Reek of hypocrisy at the top

Stephen Vines
05 June 2010

Some of America’s biggest companies are shocked and have declared that they are launching investigations into working conditions at Foxconn, the controversial Shenzhen-based factory which turns out parts for the likes of Apple, Dell, HP and Nintendo. Their shock and concern over suicides at the plant is, let’s be blunt, greatly overshadowed by the stench of hypocrisy engulfing their response.

What did they not understand when negotiating supply contracts with Foxconn’s parent company Hon Hai, which promised rock-bottom prices and a disciplined labour force ensuring uninterrupted supplies? Did they imagine this was somehow compatible with a company paying its workers top dollar and tolerating the freedoms of collective organisation which are given to American workers?

Of course not. They knew full well that they were moving production to China where labour is cheap and there is a government that deprives the workers of elementary employment rights. Indeed anyone who has attended any of the thousands of briefings on foreign investment in China will recall the smug faces of the well-heeled briefers as they outline the advantages of the People’s Republic’s labour conditions and regale their listeners with tales of how they no longer have to contend with the kind of employment practices which have made the West go “soft”.

And the beauty of the system is that the direct exploiters of all this cheap labour operate at arm’s length. The companies who buy parts from China, or even fully assembled products, rarely own the factories so, at least in theory, they are not the employers responsible for harsh discipline and low wages in the places where their goods are made; that’s someone else’s responsibility.

And who can blame companies for trying to maximise profits and minimise costs – this is the mantra of the capitalist production system. We can chuckle over the fact that the successful implementation of this mantra takes place in a so-called communist nation, where state leaders stand to attention as they belt out the national anthem which starts with the words: “Arise, you who refuse to be slaves”. But there is nothing amusing about suicides at Foxconn, or the battle between workers and their state-appointed union bosses at Honda whose main aim is to keep the production lines running. And there’s nothing funny about the jailing of independent workers’ rights activists who dare challenge the harsh conditions in China’s factories.

And just in case American consumers, or indeed consumers in Hong Kong, have been overcome with a sense of self-righteous indignation over all this, let’s remember that the main form of consumer pressure is for low prices and high quality. This combination is hard to find in countries which allow workers the freedom to organise and pay decent wages to their staff. So the production line has moved relentlessly away from these places to countries like China, where the cost of labour can be controlled, and to even lower-cost destinations like Bangladesh where there is a less-sophisticated manufacturing system but, my oh my, they sure are cheap.

In among this web of hypocrisy is the emergence of a new form of sophistry which explains away what is happening in Chinese factories, pointing out, for example, that suicide rates at Foxconn can be seen as being below the national average. Then there is the old canard about workers in these factories being better off than they would be back in the rural areas, and so it goes on because everything can be explained in a way that makes it sound less bad.

Actually, these sophisticates have a point but their point deliberately distorts the bigger picture, which is that workers are human beings who, like the products they make, are developing. Chinese workers are better educated than they were even a decade ago. They have expectations which were unthinkable among the generation that first populated the foreign-financed developments in China. And their rising wages are outstripped by rising levels of inflation, especially in the areas where industrial production is concentrated. In other words, they have to work harder to retain the real level of earnings.

It really is not good enough to confine the argument over relativities to how much wages have improved compared with the past while resolutely turning a blind eye to the rigid discipline of these factories and the complicity of the Chinese state in keeping its workers under these conditions.

Like the rich. the poor always want more. But, unlike the rich, they are less likely to get it. China today has levels of inequality which exceed that found in some of the most aggressive capitalist societies on earth; the backlash coming from those at the bottom of the pile is of a kind Karl Marx predicted; his writings are freely available in China.

Stephen Vines is a Hong Kong-based journalist and entrepreneur

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