limits the amount of pressure Apple can bring to bear on Foxconn. Foxconn isn’t going to want to lose a major client, but they have to balance the demands of multiple clients. If Apple is the only company pressuring them for reforms, and all the other companies are still pressuring for speed and cheapness above all, they may decide that labor reform is a bad decision.

Meanwhile, Foxconn and similar companies are themselves insulated from the labor abuses. These are not companies run by Mainland Chinese passport-holders. Most of them are companies in Taiwan, Hong Kong, Korea, or Japan. They are less subject to the pressures that a Chinese company would feel. In some cases these companies are basically just middlemen: an American shoe company hires a Taiwanese company to find a factory in China to produce their shoes. Not only can the shoe company maintain plausible deniability for any abuses, but the company they hire can, too. This is more common in the garment industry, where the manufacture requires less skill and fewer proprietary technologies. This extra distance is one reason why the garment and toy industries tend to have some of the worst abuses. For Chinese factory laborers, places like Foxconn are actually considered some of the better places to work: There is less distance between the western company, the manufacturer, and the factory itself, and thus less likelihood for abuse.

A lot of hostility is aimed at the Chinese government, at Apple, and at Foxconn. The main effect of this is to make the critic and his audience feel better. The Chinese government is the wrong target, and probably doesn’t care what you think anyway. Foxconn doesn’t really care what you think either, unless you’re one of the companies investing it it. Criticizing Apple might get them to make changes, but unless you’re going to go after every electronics company that sells in America, you’re not going to make any substantial change. If you do feel the need to go after individual companies: garment and toy companies are a more deserving target. But, if you really want to make a substantial change, go after the big business lobbying groups such as the American Chamber of Commerce, the US-China Business Council, or your local equivalents. Form counter-lobbying groups for Chinese workers’ rights, or organize a boycott of every member of these organizations, or publicly shame them for their aggressive anti human rights practices. At the very least spend as much time and energy calling them out as you did Apple.

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§ One Response to Chinese Manufacturing Part 1: The System

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