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China on the brink of huge social
changes
By Paul Lin 林保華
Monday, Jun 14, 2010, Page 8
Looking at the employee suicides at Hon Hai-owned Foxconn
Technology Group’s plant in Shenzhen, China, as a mere labor dispute is
superficial. It is easy to see that Hon Hai chairman Terry Gou (郭台銘) is a
visionary entrepreneur from his response to the events. In one week, he raised
workers’ salaries twice — a total of 122 percent.
The raise satisfied workers, stunned competitors and forced the Chinese
government to consider the long-term impacts of the decision on China’s
development.
The first of these is that the working conditions of Chinese workers will
greatly improve and they will receive more respect. The fact that the first move
was made by a Taiwanese company instead of a state-owned Chinese enterprise will
improve the image of Taiwanese businesspeople. Although under pressure to act, a
Taiwanese company responded faster and more effectively to social pressure than
the Chinese government.
Second, the salary increase is likely to trigger a reaction among workers
throughout China and force other enterprises to follow in Foxconn’s footsteps.
The Chinese government will not have any good reason to suppress such a reaction
and the awareness among workers that they must fight for their rights will
greatly increase. In other words, unless factory party committees and labor
unions do not get on board with the rapidly changing environment, they will lose
support quickly.
Third, increased worker income could help the Chinese government to meet its
goal of stimulating domestic demand. Rising personnel costs will eliminate
weaker companies, which will force structural economic reform. It will also
force some foreign investors to leave China and cause potential investors to
think twice before opening factories there, which will affect economic growth.
Finally, the Chinese government finds itself in an awkward position. It will be
forced to welcome pay raises offered by foreign companies, even though that will
hurt the interests of “red compradors,” intermediaries who facilitate government
contacts. In addition, growing awareness of human rights among workers is bound
to worry the government. Social movements are certain to increase in future, but
is the Chinese Communist Party (CCP) able to reform itself?
The Foxconn suicides have raised disturbing legal issues that may never be
resolved. Will its competitors stop trying to bring the company down?
China’s central and local governments and various interest groups continue to
wrangle over the Foxconn incident. However, there will certainly be changes to
China’s development model. In the worst case scenario, a CCP too enamored of its
power and privilege will refuse to reform. China would then become a bloody
battleground where civilians and officials fight each other. In such a situation
Taiwanese businesspeople would come under more pressure and many would possibly
return to Taiwan. For this reason, it is important that President Ma Ying-jeou’s
(馬英九) administration does not remain indifferent. Rather than help China, it
should instead try to do the following:
First, it should ensure Taiwanese businesspeople are able to return safely to
Taiwan without the Chinese government taking over their businesses.
It should also create a better investment environment to help returning
businesspeople start anew and take a fresh look at controversial foreign worker
policies that could hinder the growth of Taiwanese industries.
Finally, Taipei should be very cautious, as China is on the verge of tremendous
political and economic change, and avoid rushing into an economic cooperation
framework agreement.
Paul Lin is a Taipei-based political commentator.
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