Behind China's Export Boom, Heated Battle Among Factories
Under the corrugated-metal roofs of Ching Hai Electric Works Co., hundreds of workers toil in six plants to meet orders for millions of small appliances. Inside one factory, ex-farmers bend over a clanging conveyer belt where they turn squid-shaped hunks of steel and wiring into electric fans. The fans cost about $4 wholesale and eventually will retail in the U.S. for $15 to $40 through such online stores as Amazon.com.
This is the kind of picture U.S. politicians might conjure up when tapping the hot-button issue of American jobs lost to the flood of Chinese exports. But China's smaller manufacturers themselves face brutal new competition right at home.
China, one of the world's busiest factory floors, increasingly suffers from a production glut, and the big overseas retailers such as Wal-Mart Stores Inc. that soak up China's exports have been quick to capitalize. They're demanding rock-bottom prices and forcing factory bosses to cut costs any way they can in order to remain in contention for export orders. The average wholesale price for Ching Hai's fans, juicers and toasters has tumbled to $4 from $7 a decade ago, according to company executives.
It's the survival of the cheapest. At Ching Hai, manager David Liu has cut his labor force in half, to 1,500 workers, even while maintaining the same level of orders. The company's starting salary of about $32 a month is some 40% less than the local minimum wage. Many workers put in 18-hour days with minimal training and constant pressure to boost output. Despite the cost cutting, Mr. Liu says Ching Hai is just barely profitable, although he declines to provide any figures.
"I had no gray hair before I came," says the 41-year-old Mr. Liu, running a hand over a salt-and-pepper brush cut. "Profits now are too tough."
The relentless cost cutting raises questions about how much pressure retailers should exert in places where unemployment and weak labor laws are problems. Ching Hai, which has a high rate of accidents mostly involving fingers severed by machinery, has been investigated by the local labor bureau for possible violations. The company defends its safety record and says some accident claims may be bogus.
The lure of low production costs has been attracting new plants to China from around Asia for the past decade. In recent years, easy credit and expanding know-how in China have caused the number of local manufacturing operations to mushroom. The trade liberalization undertaken since China's entry into the World Trade Organization two years ago drew another raft of foreign manufacturers. Shajing alone, a city of 600,000, boasts about 1,200 factories.
Buyers are moving aggressively to play one factory against another. "As things get more competitive, the pressure that comes along with that, yeah, we try to take advantage of it," says Gary Meyers, a vice president in global procurement at Wal-Mart.
Wal-Mart expects to buy $15 billion of goods in China this year, after purchasing about $12 billion last year, or about 8% of all the goods it bought in 2002. Overseas retailers bought a total of $30 billion in goods from China in 2001, according to the most recent government estimates.
The son of two textile workers in Taiwan, Mr. Liu was the first in his family to break into the ranks of management after he joined Ching Hai's Taiwan headquarters. Then, a decade ago, Chairman Ji Maosong, 64, saw that the company, which paid Taiwanese workers $15 a day to assemble fans, wouldn't survive much longer in competition with labor costs as low as $1 a day in China. He shifted much of his manufacturing to China and asked Mr. Liu to serve as general manager for a no-frills electric-fan factory the company built for $10 million in Shajing, outside the southeastern city of Shenzhen.
At first, Ching Hai was successful, enjoying a 20% profit margin on exported fans made under contract for other companies' brands and still beating the competition. By 1996, Ching Hai's production had climbed to five million units a year and it was selling its own brands -- Cozy Air and Weatherworks -- to the U.S. and elsewhere.
By then, too, scores of factories, mostly from Taiwan, Hong Kong and South Korea, had rushed in to take advantage of China's cheap labor. Shajing's fields of rice and litchi trees gave way to white-tiled factories and a haze that hung over them. Migrant workers from other provinces, employed at Shajing's many factories, would come to outnumber town residents 10-to-1.
Multinationals were buying from China in bulk. Mr. Liu remembers an encounter in 1996 with buyers representing Wal-Mart. The American giant wanted to place a huge order of electric fans. While impressed by the size of the order, Mr. Liu recalls being distressed by the low price being demanded. He turned the order down. Wal-Mart says there is a reference to Ching Hai in its database but no record of purchases. Mr. Meyers says Ching Hai "doesn't ring a bell."
Other encounters with big-name retailers rang alarm bells at Ching Hai. They saw Chinese competitors accepting astonishingly low bids.
Mr. Liu scrambled to cut costs. When purchasing agents would arrive with a competing product, Mr. Liu would hunch over it, puzzling how to make a motor smaller or reduce the thickness of metal used. But small savings on materials couldn't offset the slide in product prices, and Ching Hai's earnings continued to shrink. Average profit margins have narrowed to 5% currently from 20% a decade ago.
The market, Mr. Liu acknowledged, had delivered an ultimatum: "We had to reduce our production costs and improve efficiency."
Ching Hai employees say they are sometimes asked to work as long as 18 hours. Though the city's minimum wage is about $56 a month, Ching Hai starts new recruits at that low $32 level and promises subsidies for food and lodging to make up the difference.
The competition is making it harder to improve conditions for Chinese factory workers. As abuses come to light, many multinationals are enforcing codes of conduct for suppliers. Among Wal-Mart's "Standards for Suppliers" are demands that factories comply with local laws for wages and work hours. Wal-Mart also forbids forced labor and child labor, and promotes proper training, safety and clean restrooms.
But many low-cost factories in China ignore such codes, and many government officials enforce them haphazardly. Chinese labor experts say officials worry that enforcing standards would increase costs, deter investment and undermine local economic development.
Some Chinese workers share these fears. "If our standards improve, the investors stop coming," says Hu Wei, a technician at the Shangliao Chunyuan Steel Mold & Hardware Factory, a kitchen-product manufacturer down the street from Ching Hai.
Ching Hai itself has refused to do business with foreign buyers that present codes of conduct. Mr. Liu doesn't explain why, other than to say that the codes are "inconvenient." Besides, the problem isn't finding buyers, but being able to meet demands for low prices and still make a profit.
Though Ching Hai declines to disclose current customers, the company's products show up on the Web sites of large online retailers. Amazon advertises Ching Hai fans made under the Chinese company's Weatherworks brand, and says they are being sold on its site by another company.
Efendos.com, a Fort Lauderdale-based internet retailer specializing in discount goods, also is a big vendor. Efendos sells Ching Hai's Weatherworks blenders and desk fans. An Efendos spokesman says the company's huge volume precludes checking out labor practices for each individual supplier. "We carry 20,000 products on our Web site," he says.
On a recent day, farmers and other would-be workers gathered outside Ching Hai's gates. An already large pool of factory labor is getting bigger, because the government is trying to reduce rural unemployment by encouraging farmers to seek work in the cities. Often the only requirements for an unskilled factory job are a tolerance for long hours and low pay.
Just off the overnight bus from central Hubei province, 11 new Ching Hai employees squatted in a strip of shade. They said they felt fortunate to have landed work right away, but none were satisfied with the pay Ching Hai was offering on a notice outside the factory gate: $1.10 a day.
"It's low," says 19-year old Gong Bo, dressed in a stained blue suit jacket and a silver turtleneck. "It's lower than low."
For two weeks, for 14 hours a day, the 11 men pieced together motors for electric fans. A line foreman tried to charge for cups of water. Another time, one of the 11 said he heard screams and turned to see a machine shredding the pant leg of a female colleague. After only two weeks, the 11 men from Hubei quit Ching Hai. Ching Hai refused to pay the 11 for such a short period of employment, and they didn't press for their money.
Mr. Liu says he doesn't recall the Hubei group. But walking up to Ching Hai's second-story showroom, he insists that the company doesn't withhold wages, unless a worker stays for only a day or two -- and then not paying them covers the costs of training. Mr. Liu maintains that Ching Hai also meets international manufacturing safety standards. Amid intense price pressure, Ching Hai has even increased wages by about 5% in the past two years, he says.
Such increases aren't easy. Any rise in wages means costs must be reduced elsewhere, since prices for Ching Hai's products have been declining. "Raising worker wages is the greatest pressure we face," Mr. Liu says, but he must maintain a delicate balance between containing costs and holding on to enough workers to fill orders.
"If we were cheaper than anyone else, we wouldn't be able to keep any workers," he says. "They can walk out of the gates anytime."
Improving safety is another source of pressure. A local official who tracks industrial accidents estimates that about 10 Ching Hai workers a month apply for personal-injury compensation -- among the highest in the area.
Mr. Ji, the Ching Hai chairman, defends the company's safety record. Showing an assembly line where workers are putting together fans, he says, "That line isn't moving so fast, is it?" The newly hired farmers often are unfamiliar with the equipment. To improve safety, Ching Hai has threatened to dock the pay of line supervisors where accidents occur. Mr. Ji suspects some accidents stem from fraud. He alleges that several workers have severed fingers intentionally to claim amounts they couldn't earn otherwise.
"It's a scam," Mr. Ji snaps. "Those workers wanted to get rich."
Two years ago, Ching Hai came under government scrutiny when a local newspaper, the Shenzhen Sunshine Daily, published a picture with eight workers holding up hands that were missing fingers. The picture caught the attention of labor authorities, who visited the factory and urged Ching Hai to make several changes, such as installing safety guards on machinery, according to an official involved in the inspection.
Today, local labor officials say they have bigger problems than Ching Hai. Although labor laws have become tougher in recent years, government investigators are stretched thin policing an explosion of smaller manufacturers. Many new factories operate without business licenses and don't provide insurance to workers, as Ching Hai does.
"Everybody is here trying to make money," Mr. Liu says in the shadows of his showroom, where the lights are shut off at lunchtime to save money. "I just never thought it would be so hard."
中国庞大出口的背后
在Ching Hai ElectricWorks Co.的金属瓦楞板屋檐下，六个车间里数百名工人为完成几百万台小家电的订单辛苦地工作著。在其中一个车间里，农民出身的工人们弯腰朝向叮当作响的传送带，将鱿鱼形状的大块钢材和配线制造成电扇。这些电扇批发价约4美元，最终在美国会通过像亚马逊(Amazon.com)这样的网上商店，以15到40美元的价格零售。
这样的场景，大概是美国政客在谈及中国大量出口产品抢了美国人饭碗的热门话题时会联想到的。然而，这些小型工厂在中国国内也面临著新的残酷竞争。
中国作为全球最繁忙的生产基地之一，正日益受到产量过剩的冲击，而沃尔玛(Wal-Mart Stores Inc.)等大量吸收中国出口产品的海外大型零售商正通过这种采购途径获得丰厚利润。这些零售商要求将价格降到最低点，迫使工厂老板尽一切可能降低成本，才有机会争夺出口订单。据Ching Hai高层人士称，该公司的电扇、榨汁机和烤面包机平均批发价已从十年前的7美元下降到了4美元。
只有价格最低廉者才能生存下来。在Ching Hai，经理大卫.刘(David Liu)将工人数量减半至1,500人，满足的订单水平却维持不变。公司月薪起薪为32美元左右，比当地最低工资水平约低40%。许多工人一天工作18个小时，受到的培训极少，而时常处于增加产量的压力之下。刘先生说，尽管削减了成本，但公司几乎没有利润，但他拒绝披露任何数字。
今年41岁的刘先生一只手捋过白发斑斑的平头，说：“我在到这里工作之前没有白头发。要盈利太艰难了。”
无情的成本削减提出了这样的问题，即在存在失业和劳动法意识薄弱的地方，零售商要向制造商施加多少压力。Ching Hai是机器轧伤手指等工伤事故的高发地，因可能违反劳动法而正在接受当地劳动局的调查。该公司为自己的安全记录辩护说，有些索赔事故可能是欺诈。
在过去十年里，中国低廉的生产成本一直吸引著亚洲各地的制造商到中国开设新工厂。最近几年，中国宽松的信贷政策和日趋丰富的生产经验使得地方制造企业如雨后春笋般涌出。两年前自中国加入世界贸易组织(World Trade Organization)后，贸易自由化又吸引了一大批外国制造商。仅沙井一个60万人口的城市，就汇集了1,200家工厂。
购买方也越来越挑剔地在厂家之间进行选择。沃尔玛全球采购副总裁Gary Meyers说：“随著竞争的加剧，压力越来越大，我们争取从中受益。”
沃尔玛预计今年在中国采购150亿美元的产品，去年是120亿美元，占2002年所有采购产品中的8%。据政府最新估计，海外零售商2001年总共从中国购买了300亿美元的产品。
刘先生来自台湾一个纺织工人家庭，在加入Ching Hai在台湾的总部后，成为家里第一个跻身管理层的成员。十年后，该公司64岁的董事长Ji Maosong发现，该公司每天要支付电扇组装工人15美元，与大陆工人的每天1美元相比缺乏竞争力，难以长久维系。他将大多数工厂转移到了大陆，在深圳西南沙井地区投资1,000万美元建造了电扇厂，请刘先生担任总经理。
最初，Ching Hai获得了成功，按合约为其他品牌制造的出口电扇利润达20%，并仍能在竞争中处于优势地位。到1996年，Ching Hai产量升至每年500万台，并向美国和其他国家地区打入了自己的品牌──Cozy Air和Weatherworks。
但那时候，大多来自台湾、香港和韩国的许多工厂也都涌入中国大陆，争取从廉价的劳动力中获益。沙井的水稻田和荔枝树让位于白瓷砖工厂和笼罩在工厂上方的白色烟雾。从其他省市迁到沙井工厂的工人数量超过了当地居民人数的十分之一。
那时，跨国公司在大量从中国采购。刘先生记得1996年与沃尔玛采购代表的一次交锋。这家美国零售巨头希望定购数量巨大的电扇。尽管订单规模具吸引力，但当时相当低的价格令刘先生难以接受。他拒绝了沃尔玛的订货。沃尔玛称，数据库中装有Ching Hai的参考报价，但没有采购记录。Meyers表示，Ching Hai没有警醒过来。
其他与大牌零售商的谈判给Ching Hai敲响了警钟。该公司发现，国内的竞争对手接受了低得让人吃惊的报价。
刘先生赶忙致力于削减成本。当采购人拿来竞争产品，刘先生都要将其压弯，为制造出更小的电动机或减少使用的金属材料伤一番脑筋。但是，材料上的少量节省无法抵消产品价格的滑坡，Ching Hai的利润继续缩小，平均利润率从十年前的20%下降到目前的5%。
刘先生承认市场已发出最后通谍：“我们不得不降低成本，提高效率。”
Ching Hai员工表示，他们有时被要求工作长达18个小时。尽管沙井市的最低月薪大约是56美元，但Ching Hai新招募的工人月薪低至32美元。为弥补收入的差距，还承诺提供餐费和住宿补贴。
竞争使中国工厂工人状况更加难以改善。随著工人恶劣待遇的曝光，许多跨国公司强制供应商遵守行为准则。在沃尔玛的“供应商行为规范”中，要求工厂遵守当地的工资和工时法律规定。沃尔玛还禁止强迫劳动和雇佣童工，并倡导提供适当的培训，安全的工作环境和清洁的休息场所。
但是，中国许多低成本的工厂无视这些准则，且很多政府官员采取放任自流的态度。中国劳动政策专家表示，官员们担心强制采取规范操作会增加成本，阻碍投资，进而影响地方经济发展。
一些中国工人对此同样感到担 。与Ching Hai一街之隔的厨房用品制造厂Shangliao Chunyuan Steel Mold & Hardware Factory技师胡伟(Hu Wei，音译)称：“如果我们的生产条件改善了，投资人就不来了。”
Ching Hai拒绝与提出行为准则的外国采购商合作。刘先生未作出解释，只是说那些准则造成了“不便”。况且，问题不在于找到买家，而是能在满足低价格的情况下赢利。
尽管Ching Hai拒绝披露当前的客户，但公司产品出现在一些大型网上零售店中。亚马逊网站上展示了Ching Hai制造的Weatherworks品牌电扇，并称这种电扇还在另一家公司出售。
位于劳德代尔堡的互联网零售商Efendos.com也是一家专门打折出售商品的大公司。该公司出售Ching Hai的Weatherworks搅拌机和台式电扇。Efendors发言人表示，网站出售2万种商品，巨大数量的采购使其不可能对每家供应商的生产规范进行检查。
最近一天，一些农民和其他未来的工人聚集在Ching Hai大门外。由于政府鼓励农民到城市找工作，试图籍此缓解农村的失业状况，本已巨大的工人队伍正在扩充，通常对非技术性工种来说，唯一的要求就是能忍受长工时，低工资。
11名刚下夜间长途车的Ching Hai新工人来自湖北中部，正蹲在阴凉下休息。他们为能立即找到工作感到庆幸，但都对Ching Hai提供的待遇不满意。该工厂门外的招工启事上写著：日薪1.10美元。
19岁的宫波(Gong Bo，音译)身穿褪色的蓝夹克和白色套头衫。他说：“工资太低了，低得不能再低。”
两周以来，这11人每天工作14个小时，拼装著电扇上的电动机。他们喝的几杯水，生产线领班也试图收费。另一次，这11人中一人说听到尖叫声，寻声看去，是机器轧到了一名女工的裤腿上。仅两周后，这11人就辞去了Ching Hai的工作。工厂拒绝对仅工作这么短时间的工人支付工资，他们也没有去争取。
刘先生表示，他不记得有这样一群湖北人。但在走向公司陈列室时，他坚持表示公司没有扣压工资，除非工人只干了一两天，工资不足以弥补培训费用。刘先生声称，Ching Hai达到了国际生产安全标准。在巨大的价格压力之下，公司过去两年甚至还将工资上调了约5%。
涨工资并不容易。由于Ching Hai产品价格在下降，任何的工资上调都意味著这部份成本必须从其他地方压缩出来。刘先生说：“给工人涨工资是我们面临的最大压力。”但是，他必须协调控制成本与维持数量足够完成订单工人之间的微妙平衡。
他说：“如果我们支付的工资比其他厂家低，我们就无法留住工人。他们随时可以离开。”
改进生产安全状况是该公司面临的又一个压力。当地追踪工伤事故的一名官员估计，每月约有10名工人申请工伤补偿，是事故高发的工厂之一。
Ching Hai董事长Ji先生为公司的安全记录进行辩护。他在展示电扇装配线上的工人工作时说：“装配线运行速度并不快，不是吗？”新雇佣来的农民往往对设备不熟悉。为了促进安全，Ching Hai警告生产线主管说，如果发生事故就要扣他们的工资。Ji怀疑有些事故是欺诈行为。他宣称，有些工人是故意轧伤手指，以索取用其他途径无法取得的金额。
Ji断言：“这是欺诈。这些工人希望拿到更多钱。”
两年前，Ching Hai因当地一份报纸的曝光而受到政府审查。Shenzhen Sunshine Daily刊登了一张照片，照片上的八名工人举起了手指残缺的手。该照片引起了有关当局的注意。据参与调查的一名官员称，官员们参观了工厂并敦促Ching Hai进行几项调整，如在机械上安装安全防护装置。
如今，地方劳动部门官员表示问题比Ching Hai的更为严重。尽管最近几年劳动法的执行已更为严格，但面对大量需要治理的小型制造厂，政府调查人员人手有限。许多新工厂没有营业执照，且像Ching Hai一样不给工人上保险。
为了节省成本，陈列室的灯在午餐时间关闭了。刘先生站在阴暗处说：“这里的每个人都是为了挣钱。我从来没想到挣钱会这么难。”
