Rights and Robots in Chinese Manufacturing

Kyodo reports allegations of continuing labor abuses at four Chinese factories supplying Japanese clothing retailer Uniqlo:

Four goods for the fashion chain were alleged to have abused workers by enforcing overtime work beyond legal limits, using toxic chemicals that harm the workers and pollute the environment and failing to pay for workers’ social insurance and housing fund premiums, according to Sophie Chen, project officer for Students and Scholars Against Corporate Misbehavior (SACOM).

In a report jointly conducted by SACOM and three other labor-related groups and issued in January, the factories were also alleged to have collected fines from workers who failed to meet certain job requirements and ignoring workplace safety.

“In the (Corporate Social Responsibility) report issued by Uniqlo on July 31, the company admitted to some of the issues, made changes such as lowering the shop floor temperature by bettering ventilation and installing troughs to direct the sewage water, (but) the condition of illegal overtime work remained rampant,” Chen, who along with some 20 protesters who stormed the shop’s headquarters in Hong Kong to protest, told the press. [Source]

Major suppliers for toy vendors including Hasbro and Mattel have also come under fire in recent weeks, Fortune’s Claire Groden reports:

China Labor Watch sent undercover investigators to the factories, which altogether employ about 20,000 laborers. “Over the past 20 years, toy brands and retailers have reaped tremendous benefits from the labor and sometimes even the lives of Chinese workers,” China Labor Watch Program Coordinator Kevin Slaten said in a press release, “yet these companies fail to respect and to ensure that workers also enjoy the fruits of the ’s success.”

The report found instances of hiring discrimination, mandatory and excessive overtime work, unpaid work, broken labor contracts, poor safety measures and few paths for laborers to seek recourse. Many of these issues also break Chinese labor law.

Hasbro and Mattel have both responded by launching investigations into the claims made in the report. […] [Source]

At The Wall Street Journal last week, Kathy Chu and Bob Davies asked how foreign companies should best respond to persistent labor issues:

More than 20 years ago, Levi Strauss & Co. partially retrenched from China because of what it called pervasive human-rights violations, in an attempt by the iconic U.S. jeans company to put working conditions before profits.

The decision has been widely cited in debates on human rights and corporate responsibility, with Levi held up as a company that dared to back away from China’s burgeoning economy even as others rushed in. At the time, China represented about 2% of Levi’s global production.

But Levi’s moratorium on investment in China was never absolute – and it lasted only a few years. Its labor rights record in China since then has been mixed, critics contend.

[…] Human rights groups say that conditions didn’t improve significantly in the country during Levi’s five-year partial absence. Some advocates see Levi’s decision to pull back from China as a misguided one.

[…] Companies make more of an impact if they stay and try to improve working conditions than if they leave, [Apo Leung, the former director of Asia Monitor Resource Centre] said, even though Levi’s decision drew attention to China’s human-rights violations. [Source]

Far from meekly awaiting rescue by foreign companies or consumers, Chinese workers have defied intimidation to assert their own rights with increasing vigor. Linda van der Horst discussed the rise of labor organization in China in a recent post at The Diplomat:

Zhang [Jun]’s loosely defined movement — the “Wal-Mart China Staff Association” — is neither huge nor high profile, and it doesn’t have a national political agenda. But the activists involved are no longer just focused on specific workplace grievances. Instead, they are fighting for workers’ rights to organize a real union with teeth: namely, collective bargaining power.

And while this transition is standard in the history of labor movements around the world, the fight of activists like Zhang in China is unique. They are trying to re-code the only union that’s allowed to exist in China, the so-called All-China Federation of Trade Unions (). As a socialist institution, it was a conduit for the Communist Party to its large working class, as opposed to a trade union with collective bargaining power that represents workers’ interests. As a result, the has mostly stood on the sidelines as protests and collective strikes have intensified and increased in frequency.

Prompted by signs that Beijing’s central leadership is urging the 200-million member ACFTU to reform, Zhang and a small cadre of like-minded organizers are applying pressure on the ACFTU from below — demanding democratic elections of the grassroots layers of the ACFTU at their respective Wal-Mart stores, which they claim have been illegally controlled by Wal-Mart’s management since unionization in 2006.

[…] Navigating the murky waters of labor activism in China remains a delicate balancing act for pioneers like Zhang Jun. Earlier this year, ACFTU vice-chairman Li Yufu said in an interview with a political magazine that “hostile foreign forces” are infiltrating the Chinese labor movement, which “are attempting to wreck the solidarity of the working class and trade union unity with the help of some illegal ‘rights’ organizations and activists,” the Financial Times reported. […] [Source]

Van der Horst notes that “growing labor activism could also make it harder for employers to manage costs as China’s economy slows.” The Wall Street Journal’s Chu and Davies describe some of the other demographic and technological pressures on Chinese manufacturing in the Journal’s 2050: Demographic Destiny series:

Over the coming decades, a labor shortage will force Levi and scores of other Western brands to remake their China operations or pack up and leave. The changes will mark a new chapter in the history of globalization, where automation is king, nearness to market is crucial and the lives of workers and consumers around the world are once again scrambled.

The stirrings of change are visible already. In an apparel factory in Zhongshan, a gritty city of three million stuffed with industrial parks across the Pearl River from Hong Kong, lasers are replacing dozens of workers who scrub Levi’s blue jeans with sandpaper to give them the worn look that American consumers find stylish. Automated sewing machines have cut the number of seamstresses needed to stitch arc designs into back pockets. Digital printers make intricate patterns on jeans that workers used to do with a mesh screen.

“Labor is getting more expensive and technology is getting cheaper,” says Andrew Lo, chief executive of Crystal Group, one of Levi’s major suppliers in China.

[…] Wages and benefits have already been rising in double-digit percentages for the past decade as workers can command higher rates. Although wage growth may ease this year because of the economic slowdown, the pressure is bound to increase in coming decades as the number of workers plunges.

[…] Adding to the shortage, many will be drawn back to their hometowns to take care of the growing ranks of Chinese older than 60, whose share of the population is forecast to double by 2050 from 2015, to 36.5%. [Source]

The recent World Robot Conference in Beijing, hosted by the China Association for Science and Technology and the Ministry of Industry and Information Technology, demonstrates Beijing’s determination to harness the long-anticipated wave of automation. The event saw appearances from dancing Transformers, mechanized food preppers, a satellite refueling robot, a team of scout, bomb disposal, and offensive counterterror bots (whose buyers reportedly include the Beijing Municipal Public Security Bureau), and Vice-President Li Yuanchao. From the AFP:

Vehicles with automated gun turrets sat alongside drink-serving karaoke machines at the World Robot Conference, as manufacturers sought new buyers for their “jiqiren” – “machine people” in Chinese.

The push has support at the highest levels of government. President Xi Jinping issued a letter of congratulations for the conference, and the industry is name-checked in the draft version of the country’s new five-year plan, the policy document that guides national economic development.

The world’s second-largest economy is already the leading market for industrial robots, accounting for a quarter of global sales, according to the International Federation of .

[…] But the transition from the world of fantasy and novelty to a real robot economy could be tricky, with the country’s technology still lagging far behind neighbours Korea and Japan, the undisputed king of the robots. [Source]

South China Morning Post’s Wendy Wu examined the challenges ahead:

China plans to boost the development of robotic tools within the next five years as it moves to transform its manufacturing industry with high-end technology and automated production.

But its robot sector “lacks core technology” and was generally stuck at “low-end application in a high-end industry, and under pressure of being marginalised in Western-dominated markets”, Qu told the ongoing World Robot Conference in Beijing on Tuesday.

[…] “Key parts of industrial robots, such as sensors and motors, are still reliant on imports, and not many robot makers are ready for mass production,” said a general manager with a government-backed technology firm in Sanming, Fujian province.

The manager, who spoke on condition of anonymity, blamed local governments and enterprises for their fickle strategies that prevented firms from fully learning how to manufacture industrial robots’ key parts. [Source]