Chinese workers are the losers

This is according to a report published by the Center for Research on Multinational Enterprises and the China Labor Bulletin, which has been monitoring strikes across the country since 2011. In 2023, protests over non-payment of wages and factory closures increased tenfold compared to the previous year. A trend motivated by several factors: rising labor costs, the consequences of the pandemic and trade wars between China and the West.

Beijing () – Those who pay the price for the “risk reduction” practices implemented by Western countries as a result of growing economic competition with China are, first and foremost, Chinese workers, who have been forced to take to the streets more than in the past year due to non-payments and company closures. This is the conclusion of a report published a few days ago by the Centre for Research on Multinational Enterprises (SOMO) and the China Labour Bulletin (CLB), which based their conclusions on the reasons that prompted factory workers – especially in the textile and technology sectors – to go on strike.

“This does not mean,” the document reads, “that jobs or supply chains should never change. There is nothing inherently wrong with companies taking a closer look at their supply chain risks and taking appropriate mitigation measures. But corporate risk reduction cannot be limited to shifting risks or harm onto the shoulders of workers. Brands and retailers must be aware of their responsibilities and take into account the risks to workers’ rights associated with the dynamics of moving supply chains, including in China, and take additional steps to ensure that these decisions do not contribute to collective abuses of workers’ rights.”

In fact, according to the study, titled “Chain of Consequences,” “Chinese workers who have for decades sustained supply chains in the garment and electronics sectors are now struggling to get paid or are losing their jobs due to reduced orders or factory closures or relocations.”

From being the “factory of the world”, China has become a market to be avoided in recent years due to several factors, including rising labour costs, tensions between China and the West and the consequences of the Covid-19 pandemic. But in reality – the report explains – this is an “anti-globalisation” trend that began with the economic crisis of 2008 and continued during the pandemic. Over the past 10-15 years, manufacturers and retailers have moved some of their production from China to other parts of the world,” it says. A trend confirmed by the data: according to a survey by the European Union Chamber of Commerce in China, in 2023, 75% of European companies “have reviewed their sourcing strategies in the past two years, 24% plan to move at least part of their supplies from China and 12% have already started the process.” A reality that also affects American companies and Taiwanese investments in China, especially those in the manufacturing sector. “This trend – continues the report – continues and reflects a change in corporate priorities, as companies now place more emphasis on supply chain resilience and risk mitigation. In doing so, however, companies are ignoring the risks to workers.

Despite all the difficulties associated with the Chinese context (where all unions have to be affiliated to the All-China Federation of Trade Unions, which tends to serve government and business interests rather than representing workers’ interests), the CLB has been monitoring strikes across the country since 2011. Protest incidents increased tenfold last year and were concentrated in export-oriented production areas along China’s southeastern coast: the Pearl River Delta in Guangdong, the lower Yangtze Delta area around Shanghai, and the coastal province of Fujian.

In 68% of cases, these were protests over unpaid wages, while in 41% of cases, workers reported taking to the streets following the closure or relocation of the factory where they worked. Although the reasons for the strikes “vary and are not always clear from the outside”, there is little doubt that this is a phenomenon linked to “the decision by brands or downstream buyers to change their sourcing practices and reduce their global dependence on China”.

Several Chinese workers went months without pay and were then fired. A situation, the report says, “exacerbated by the cumulative effect of many buyers in an industry making sourcing changes at the same time.” And in addition to non-payment of wages, the investigation reveals two other violations of Chinese workers’ rights: little warning of possible layoffs and no or low compensation once workers are home. “If production slows due to falling orders, the loss of overtime or incentives can lead workers to resign voluntarily, reducing the total amount of compensation the factory has to pay,” the report says. In other words, “even when brands and other buyers claim to give factories sufficient notice of their intention to change suppliers, this information does not always reach workers.”

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