The Chief Asia Inspector Blog

Child Labor : still a long way to go ...

Given the business I am in with AsiaInspection, I can only react to the news of Beijing Olympic Games merchandises being manufactured by Chinese rogue factories employing children...
There is a highly symbolic value to this news, which brings together 2 of the most popular topics, one positive and one negative, when it comes to China. Moreover, the story comes to light, quite ironically, when yesterday was the official World Day against Child Labor.

This is obviously a highly-debated subject, but I still find it interesting that Olympics officials can tell reporters about the factories involved: "They have told us they did not employ child labor at all"... Told us ??

In my opinion, the least they should have done,  when they knew the whole world was watching every of their steps, and when they are supposed to convey positive ethical values through the Olympic spirit, was to order / impose a proper Social Audit program on all suppliers & factories involved...

Yet another Chinese export...

I am not the first one to blog about the Chinese "Gold Farms" (these companies where Chinese video gamers collect virtual money, mainly from World of Warcraft game, then resell it to western gamers); however I read this new article on the subject and had a chance to check again the must-see related video again (more than 500,000 views on YouTube !)...
I like the Interview of the Video maker, who states that "if more social and economic activities happen in an accessible 3D game world, people who don’t have access to other culture capital but gaming knowledge will be more likely to be included in global interaction." In other words, these Gold farms are a smart way for Chinese people who don't speak English or have no particular education, to still benefit from the globalization ...
The natural sense of business that the Chinese have, almost in their DNA, just amazes me !

Direct from the Factory - episode 3

Another episode of our Inspections videos series, gathered around China. This time we are in a Glass Factory, located in northern China (Shangxi province), where, as you can imagine, there have been some arguments about working safety conditions...

Secrets, lies and sweatshops...

Read this interesting article on Business Week about how American companies handle their corporate responsibility when dealing with suppliers in China.
If the article tends to say, quite rightly, that Social Audits are more about image than actual improvements on site, I can not help but argue, from AsiaInspection experience, that it still contributes to educate and send a strong message to the factories.

Does work/life balance mean "eat at your desk"?

White collar workers finding themselves chained to the office, squashed in the elevators, stressed to the max? It looks like China is finding out what a free market economy looks like from the office parquet, as well as the factory concrete floor.
But it’s not so bad! Apparently some companies have office libraries and/or like to “create a humane environment in the office so that staff members can complete the office work while doing some personal activities at the same time”, such as “eating, doing exercises, resting, playing games or even dating”. (Ah, but would you trust the figures if your accountant had worked them out at the same time as eyeing up certain other figures online?)
Some workers are apparently at their desks during the evening because they have little excitement to go home to rather than because they have so much work on. However, in my experience, a bunch of young out-of-town colleagues will make friends with each other – and will be more than happy to see each other away from the office!

Future Rice Bowl of the World?

Quick heads-up (or hands-out): China became the third largest donor to the World Food Program in 2005, the same year the Program ended its assistance to China. According to WFP, since 1979, the Chinese Government “has lifted some 300 million of its people out of extreme poverty.” Via a bit of free market capitalism! Hat tip: UV Garden

“Sweatshop” Propaganda Wars continue

This slickly made ad lampoon attributed to French satirical TV show Les Guignols is doing the internet rounds (and here), suggesting Nike factory conditions in Asia leave something to be desired, to put it mildly.
Several points:
• Horror stories do deserve exposure. But beware: there are plenty of non-altruistic reasons why like to people start throwing dirt around, even if it doesn’t stick (e.g. über-brand Apple is facing the ignominy of answering the question “Are iPods really evil as people believe?” - read more here).
• But in my experience – which includes inspecting literally hundreds of Chinese factories per year – the majority of Chinese factories aren’t any less (or more) pleasant than factories elsewhere. The news is not all bad! For light-hearted confirmation, for example, click here.
• Overall, factory conditions in China have vastly improved over the last decade – in part due to a labor shortage. As I have pointed out before, workers who are in demand have power.
• Implying that “made in China” necessarily means “made in Sweatshop” is false and counterproductive to improving factory conditions. How? Duped “ethical buyers” who buy the stereotype may just avoid anything China-made instead of learning to discern between one Chinese manufacturer and another. The key - of course - is to have keen eyes and ears on the ground (which is of course our expertise).
Could this barbed video just be a case of Gallic jealousy about the success of China (and of Nike – i.e. a fabulously successful American company)? I believe China Law Blog may have said something on the subject not so long ago!

China’s development footprint moves west…

So much is happening on China’s booming eastern seaboard that its easy lose sight of what’s going on in the not-so-booming areas – like the Western provinces. China is well aware of its growing pains and is trying to sort out rich/poor, urban/rural, coastal/inland inequalities in several ways. One tactic is pumping money into its own western provinces which have (so far) missed out on the skyscraper cities, and in some cases, seem to have very few permanent buildings at all.
The Beijing-Lhasa railway is an obvious showcase, but its US$3.7 billion budget was a mere drop in the US$125 billion spent on infrastructure in western China in the last five years.
Already the pay-back has begun. The economic growth of several inland cities is now (officially) higher than the national average of 10%. And while it's easier to grow faster if you start with next-to-nothing, Inner Mongolia, better known for its yaks than its financial security, is experiencing average annual growth of nearly 17 percent.
The government is concentrating on transport, industry and health infrastructure - if they add education spending, the recipe for several "Shenzhens of the west" will be complete. Seem far-fetched? Remember Shenzhen was a fishing village only 20 or so years ago!

Insomnie à Shenzhen

Les étrangers qui séjournent en Chine ne se lassent pas de commenter ce passe-temps national qu’est le wu xiu. A l’école, chaque après-midi, les étudiants se laissent aller à l’art de la sieste, et, pour beaucoup de Chinois, devenir un travailleur professionnel implique également de devenir un dormeur professionnel. Il n’est pas rare que certains salariés s’endorment au beau milieu d’une réunion – voyez comme ils s’attachent à perfectionner leur technique ! –, au plus grand désespoir de leur patron lorsque ce dernier n’est ni Chinois, ni adepte du wu xiu. Courage à vous qui vous plaignez du wu xiu ! La situation pourrait être bien pire. Vous auriez pu vivre en Chine il y a dix ans. En effet, les siestes au bureau constituent un phénomène moins répandu aujourd’hui qu’il y a encore quelques années. Après tout, les 9 % de croissance économique ont un prix qui, en Chine, implique de garder les yeux ouverts !

La criminalité en forte hausse

Il suffit qu’un voleur pénètre un jour par effraction dans votre domicile pour que vous portiez sur le taux de criminalité général un regard très personnel. L’un de mes meilleurs salariés à Shenzhen a été cambriolé la semaine dernière alors qu’il dormait dans sa chambre. Des ordinateurs portables et d’autres équipements ont été volés. Des disparitions qui ont fait naître un fort sentiment de frustration. Mais ce qu’il faut souligner dans cette affaire malheureusement très banale, c’est que le collaborateur en question vit au 19^ème étage et que le voleur est entré par la porte de son balcon restée ouverte !

Les vols en Chine ont sensiblement augmenté ces dernières années, renversant ainsi la tendance (officielle) des autres crimes. Certains pourraient cyniquement émettre l’idée qu’il y a effectivement beaucoup plus de choses à voler en Chine aujourd’hui. Mais ce phénomène est également révélateur du fossé qui se creuse inévitablement entre les riches et les pauvres dans une économie chinoise en pleine mutation.

Selon des sources officielles, dans la province du Guangdong (dont Shenzhen fait partie), plus de 80 000 personnes ont été reconnues coupables de « vol » ou de « vol avec violence » au cours de la période 2003-2005, soit plus d’un tiers du nombre total de criminels condamnés. Les visiteurs qui quittent le territoire très civilisé de Hong Kong pour se rendre à Shenzhen doivent se cramponnent à leur sac à main, jusqu’à avoir des crampes dans les doigts. Il est vrai qu’un étranger passe pour être quelqu’un de probablement riche, qui n’a probablement aucune idée de ce qui l’attend – en bref, une proie facile pour les voleurs, les colporteurs et les commerçants !

Malgré tout, condamner à mort ceux qui commettent des vols à l’arraché apparaît vraiment comme une réponse excessive de la part des autorités (précisons que c’est une peine qui n’a encore jamais été appliquée). Si vous ne voulez pas prendre le risque d’être à votre tour victime de tels larcins, il suffit, à mon avis, d’être un peu plus vigilant : veillez à ne pas exhiber votre Rolex dans les ruelles sombres, si vous avez une voiture, fermez-la bien à clef et, bien sûr, verrouillez votre porte de balcon à double tour, même si vous vivez à 60 mètres d’altitude.

Le sujet a déjà été abordé il y a deux ans environ dans le South China Morning Post qui titrait à l’époque : Escalade de la criminalité à Shenzhen : une bande armée retarde l’ouverture d’une station de métro à Shenzhen en braquant le chantier de construction – Un escalier mécanique dérobé. Les membres de ce gang l’utilisent peut-être pour escaler les murs des immeubles, allez savoir !

High-rise crime

There's nothing like a thief invading your home to make the general crime rate suddenly seem very personal. One of my top employees in Shenzhen was burgled last week, as he lay sleeping in his bedroom; work laptops and equipment were stolen leading to frustration all around. But what makes this all-too-common occurrence remarkable is that he lives on the 19th floor of an apartment building, and the thief got in through his unlocked balcony door!

Robbery in China has been on the up for the past few years, bucking the (official) trend for other crimes  - cynics could say that this is because there is now a lot more worth stealing in China; it is also indicative of the growing rich/poor divide, inevitable for an economy changing as fast as China's.

Officially, in the Guangdong province (which includes Shenzhen) more than 80,000 people were convicted of “robbery” and “violent robbery” in 2003 - 2005, making up more than one-third of the total number of criminals convicted. Visitors to Shenzhen from gentle Hong Kong hold on so tightly to their handbags that they get cramps in their fingers, and it's fair to say that a foreigner stands out as somebody who's probably rich and probably doesn't have a clue - an easy target on the street for thieves, street hawkers and shop owners alike!

Still, giving the death penalty to bag-snatchers does seem an overreaction from the authorities (so far, this is a ruling which hasn't been put into practice). To minimize your chances of being a victim, I think just a little extra vigilance is needed: no visible Rolexes down dark alleys, locking your car (if you're using one) and of course, locking your balcony, even 60 meters up.

A couple of years ago, this item was spotted in the South China Morning Post: "Shenzhen crime spree escalates: The opening of a Shenzhen subway station has been delayed after an armed gang raided the construction site and stole the escalator." Maybe they're using it to scale apartment walls!

La guerre de propagande contre les « ateliers de misère » se poursuit

L’habile fausse publicité attribuée aux Guignols, l’émission satirique de Canal+, fait actuellement le tour d’Internet (voir également le lien suivant). La vidéo suggère que les conditions de travail dans les usines de Nike en Asie laissent à désirer – c’est un euphémisme.

Plusieurs points à ce sujet :

Les horreurs méritent certes d’être révélées. Mais, attention, il existe de nombreuses raisons non altruistes pour lesquelles les gens aiment colporter des ragots autour d’eux, même si ceux-ci ne tiennent pas la route (par exemple, l’über-marque Apple doit aujourd’hui faire face à cette question ignominieuse : « Les iPods sont-ils vraiment aussi mauvais qu’on le pense ? » – pour en savoir plus, cliquez ici).

En me fondant sur mon expérience – acquise notamment en inspectant des centaines d’usines par an –, je dirais que la plupart des usines chinoises ne sont pas moins (ni plus agréables) qu’ailleurs. La nouvelle n’est pas entièrement mauvaise ! Pour une approche plus « légère » de la question, cliquez ici.

De façon générale, les conditions de travail dans les usines chinoises se sont nettement améliorées ces dix dernières années, ce qui s’explique en partie par la pénurie de main-d’œuvre. Et comme je l’ai souligné précédemment, les salariés sont en position de force.

Prétendre que l’étiquette « Fabriqué en Chine » signifie forcément « Fabriqué dans des ateliers de misère » est faux et contre-productif : cela ne contribue pas à améliorer les conditions de travail en usine. Pourquoi ? Parce que les « acheteurs éthiques » dupés pourraient décider de ne plus acheter de produits fabriqués en Chine, au lieu d’apprendre à faire la distinction entre les différents fabricants chinois. La clef ? Aller sur le terrain et avoir de bons yeux et de bonnes oreilles, bien sûr (ce qui relève bien sûr de nos compétences).

Cette vidéo caustique ne serait-elle pas simplement l’expression de la jalousie des Français vis-à-vis de la réussite de la Chine (et de Nike, une entreprise américaine qui connaît un succès fabuleux) ? Je crois que le China Law Blog a abordé le sujet il n’y a pas si longtemps !

Au paradis des employés (qualifiés)

Regardons les choses en face : le marché chinois offre un énorme potentiel d’employés qualifiés. En moyenne, les jeunes diplômés de Shanghai, âgés d’une vingtaine d’années, restent moins de 18 mois en poste avant de dire zai jian à leur patron, et ce quel que soit l’emploi qu’ils occupent. Dans la mesure où le vivier de talents disponibles est bien moins important qu’il n’y paraît, la priorité absolue des entreprises devrait être de chercher à retenir les salariés de valeur.

De ce côté-là, AsiaInspection a été bien mieux lotie que la plupart des autres sociétés. En effet, certains de nos collaborateurs font partie du personnel depuis plus de cinq ans. Les dirigeants qui viennent à découvrir cet incroyable état de fait veulent bien sûr connaître nos secrets. Voici donc quelques trésors de sagesse à l’attention de la blogosphère :

• Comme partout ailleurs, il est important d’offrir des avantages tangibles : nos bureaux sont bien placés, nous payons bien et nous récompensons le mérite. A titre d’exemple, l'une de mes collaboratrices a rejoint notre équipe alors que nous lui proposions la moitié de ce qu’elle gagnait dans son précédent poste. En contrepartie, elle m’avait demandé de revoir son salaire au bout de six mois si j’étais satisfait de son travail. Elle a finalement vu son salaire tripler en moins de deux ans.
• Une autre méthode de gestion efficace pour tous : le respect mutuel et la mise en œuvre de canaux de communication ouverts. Les salariés ont besoin de savoir qu’ils peuvent aller se plaindre directement auprès de leur patron, si besoin.
• En Chine, où l’enseignement public est généralement inadapté, les salariés considèrent qu’apprendre constitue un investissement, une assurance sur l’avenir, voire une béquille ; ceux-là sont prêts à prendre un risque ou à accepter un salaire moindre en vue d’acquérir des compétences.

Sébastien Breteau

(Skilled) Workers' Paradise

Let’s face it, It's a skilled employee's market out there.  On average, young 20-something graduates in Shanghai stay less than a year and a half in any one job before bidding their employers "zai jian". Since the available pool of talent is far smaller than it seems, retaining valuable employees should be a top business priority.

AsiaInspection has been rather more fortunate than most companies: we have employees who've been with us for more than 5 years, and when other managers discover that incredible fact, they want to know what our secrets are. So, as a special treat for the blogosphere, here are some pearls of wisdom:

• Like everywhere else, tangibles are important: our offices are well-located and we pay well and reward merit. One of my staff took a 50% pay cut from her former job to work for us. But she told me to revise her salary after six months if I was happy with what she was doing and in the end, we tripled her salary in less than 2 years.
• Another universally good management practice: mutual respect and open communication channels. Employees need to know they can complain directly to the boss if necessary.
• In China especially, partially because state education is often inadequate, employees often see learning as an investment, as insurance or a leg-up for the future, and are willing to take a risk or lower their salary in order to acquire skills. 

The Lucre of Love Online

The Chinese have taken online dating to their hearts (pardon the pun). The self-proclaimed largest Chinese dating site, Baihe, has over five million registered users, while the gleefully named Yeeyoo has four million. International sites such as AsianFriendFinder are also keen to match-make the lovelorn in China.

China is unusually suited to online dating: more than half of its internet users are younger than 25, and in the next 15 or so years, because of China's One Child policy, 23 million more Chinese men than Chinese women will come of age. Youth plus scarcity of partners equals trolling the web for romance.

But opinion is divided as to whether there's much money to be made out of hellokittygirl_83 and her pals. European online dating company Meetic certainly thinks so – they recently paid $20 million for a majority stake in Yeeyoo's operating company, and may take it over entirely. Yet in 2005, the Chinese online dating market was only valued at 91 million Yuan ($11.2 million), up from a mere 37 million Yuan ($4.5 million) the year before. While admittedly that shows rapid growth, the 2008 prediction of 653 million Yuan (about $81 million) is still only a fraction of the 2005 American online dating market value of 520 million.

What to do? Site-owners want an industry-wide shift away from relying on advertising revenue towards turning users into paying subscribers. But starting that trend means risking your users' fidelity; they may decide to break up with your site and bestow their affections on a less demanding partner, instead of paying for your favors. Who said love was easy?

Filles d’Asie, bistouris d’Occident

Toutes les deux minutes, quelque part en Chine, une femme subit une intervention de chirurgie esthétique en vue d’obtenir une double paupière à la manière des Occidentales. Un marché de 3 milliards de dollars que se partagent un million de cliniques de chirurgie plastique, soit six millions de personnes. Fait insolite, c’est Beijing qui a organisé le premier concours de Miss Chirurgie Esthétique pour « beautés artificielles », en 2004. Et parmi les participantes se trouvait un transsexuel.

En Chine, la folie plastique relève plus ici de l’investissement que de la vanité – que faire pour se distinguer des 1 300 000 000 autres Chinois dans la course pour un poste ou un mari ? Des yeux plus ronds, un nez plus droit ou des jambes plus longues (les os sont brisés et écartés au moyen de broches ; l’espace entre ces os est comblé petit à petit par la formation de matière osseuse à peine assez solide pour porter le poids du corps. Aïe !) Sans compter que toutes les 25 minutes, quelque part en Chine, une personne se plaint d’avoir été défigurée par la chirurgie esthétique. Je le répète : aïe ! Je suis aussi sensible qu’un autre à la vue d’un joli visage mais l’idée que quelqu’un veuille ressembler à une personne d’une ethnique qui n’est pas la sienne me rebute.

The Other Tinsel Town

How's this for a bit of global-mix surrealism: 70% of America's artificial Christmas trees - including those in the White House - are made by Buddhists in Shenzhen. In fact, Shenzhen, in China's Guangdong province, is now the world's largest manufacturing base and export center of Christmas-related products, shipping half a billion dollars' worth of Christmas goods every year.

I'm currently in Hong Kong, just over the border from this unusual Santa's factory. You may never have heard of Shenzhen - it gets a little overshadowed by its limelight-hogging neighbor - but if Hong Kong is China's gaudy gateway, then Shenzhen is its impressive front door. In my opinion, it's the easiest city to do business in today in mainland China, ahead of bureaucratic Beijing or even Shanghai, whose revenue per capita Shenzhen has left behind in the dust.

Christmas fripperies are only the star on the top of Shenzhen's money tree: high tech products make up 40% of Shenzhen's industrial output and the city hosts the headquarters for a number of domestic industries, including computer hardware and software, telecommunications and bio-engineering. The annual national high-tech fair has been held here every autumn since 1999.

Less glamorous but still economically important are the low cost factories for toys and electrical goods, often working for Hong Kong and Taiwanese manufacturers. The China Britain Business Council warns that many of them still have atrocious working conditions. But overall, Shenzhen residents enjoy a higher standard of living than those in Shanghai. Two color television sets per household is the average. In 2002, 7% owned cars (many more than in most Chinese cities).   

Another reason why it's relatively easy to do business here is that virtually all of Shenzhen's inhabitants have come to Shenzhen precisely for that purpose. For 20 years, migration to Shenzhen from the North has been controlled on the basis of age and education, with the result that the average Shenzhen go-getter is only 29, and it is very rare to come across people aged over 45. But maybe Santa's there somewhere...

Fair Labor Frontline

Want to know what happens in a Puma factory in China when managers have been covering up the amount of overtime workers have been doing? Or what happens in a Vietnamese Adidas factory where workers’ mistakes are made public and announced on loudspeakers?
It's all in the Fair Labor Association's tracking charts which can be searched by company, licensee or global region, written by independent FLA accredited monitors.

One of the more woeful lists of conduct code violations came from a factory in India which makes and dyes Nike t-shirts and sweaters:
- management coached workers not to reveal to inspectors that they'd worked on their rest days,
some new workers didn't know how much they were being paid and didn't know the contents of documents they'd signed when starting,
- workers with union affiliation were never hired,
- fabric was stored in what, by law, should have been a functional ambulance room,
in one of many health and safety breaches, loose electric wires were seen on the wet floor of the dye house,

All in all, monitors found 1,603 code breaches in the 88 factories in the FLA 2005 annual report. Health and safety concerns were the biggest problem area overall, making up 44% of all code breaches found. There were regional trends: South Asia - India, Bangladesh and Sri Lanka - had the worst health & safety record; South East Asia - Thailand, Indonesia and Vietnam - trailed the pack in requiring workers to work very long hours, and both South East Asia and East Asia - China, Macau, Hong Kong and Korea - did badly on "freedom of association" (unsurprisingly, given trade unions are illegal in China).

With labor conditions of increasing interest to consumers and authorities, this shows that it pays to have someone check out the factories you're using (or considering using) in Asia and elsewhere, to ensure they're as "sweat-free" as possible. (Unfortunately for those looking to avoid dodgy factories, it is the FLA's policy not to publish the names of the individual factories they monitor). 

But the Fair Labor Association has not been without its fair share of controversy. After all, when six apparel industry representatives sit on your board of directors, someone's going to say you're too cozy with your companies to be truly independent. Could "happywashing" be to the fair labor movement what "greenwashing" is to the environmental lobby?

Ethical Trade

Another group interested in labor conditions in China – although they’re looking most closely at occupational safety and health rather than at child labor – is the Ethical Trading Initiative. There are some impressive names on its roll call of British corporates, NGOs and trade unions - including Marks & Spencer, Sainsbury’s, Tesco, WH Smith, the Body Shop and Boots. It aims to improve working conditions anywhere in the world producing goods for the UK market, via codes of practice.

If you have time to wrap your head around the organization’s incredibly layered and bureaucratic website, some useful information is buried in there somewhere. All the companies named above are in the ETI’s China discussion group, and the ETI has been running a specific China Project since 2004. The laudable aim is to encourage the workers themselves to have a hand in improving factory health and safety through elected worker committees . The committees will be trained to discuss health and safety issues and possible improvements with management (with the added “bonus” of more open worker-manager relationships). So far, “site teams” of management, corporate and training NGO representatives have been set up at the five selected factories. It is hoped that the worker committees themselves will become fact within the next six months.

It seems a thorough and ambitious project in a culture which hasn’t traditionally favored workers’ rights (to say the least). This may explain the glacial pace of the project – the ETI is attempting nothing less than a culture shift and that takes trust and time. Even when the committees are set up, it will be interesting to see whether the members feel secure enough to raise safety issues with their bosses – or even whether volunteers can be found easily.

The ETI website also has links to information sources about labor laws and conditions in specific countries including China. Presentations from a 2004 ETI China conference are included near the bottom of the China page, but most are of limited use; as with all Power Point slide shows, there is the risk of getting the wrong idea if you haven’t heard the speech which the visual aids are for.

Decline in Child Labor

I was pleasantly surprised to see that the International Labour Organization (ILO) was being cautiously optimistic, last week, when they issued a report on the decline of child labor worldwide. They report a drop of 11% between 2000 and 2004, from 246 million to 218 million children. Despite these improved figures, the overall numbers indicate that this continues to be an international problem.

In Latin America and the Caribbean, the number of children working has fallen by two-thirds in the past four years. Sub-Saharan Africa, however, has the highest proportion of children working of any region in the world.

So how did Asia do? It seems that Asia and the Pacific registered a significant decline, but seeing as the child population has also declined, the results are less positive. The ILO estimates that the region still has the largest number of child workers aged 5-14. Unfortunately, anyone doing business in Asia has to keep a close eye on this issue.

Read the ILO report.