Revelations on Union structure in China

[SinoIndusFriendship]

Found this on BR, and is written by a fellow Chinese who works for a Chinese company in a Union. He does a excellent job clearing up mis-understandings (and sometimes deliberate falsehoods) some people have.

It is an excellent read, as not to often you come across such an beautiful explanation. Please take time to read it.

abhischekcc wrote:
This is actually quite correct observation. No strike is taking place in Chinese owned factories. I have several opinions about the situation, given below in no particular order:
1. The short term benefit: to stop production in Japanese factories so that Chinese ones acan take advantage of selling to the domestic market.

2. The medium to long term benefit: to put strategic pressure on Japan to toe Chinese line in China's conflict with America.

3. Long term possibility: As in the quote above, the Chinese are trying to remove Japanese firms so that they can compete on a global level against everybody.

If it is 2, then it is the sweet spot between reward and risk. Option 1 may be at the back of the mind but unlikely.

Chinese assumption is that the Japanese (and Americans) will not be able to find a cheap labour source as large as China. They are wrong. The labour source is India and Indian labour rates are lower than China's for some years now. All that is missing in India is the external facing infrastructure. Even that is changing, so how long China can be the sole shop floor of the world remains to be seen. CHinese gamble will not work for long. But I wish them godspeed in this strategy because it will push western and Japanese MNCs towards India. Then they will see India's lack of infrastructure not as an obstacle, but an another opportunity. This has been quitely unerway for a long time too, but the recent strikes in China will make every outsider CEO sit up, take notice, and ask - are they next?

However, option 3 presents the most interesting situation. It shows that Chinese leaders believe that their time under the sun has come, and not only are willing to be aggressive about it, they are willing to risk or take large losses for it.

This is a dangerous situation, as hubris always leads the CCP to war. It indicates that in the next few years, the Chinese will test the nerves of every country in the world.

Their investment in Greece shows bad economic sense but questionable political ones - a crashing country investing in a crashed one.

Chinese economic fundamentals are not strong enough to warrant a show of strength, but they feel the rest of the world is weak so it is ok to try to push their way into the center of the table. How the rest react to this remains to be seen - but it does make the possibility of a trade war much more likely.

You guys put too much on it. Let me tell you the difference between the Chinese owned factories and foreign owned factories.

1, Almost all Chinese owned factories got unions while foreign owned factories do not.

A lot of foreigners do not understand this. They thought the Chinese unions are the same as in States. But it is not. The Chinese union is controlled by CCP and needs to follow party lines. The top leader of China union is one political Bureau member. The responsibility of Chinese union is mostly pacify the workers. The union leaders in the factory are elected from workers and take care of welfare of worker, like they manage factory café, dorms etc. All the factory unions reported to local unions. Like organize travel, organize entertainment, like distribute welfare etc. They are not an collective bargaining power, will not negotiate salary with management and are forbid to strike. Strike is protected in Mao’s Constitution but not in Deng’s.

One good things of union is they acted like a communicate channel. When workers complain, the union will tell the management. And the management will got time to response. In state owned enterprise, the union leader sit in the party committee of the enterprise. If it is public traded company, they sit in the board.

I like unions in my factory. I am also a union member, I mean I pay the fees. We had a pretty good soccer team and a bad basketball team and we played in our local tournament. It is really good for moral.

All the foreigners when they came to China, they do not want to have unions in their factory. The local government give it a blind eye. Even they have unions, the union leaders are not elected. And they have no power in the company. So when you do not have CCP controlled union in the factory or they do not have any power, then when workers angry, they communicate themselves. That is the case we saw. In China, if possible, people want to work for state owned enterprise first, then the Chinese private owned factory, then joint ventures, then US or European owned ones, then Japanese owned ones. The worst are Korean, Taiwanese and Hong Kong owners.

2, They can not climb the ladders.

All Taiwanese owned companies bring their manager from Taiwan and they only trust them. Like Foxconn, they employed one million workers in Mainland but none of them had a chance to be promoted to a tiny management position. They bring several thousands of Taiwanese to mainland and they occupy all management positions. The employees got no hope to be promoted in the company. A fresh man came to Guangdong and worked for Foxconn, that is ok. But after 5 or 10 years, he still worked for the same position and got no chance to rise. That is a problem. He could leave in the old times and Foxconn got no problem to replace them. So it is not big problem for Foxconn. But things are changing now.

The Japanese company, the same thing. The managers are Japanese. Chinese are supposed to be only labors.

All these are different in Chinese owned company. When company developed, employees also developed because we can not bring our middle tier from Taiwan or Japan. We have to be local.

3, The government allow the strike to be reported.

CCP is now trying to balance the wealth gap between rich and poor. Reason is it will have impact on social stability. One way to do that is to raise labor salary. So they allow the media to report this kind of strike. This kinds of thing happened everyday. If you have hundreds of factories in one industrial zone and you got half million workers work there. Strike is pretty common. Also the suicide, Foxconn employed 800,000 young people in Guangdong. 12 suicides in half year, is it very high? The difference is this one got public attention because CCP wants to push their agenda. Why not Chinese owned companies? I think my first two points explain this. The workers are not be pushed to corner yet. They have channel to communicate and their hope and future binding with their companies. The only reason they strike is when they know some foreign company come to buy the factory or the state owned enterprise go private. The most recent Chongqing strike is for this reason. Carlsberg want to increase its stake in Chongqing brewer, a state owned enterprise, to 29.71 percent from the current 17.46 percent. And workers went on strike because fear Carleberg will cut personnel in the future.
Globaltimes_china business ... 43251.html

I can not say for Honda or Toyota part factory because I thought they should have higher standard. But for Taiwanese company, they are really the worst employer.

The last reason is because they are big names. If my factory got strike, nobody cares. If someone strike in Honda and cause Honda to halt their production, it is big news anywhere in the world.

Will these strike rise cost in China? Yes. Almost all provinces raise the lowest salary 20-30% in recent month because of CCP push.

Will they move out China? Possible. But if they do, It will be a one big mistake. Because, nowhere in the world, had this good manufactory oriented infrastructure. Even US do not have this. And nowhere in the world had this kind of government that so pro-business. Also nowhere in the world, had this good worker pool. I mean the quantity, the education level, the work ethic, the easy to management and the productivity wise.

Will Honda/Toyota move out? I do not think so. Their factory is busy making car for China market. If they move out, their sales will drop a lot and have no chance to recover because it will refresh Chinese’s war memory. Also they will pay a high duty tax.

Will Foxconn move out? If they do, it good news for all Chinese OEM factories. Just imagine, they moved to India and bring thousand of Taiwanese into India. And there will be no opportunity for India workers to rise in the ladder. And Indians have to enjoy work overtime. Will it work for Foxconn or broke Foxconn? I heard India got a lot of real communist or even Maoist. I also assume all the thousands of Taiwanese knew how to speak Hindi. If Foxconn moved, Chinese owned companies will beat Foxconn hands down.

I knew some Taiwanese companies move to Vietnam and they move back to Mainland several years after. When I asked them, they told me, the Vietnamese just strike every month if not every week. And government support workers. (Hats off to Vietnam communist )They can not speak Vietnamese is another problem. That means they can not communicate, they can not manage and they can not train people, all of these are not an issue in mainland so they never consider it an privilege. They only compare the wages and they move. So they have to come back. Of course, they may still keep factory open in Vietnam because they need their tag.

 

[SinoIndusFriendship]

You guys put too much on it. Let me tell you the difference between the Chinese owned factories and foreign owned factories.

1, Almost all Chinese owned factories got unions while foreign owned factories do not.

A lot of foreigners do not understand this. They thought the Chinese unions are the same as in States. But it is not. The Chinese union is controlled by CCP and needs to follow party lines. The top leader of China union is one political Bureau member. The responsibility of Chinese union is mostly pacify the workers. The union leaders in the factory are elected from workers and take care of welfare of worker, like they manage factory café, dorms etc. All the factory unions reported to local unions. Like organize travel, organize entertainment, like distribute welfare etc. They are not an collective bargaining power, will not negotiate salary with management and are forbid to strike. Strike is protected in Mao’s Constitution but not in Deng’s.

One good things of union is they acted like a communicate channel. When workers complain, the union will tell the management. And the management will got time to response. In state owned enterprise, the union leader sit in the party committee of the enterprise. If it is public traded company, they sit in the board.

I like unions in my factory. I am also a union member, I mean I pay the fees. We had a pretty good soccer team and a bad basketball team and we played in our local tournament. It is really good for moral.

All the foreigners when they came to China, they do not want to have unions in their factory. The local government give it a blind eye. Even they have unions, the union leaders are not elected. And they have no power in the company. So when you do not have CCP controlled union in the factory or they do not have any power, then when workers angry, they communicate themselves. That is the case we saw. In China, if possible, people want to work for state owned enterprise first, then the Chinese private owned factory, then joint ventures, then US or European owned ones, then Japanese owned ones. The worst are Korean, Taiwanese and Hong Kong owners.

2, They can not climb the ladders.

All Taiwanese owned companies bring their manager from Taiwan and they only trust them. Like Foxconn, they employed one million workers in Mainland but none of them had a chance to be promoted to a tiny management position. They bring several thousands of Taiwanese to mainland and they occupy all management positions. The employees got no hope to be promoted in the company. A fresh man came to Guangdong and worked for Foxconn, that is ok. But after 5 or 10 years, he still worked for the same position and got no chance to rise. That is a problem. He could leave in the old times and Foxconn got no problem to replace them. So it is not big problem for Foxconn. But things are changing now.

The Japanese company, the same thing. The managers are Japanese. Chinese are supposed to be only labors.

All these are different in Chinese owned company. When company developed, employees also developed because we can not bring our middle tier from Taiwan or Japan. We have to be local.

3, The government allow the strike to be reported.

CCP is now trying to balance the wealth gap between rich and poor. Reason is it will have impact on social stability. One way to do that is to raise labor salary. So they allow the media to report this kind of strike. This kinds of thing happened everyday. If you have hundreds of factories in one industrial zone and you got half million workers work there. Strike is pretty common. Also the suicide, Foxconn employed 800,000 young people in Guangdong. 12 suicides in half year, is it very high? The difference is this one got public attention because CCP wants to push their agenda. Why not Chinese owned companies? I think my first two points explain this. The workers are not be pushed to corner yet. They have channel to communicate and their hope and future binding with their companies. The only reason they strike is when they know some foreign company come to buy the factory or the state owned enterprise go private. The most recent Chongqing strike is for this reason. Carlsberg want to increase its stake in Chongqing brewer, a state owned enterprise, to 29.71 percent from the current 17.46 percent. And workers went on strike because fear Carleberg will cut personnel in the future.
Globaltimes_china business ... 43251.html

I can not say for Honda or Toyota part factory because I thought they should have higher standard. But for Taiwanese company, they are really the worst employer.

The last reason is because they are big names. If my factory got strike, nobody cares. If someone strike in Honda and cause Honda to halt their production, it is big news anywhere in the world.

Will these strike rise cost in China? Yes. Almost all provinces raise the lowest salary 20-30% in recent month because of CCP push.

Will they move out China? Possible. But if they do, It will be a one big mistake. Because, nowhere in the world, had this good manufactory oriented infrastructure. Even US do not have this. And nowhere in the world had this kind of government that so pro-business. Also nowhere in the world, had this good worker pool. I mean the quantity, the education level, the work ethic, the easy to management and the productivity wise.

Will Honda/Toyota move out? I do not think so. Their factory is busy making car for China market. If they move out, their sales will drop a lot and have no chance to recover because it will refresh Chinese’s war memory. Also they will pay a high duty tax.

Will Foxconn move out? If they do, it good news for all Chinese OEM factories. Just imagine, they moved to India and bring thousand of Taiwanese into India. And there will be no opportunity for India workers to rise in the ladder. And Indians have to enjoy work overtime. Will it work for Foxconn or broke Foxconn? I heard India got a lot of real communist or even Maoist. I also assume all the thousands of Taiwanese knew how to speak Hindi. If Foxconn moved, Chinese owned companies will beat Foxconn hands down.

I knew some Taiwanese companies move to Vietnam and they move back to Mainland several years after. When I asked them, they told me, the Vietnamese just strike every month if not every week. And government support workers. (Hats off to Vietnam communist )They can not speak Vietnamese is another problem. That means they can not communicate, they can not manage and they can not train people, all of these are not an issue in mainland so they never consider it an privilege. They only compare the wages and they move. So they have to come back. Of course, they may still keep factory open in Vietnam because they need their tag.

This should dispel a lot of falsehoods and propaganda. Truth be told, India is not capable of being an alternative manufacturing base --- it would take at least 10 years before the necessary machinery, technology, skills, experience and training is in place, and this is an opportunistic assessment.