Wall Street Journal: China’s Workers Are Fighting Back as Economic Dream Fades

15 December 2015

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


Dec. 14, 2015

SHENZHEN, China— Li Jiang’s journey from village rice fields to a concrete dorm room of snoring men has played out millions of times as migrant workers have reached for a piece of the China dream.

That dream evaporated in October for Mr. Li. After a decade in this coastal city, he returned to Fuchang Electronic Technology Co. from a weeklong holiday to find the maker of cellphone bodies and set-top boxes had stopped production, leaving him and five family members jobless. In notices on the factory gate, Fuchang blamed a credit squeeze and its own bad management.

With no word on severance, Mr. Li and some 1,000 of Fuchang’s workers took to the streets. The next day, 3,000 protested, workers and labor activists say, fueled by worker anger and social media. “I kept calling people to join,” says 30-year-old Mr. Li. “The more the better to build our strength.”

The Fuchang protest was part of a new wave of labor strife hitting China, one that is larger and angrier than previous rounds, labor experts say.

The Hong Kong-based civic group China Labour Bulletin says strikes and labor protests nationwide nearly doubled in the first 11 months of 2015 to 2,354 from 1,207 in the same 2014 period. China’s labor ministry says 1.56 million labor-dispute cases were accepted for arbitration and mediation in 2014, up from 1.5 million in 2013.

Behind the strife is an economy decelerating faster than the government expected, sparking layoffs and factory closings.Economists say China has struggled to reach its 2015 growth target of about 7%, its slowest pace in 25 years, and most project slower growth next year.

China doesn’t release statistics on factory closings. The number of factories owned by Hong Kong companies in southern Guangdong province, where Shenzhen is located, fell by a third to 32,000 in 2013 from a 2006 peak, according to an analysis by Justina Yung of Hong Kong Polytechnic University for the Federation of Hong Kong Industries, a trade group.

For workers like Mr. Li, such closings represent a failed promise, the fraying of a social compact in China under which migrants accepted grueling shift work and spartan living conditions far from home in exchange for prospects of a better future.

“Migrant workers have really helped build China, but our rights aren’t protected,” says Mr. Li. “We’re discriminated against, and wealth in society is not fairly distributed.”

Fuchang eventually offered Mr. Li and his fellow workers a partial settlement, and the protests subsided. But the bitterness isn’t dissipating. Some workers have taken Fuchang to arbitration tribunals. Though Mr. Li and one relative eventually found jobs in the city at comparable pay, they say working hours and conditions are worse. His wife, brother, sister-in-law and cousin remain unemployed.

Liu Zehua, a lawyer representing Fuchang and its majority owner, Chen Jinse, says Mr. Chen “is very honest and diligent…But he has limited management abilities. Fuchang’s management wasted money leading to the company’s eventual decline.”

Desperate workers

Early in China’s slowdown, its economy was able to absorb many laborers like Mr. Li and his family. But as the downturn lingers, layoffs are becoming more common and desperate workers are finding few new opportunities—a trend officials and labor experts say is gathering momentum.

Factory employment in China has fallen for 25 months, according to a business-sentiment index released by Caixin, a Chinese magazine. China’s labor ministry says it expects employment to remain stable near term but says the impact of China’s slowdown and restructuring can’t be ignored. China’s Ministry of Public Security didn’t respond to inquiries.

Chinese researchers and business executives say chances are rising that the Communist government may face the kind of social unrest that it has long feared. Chinese authorities recently detained and interrogated over a dozen labor activists, mainly in Guangdong.

“They definitely see protests as threatening social security, and are concerned,” says Anita Chan, a visiting fellow with the Political and Social Change Department of Australian National University.

In another recent case, up the Pearl River Delta from Fuchang, an October strike by some 270 workers at circuit-board maker Accurate Electronic Co. over back pay descended into fights between workers and police, including 40 antiterrorism officers holding shields, say workers and labor activists.

Worker Yang Changsheng says he was videotaping the protest when police started beating his colleagues and he urged them to stop. Officers grabbed and punched him, he says, detaining him and other workers for 15 hours.

Accurate Electronic officials declined to comment, as did police and officials in Dongguan, where the company is based. An official at the Dongguan branch of the government-controlled All China Federation of Trade Unions says the Accurate case was largely settled.

Elsewhere, workers are lashing back by detaining company officials. Executives are being seized after layoff announcements in greater numbers than before, says M. Sean Molloy, Shanghai-based managing director of Control Risks, a London crisis-management consultancy.

One European executive says workers held him after his industrial company, a foreign concern’s Chinese arm, announced a restructuring in February in Tianjin. The workers blocked the factory gate with a forklift and videotaped everything he said, hoping to exhaust him. Police freed him at 3 a.m. after 15 hours, he says.

“We need to help workers find jobs, otherwise they’ll be forced to act illegally,” says Zou Suojun, a former director of a Dongguan-based electronic-parts unit of Hong Kong’s Plainvim International Ltd. Mr. Zou says workers at the Dongguan factory held him seven days in late 2013, beating him and banging a drum to deprive him of sleep.

“If the economy keeps going this way,” he says, “we’ll have serious social unrest in a couple of years.” Plainvim officials declined to comment. A Plainvim employee confirms the details of Mr. Zou’s detention, saying it was understandable: “They were very emotional.”

Migrants like Mr. Li provided the sweat behind the China miracle, leaving farms in the hundreds of millions to build highways and housing and to assemble everything from shoes to iPhones. For many, the bright economic promise was worth even leaving children far away.

Mr. Li’s journey

Mr. Li and his wife, Guo Ping, 26, who was working at another Shenzhen factory when they met, live in an eighth-floor walk-up apartment off a noisy highway. Newspaper covers the windows. Their 3-year-old daughter lives in their Hubei-province hometown 700 miles north with her grandparents because they can’t afford a nanny or school fees in Shenzhen—one of 61 million offspring growing up in China without one or both parents, or 22% of the country’s children, estimates the government’s All-China Women’s Federation.

They phone her every few days “so she doesn’t forget us,” he says, but see her only once a year. “When I see parents in Shenzhen able to live with their children,” he says, “I feel sad and helpless.”

After the layoffs, Mr. Li and his wife stayed in Shenzhen to seek jobs while his brother Li Li, 32, with his sister-in-law and cousin returned to Hubei to see their children.

Yaoxing village, where the Li brothers grew up, is typical of rural China, given over to the old and young with few working-age residents. Their leaky earthen house without heat or running water is among a few dozen mostly empty dwellings in a landscape of rice fields and scrawny chickens.

Li Li talks of his options as he plays with his son Li Zihang, 6, and Li Jiang’s daughter, pigtailed Li Zixin. He feels he has outgrown his hometown but is unsure about job prospects in other cities. He’ll likely return to Shenzhen, he says.

But opportunities in industrial cities may be worsening. Zeng Xiangquan, director of the China Institute for Employment Research at Renmin University and a former Communist Party adviser, told a November forum that China faces a new wave of layoffs as companies restructure, according to the government’s Xinhua News Agency. Mr. Zeng declines to comment.

Factory closings create domino effects. Fuchang’s collapse forced supplier Jun Yi Co., which polishes cellphones, to lay off half its 16-employee staff because of money Fuchang owes it, says Jun Yi owner Chen Jun.

“It’s incredibly stressful. Creditors call at all hours,” says Mr. Chen, no relation to Fuchang’s Mr. Chen, hanging up a creditor’s call. His wife worries he might commit suicide, he says tearfully. “It’s like a waterfall. Fuchang tumbles, then we fall.”

Mr. Liu, Fuchang’s lawyer, declines to give details on its debts.

Increasingly heated are labor disputes involving older, less-educated workers with limited job options, says Mr. Molloy, the crisis-management consultant. He advises clients—Western companies and a few Chinese multinationals—to lock factories, evacuate executives and ensure production can continue elsewhere before delivering bad news to workers.

“They’re increasingly desperate,” he says of older workers. “They’re not going to get another job.”

Labor backlash is meeting tough official responses. In the manufacturing hub of Guangdong province, strikes and worker protests over the past year have drawn more police and faster detentions, says Geoffrey Crothall, China Labour Bulletin’s communications director.

“Authorities now feel they have to up the ante as well,” he says. “In many cases, the cops outnumber the workers.” Workers estimate 200 police were involved in the Fuchang demonstrations. Shenzhen police declined to comment.

Mr. Li never expected to be at the center of a protest. By age 6, he was adept at the backbreaking rice-planting in the family’s small plots. Like most village youth, he left after high school, following a brother and a cousin to Shenzhen.

He worked at shoe and electronics factories, initially living in a 12-bed dorm room with migrants who snored and ground their teeth. He joined Fuchang at the suggestion of his brother and cousin, who said it offered more overtime and better labor practices. He worked with molten plastic, which he says was bad for his health but worth it for a steady income.

His older brother, Li Li, says he had seen problems in the company’s storage department: Inventory was piling up, and suppliers seemed to have trouble getting paid. Still, Fuchang’s closure was a jolt.

Mr. Chen, the majority owner, in an October open letter to former workers and suppliers, expressed regret for being an overly cautious manager, which he said contributed to problems. “I can’t hide my shame,” he wrote, “at the company reaching this state.”

Mr. Li called and messaged colleagues, helping to build the protesters’ ranks. As they thronged outside the factory, he advised co-workers to keep moving to reduce the chance of arrest, something he had learned from online videos of other strikes.

“It’s about the only way we can get attention, short of jumping off a building,” says Zhang Zhiru, a labor activist who helped advise Fuchang workers. “When thousands of workers are outside their offices, the government is forced to notice.”

After initially saying it couldn’t pay workers, Fuchang offered severance based on three years’ work: about three months’ salary. The settlement enticed younger workers who were more employable, and it got workers off the streets. But it left older, more experienced workers isolated and having to negotiate on their own, say ex-workers and labor activists like Mr. Zhang.

Mr. Liu, Fuchang’s lawyer, says the company didn’t employ divide-and-conquer tactics and that the initial offer aimed to give workers some money promptly to cover immediate expenses: “No one has said there won’t be more compensation later.”

Mr. Li eventually found a job molding liquid plastic at another company. The work is more grinding than at Fuchang, he says, and he isn’t sure how long he will last. His wife and three other family members remain unemployed, so they need the money.

“We didn’t want to hit the streets. If they give us good benefits, we wouldn’t need to do this,” he says. “I’m doing this for our daughter. I hope she never has to work in a factory.”

—Pei Li contributed to this article.

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