Thursday, February 01, 2007

When Communism meets Capitalism

I just finished reading an article in the BusinessWeek ( magazine about Chinese factories and American companies - the meeting of Capitalism and Communism. The magazine focused on factory work conditions and American investment - 3 points came up as 'obstacles to reform' within those factories (concerning work conditions).

(1) Price Pressures: American's expect to pay less for the goods they recieve and since 1996 prices on many articles (ex: clothes, toys, and games) has been dropping - Americans have become accustomed to paying the low prices.

(2) Few Alternatives for Manufacturers: Other low wage nations enforce their codes of conduct more stringently but China is very efficient in workforce, infrastructure, supply base, and massive ability to manufacture so much in so little time. Problem is China doesn't enforce codes of conduct as efficiently.

(3) Worker Demands: The Chinese workforce is quite alright with getting as much hours as possible and not making overtime pay (3-4 hours OT a day on a 5 day workweek) - however this is not what American companies endorse yet they never use their leverage to change the situation.

The problem with the whole scenario is that these Chinese factories are breaking all the American rules for 'code of conduct' in an effort to keep American business on their soil. The problem really lies with the 'pricing' - most Chinese factories admit that on order to meet American demand for what a product should be produced for (ex: $0.64/hour) they have to not pay overtime - and there isn't much they can do to change that (since Americans demand a low price on a lamp or sweater).

The Chinese 'doctor' the accounting books during audits to make it look like all is fair - they only get found out during routine visits by American companies visiting those factories first-hand. There is even Chinese companies willing to help 'doctor' those books for the factory - as a help to keep them in business. All the while, even when the American companies know some of the discrepencies (ex: no OT or underage kids working) rarely do anything since that's a Chinese thing to deal with - again, bottom line is the focus for both sides. The end of the article even states this is still an 'economic reality' - so this is still happening (right now as I type on a Dell computer).

So next time you shop at Wal-Mart, Target, Nike, Adidas, Eddie Bauer, Nordstrom, Hewlett-Packard, Dell, Motorola (owns a literal factory), General Electric (owns a factory also), McDonalds, Walt Disney, Home Depot, Sears, retailers under 'Young Sun Lighting Co., and J.C. Penney - remember they all do business with China so you can 'pay less' for their products.

Of an even greater note, we can't solve the inequitable problem in China but we can learn this simple lesson - with all the money we save for buying at these outlets on all the products we buy each month - possibly we can use that money we save to help someone struggling here with poverty - although the Chinese still will be worked to death - let's not let their sweat go wasted on a Capitalist machine that also forgets it's poor here.


the_burning_bush said...
This comment has been removed by the author.
chris said...

It's crazy isn't it? When the almighty dollar is involved we will overlook much to attain what we want!

Jim Jordan said...

The almighty dollar's power is over us alone. Whether it's Pres. Carter singing for his Arab friends or President Bush advancing the interests of his business partners, money is the best catalyst for showing us how small and stupid we really are [in most cases].

It's only when we give it up freely that we resemble our Maker in some way. So do we save money at Walmart and send some of the savings to start missions in China? Or do we try to obligate China [a sovereign country] to raise their minimum wage? Raising the minimum wage may create more unemployment in the short term, causing even more suffering. It has been said that economics is a "dismal science".

It's a lose/lose situation. The problem with "social justice" is that it often results in something unanticipated, and rarely ever resembles justice in practice.

Now if everyone were to be led by the true love of Jesus Christ, all poverty would cease. But then it would be another world entirely.

dorsey said...

Another perspective:

I think Business Week's approach to this article relies on the prevailing attitude of American superiority. This whole argument assumes that America's cultural standards are somehow more correct than the cultural standards in the PRC.

I spent some time in China and had the opportunity to discuss some of these very issues with people I met there. They were astonished that Americans were getting so bent out of shape over the fact that Chinese children work in factories. For a great many families in China, if those kids couldn't go to work, those families suffered. Same with overtime, work hours, etc.

Likewise, we gripe that products are made cheaply in China (at the expense of the workers?), but you could move to Beijing and live comfortably for several hundred dollars per month. I was tempted, myself. There is an enormous middle class emerging in PRC right now. It's amazing to see.

We have a tendency to look at such issues through our own cultural lenses. Americans have become accustomed to high wages, a 40-hour week, paid time off, etc. There are some cultures that have it even easier. Many European cultures have an even shorter week and their workers take a month off at a time. Maybe they should boycott American goods and services until we get some relief from these harsh conditions? LOL. My point is that America is not Europe, and China is not America.

Regarding the poor in America, you can't fault capitalism. The blame is cast at the feet of those who hoard its benefits (you and me). It is we who forget the poor.

dorsey said...


Sorry, SVS, I forgot you're in Canada. My references to America were intended to denote the Western mindset, in general.

SocietyVs said...

Dorse, I appreciate that tid-bit and that world-view - again, I think it does cme down to the individual to make a difference in their own poverty-stricken communities (and to develop the programming). I like your take on the world 'politik' - very interesting - can't say I have heard it said this way before.

However, and I hate to be a 'last word' kind of dude, the factory conditions were seen as deplorable according to American's basic safety standards - and of concern to me is 'working conditions' not the 'payment' (I am sure .64/hr is a lot of cash in China). Working conditions do not change from country to country - as far as working in a safe environment goes...and that isn't something we should overlook too lightly.

I know I shouldn't blame the devil for this but Capitalism (profit) is the driving force in this scenario.

dorsey said...

Don't get me wrong. I'm not the flag-bearer for Sino-American trade practice. I'm sure there are plenty of problems, just as there are still in this country. I just wanted to point out how our "Western cultural lenses" affect our perception of other cultures. I'm glad you brought this up. It deserves to be talked about.

SocietyVs said...

Dorse, you still rule and I actually learned something from your view-point - thanks.