Financial Times: Chinese factories act to keep staff in saddle in Year of the Horse

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher

February 3 2014

By Demetri Sevastopulo in Hong Kong

As China prepared to usher in the Year of the Horse, Crystal Group, a garment manufacturer that produces clothes for retailers such as Abercrombie & Fitch and Mothercare, added a new task to its holiday “to do” list.

Dennis Wong, executive director at Crystal, says it bought 9,000 return train tickets for migrant workers in Dongguan who wanted to return home for the Lunar New Year – the biggest holiday in the Chinese calendar – and also helped them buy snacks for the often long trip from Guangdong Province to their towns and villages.

While workers receive a free trip, more importantly, they no longer have to queue – or go online as is increasingly common – to buy tickets. Crystal also gains as workers are less likely to leave Guangdong earlier to secure a train or bus seat for the biggest annual migration on earth.

“The whole programme is to attract them to stay as long as they can,” says Mr Wong, explaining that the company also boosts the amount it pays in efficiency bonuses by up to 8 per cent from November until the new year period.

Many factories across the Pearl River Delta, the manufacturing workshop of the world in Guangdong, are trying to find ways to keep workers. This has become more important as demographic changes – particularly the one-child policy and a government push to create jobs inland – have made staffing harder.

Melissa Tsui at Eagle, an electronics manufacturer in Dongguan, says workers get a bonus of Rmb100-Rmb1,000 for returning on time after new year. She says this has helped keep retention rates high – about 80 to 90 per cent – in contrast to some factories that can lose more than 30 per cent of their workforce over the holiday.

In another part of Dongguan, TAL, an apparel company that supplies Brooks Brothers and other retailers, tried to retain staff with a lucky draw. Any worker who stayed between November 15 and January 24 was eligible to win one of eight prizes of Rmb8,888 ($1,500), an auspicious number in Chinese as it suggests financial success.

Crystal will also hold a draw for Rmb9,999 – another lucky number that signals longevity – in February to entice more workers to return. Mr Wong says that over the past five years, 98 per cent of workers have returned on the first day after the holiday. But he stresses that such measures are part of a year-long push.

“It is really like a package. More important is how you treat the workers during the year and not just Chinese new year,” says Mr Wong, adding that the company has introduced initiatives to “make them feel like it [Dongguan] is their second home”, including organising big parties and day-trips to other parts of Guangdong.

January 2014: As China prepares to ring in the Year of the Horse, celebrations are expected to be more frugal than previous years as a high-profile austerity and anti-graft campaign gains momentum.

That echoes with Alan Cuddihy, head of sustainability at PCH. Thus the supply chain company in Shenzhen that works with clients such as Apple , has built a library with free WiFi, organises outings such as beach barbecues and issued discount cards at local businesses.

It has also set up a worker hotline. Mr Cuddihy says these efforts have helped cut average monthly turnover from 31 per cent in 2012 to less than 10 per cent today.

“Workers from different cities around China inevitably feel homesick, lonely and often change jobs when they don’t get to know anyone in the immediate area,” says Mr Cuddihy. “They are looking for more social work environments and communities . . . this is one of the main reasons for frequent job changes.”

But the world’s factories cannot simply rely on outings, returning bonuses and lucky draws. What workers really want is better pay and benefits, says Geoff Crothall of China Labour Bulletin. While wages in Guangdong have posted double-digit rises in recent years, the minimum wage in Shenzhen – the highest in China – is still only about $300.

Gerhard Flatz, general manager at KTC, which makes skiwear in Guangdong, adds that measures such as returning bonuses are not sustainable solutions for retention issues.

“These kinds of tools are very similar to painkillers,” says Mr Flatz. “In the short term, they may help to repress the urgent symptoms to a certain degree, but . . . alone are likely to fail in solving or even addressing the actual root problem.”

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