Industrial activism in China is ‘a big enough issue’ says author Kerry Brown

Transcript

Industrial activism in China – a decade ago this was largely unheard of. But now, as a generation of long serving migrant factory workers retires, the higher educated, more social-media savvy younger generations are less inclined to tolerate the poor conditions of their forefathers. But what does this mean for China, largely dubbed the factory of the world? World Finance speaks to Kerry Brown, author of The New Emperors, to find out.

World Finance: Well Kerry, industrial activism in China, how big of an issue is this? Do you think the Western media have blown it out of all proportion, or would you say it’s actually under-reported?

Kerry Brown: Well it’s a big enough issue for workers to get better wages now than they did even three or four years ago, and so there have been cases of successful activism, but any form of activism in China is problematic for the government because it sometimes creeps more and more into general political demands, and so there have been sporadic cases in some factories, I think there was one case for instance in the Taiwanese owned factory Foxconn where there were lots and lots of issues in Shenzhen, massive factory, two or three years ago people committing suicide. Real issues of well-being, and so they did increase their wages, and then there were other factories that also had to go through a sort of negotiation process. But on the whole, the government does not like organised activism.

World Finance: Well it does seem to me that industrial activism is perhaps more tolerated because, like you said, if the government doesn’t like something they can shut it down quickly. Look at the 2008 Sichuan earthquake with the school collapses and the protests over that, and more recently of course the anniversary of Tiananmen. So how do you think the Communist Party actually view industrial activism?

[T]he government does not like organised activism

Kerry Brown: They do sometimes act very pragmatically, but then there are other times when they can really send the kind of people’s armed police and the security services in and just smash activism. So there’s no hard and fast rules, it’s very dynamic, sometimes they feel that they can negotiate, and sometimes they’re very very hard. You can’t really come out with a particular template. But the one thing you can say is that politicians are mandated to deal with things according to a pro-stability framework. You must have stability, this has been from 2008 and Wen Jiabao, their leadership right up until now, you must have stability. So if you can’t negotiate, you will use force.

World Finance: China has also seen an increase in collective labour disputes in relation to mergers and acquisitions, and company restructuring. It seems during strikes in large western corporation such as the recent Wal-Mart closure in Hunan, most Chinese lay blame on the Western corporations, whilst the West point blame at the Chinese government for workers’ dissatisfaction, so who would you say is ultimately responsible?

Kerry Brown: Well Wal-Mart is of course a real cause célèbre really, because it’s not allowing unions in America or most other countries, I think all other countries, but in China has allowed the union because it’s a big market for Wal-Mart. And so this is, in a sense, China making multinationals change their behaviour globally in order to get access to this vast potential market. The government are kind of really showing who’s in control, making powerful foreign entities behave. But on the other hand you do get foreign multinationals who come in and are trying to introduce new labour methods and are trying to introduce best practice. On the whole, most workers prefer working for foreign corporations than Chinese ones because they think their rights are more protected. It’s terribly damaging, as Nike found out ten years ago when they were accused of having child labour and all sorts of things in China, it can very damaging if your name is dragged through this in China and you’re not doing things according to the rule, and on the whole the general rule is that multinationals will be more observant of rules and regulations, and maybe more receptive to demands than Chinese corporations, because they probably have more to lose.

World Finance: Well how much power does the Chinese actually have, and what happens if it does go wrong? In the West we have social security, but that’s not really in existence in China, so how much have they got to lose?

Kerry Brown: China has built a great economy over the last 25-30 years on exports. That’s changing now of course, since the crisis in 2008 when export markets dried up outside of China, but still a lot of growth comes form exports and that’s going to continue even though it’s more modest. So workers in that sense, who work in export industries, or even work to service the increasing domestic demand, are very important and potentially very powerful. The point is, how do they link up? Now the government union is the point where that would happen, but the government union is controlled politically and it’s a political entity. To have informal links between different workers in different sectors, to grow up like the union movement in Europe or America, this is still a very very big taboo issue, the government leaps on it, doesn’t like it, so in that sense at the moment workers cannot find the links with each other in order to kind of find strength. If they did, they would be very very powerful.

World Finance: So do you think this is perhaps where social media comes in, will this be the liberating factor for Chinese workers perhaps, give them a voice?

Kerry Brown: Sometimes it’s helpful in some protests. Again, probably ironically, on multinationals because they do feel they have to respond to their public image. Image is important for them outside of China for their shareholders and owners. Chinese corporations though, probably are not so receptive. Weixin and Weibo and other forms of the Chinese version of Twitter for instance, they can be powerful, but they are very well policed. If you mention certain keywords you’re not going to be able to spread your message.

World Finance: So how worried do you think the Chinese government should be about potential investor exoduses?

Kerry Brown: They know that the Chinese domestic market is an amazing asset and that foreign companies can’t easily pretend to be globally successful without them having some way of trying to get access to this market. Does China need investment? In a sense its need for foreign capital is not great, but in terms of its needing to meet the demands of its own people, that’s a different thing. So the Chinese government there knows that it cannot continue to have huge numbers of protests which become incredibly expensive to police and create lots of social resentment.

World Finance: If the worker gets more power and wages rise, how will this affect China, a country which grew on the backbone of manufacturing and cheap labour?

Kerry Brown: Most of the action now is about creating a service sector economy in China and also an economy which is more mixed, an economy which is more geared to domestic demand.

[I]f you can’t negotiate, you will use force

World Finance: And how concerned do you think the West should be about these strikes, do you think we’re looking at higher priced goods as a result of them?

Kerry Brown: The era of cheaply made in China is coming to an end. But then the environmental consequences of that were devastating too. So it’s been a little bit of an odd period, the last 20 years of outsourcing a lot of your polluting, cheap production to China. So I think that’s coming to an end, I think it’s still a huge part of what China does but it’s less and less important and I think most people now accept that sustainable development for anyone will mean that you’ll have to have higher consumption prices.

World Finance: Well finally, considering the strikes, how would you feel about setting up a company in China?

Kerry Brown: If you’re producing things in China to satisfy the Chinese market, and you’re able to deal with your competition domestically there, you should be there. I mean, people like GlaxoSmithKline, Apple, these high technology companies will have a future there.

World Finance: Kerry, thank you.

Kerry Brown: Thank you.