foxconn + walmart = shenzhen, or globalization after mao

China Labor Watch has reported another Foxconn strike, this time at the Zhengzhou campus. According to the report, the shortage of iPhones led to increased demands on Foxconn workers, who were required to work over the holiday, for longer hours, at jobs that they did not have the skills to perform. Moreover, quality control inspectors also joined line workers in the strike for more reasonable work conditions. From the report:

(New York) China Labor Watch (CLW) announced that at 1:00PM on October 5 (Beijing time), a strike occurred at Foxconn’s Zhengzhou factory that, according to workers, involved three to four thousand production workers. In addition to demanding that workers work during the holiday, Foxconn raised overly strict demands on product quality without providing worker training for the corresponding skills. This led to workers turning out products that did not meet standards and ultimately put a tremendous amount of pressure on workers. Additionally, quality control inspectors fell into to conflicts with workers and were beat up multiple times by workers. Factory management turned a deaf ear to complaints about these conflicts and took no corrective measures. The result of both of these circumstances was a widespread work stoppage on the factory floor among workers and inspectors.

Ironically, on the same day, Salon dot com reported that workers at Wal-mart also went on strike for the first time in the company’s notoriously anti-union history. As at Foxconn, Wal-mart workers are striking in large part because they are being to asked to do the impossible — do the jobs of several people. From the article:

I’m excited, I’m nervous, I’m scared…” Pico Rivera Wal-Mart employee Evelin Cruz told Salon yesterday about her decision to join today’s strike. “But I think the time has come, so they take notice that these associates are tired of all the issues in the stores, all the management retaliating against you.” Rivera, a department manager, said her store is chronically understaffed: “They expect the work to be done, without having the people to do the job.

News of these two labor strikes resonate ironically in Shenzhen because Foxconn (鸿海科技集团) and Walmart were two of the first multi-nationals to benefit from Shenzhen’s establishment in 1979.

Foxconn has 13 factories in China, but its oldest and largest is the Shenzhen Longhua Campus, which has an estimated population of 250,000 workers and managerial staff. Moreover, the Shenzhen Campus is the location of Foxconn China’s headquarters and represents over 1/4 of the Company’s global workforce. Foxconn is the worlds largest contract provider of computer, communication and consumer electronics products. In addition to Apple, Foxconn partners with Acer Inc, Amazon, Cisco, Dell, Hewlett-Packard, Intel, Microsoft, Motorola, Nintendo, Nokia, Sony, Toshiba, and Vizio. In other words, Foxconn employees also make Kindles, PlayStations, and Xboxes in addition to iPhones, so if you’re using any kind of high-end electronic product — especially a smartphone — odds are it was made in one of Foxconn’s Chinese factories. Foxconn posted net profit of US$ 102.74 billion in 2011.

Similarly, as Walmart’s world buying headquarters, Shenzhen is a critical site in the multinational’s chains of production and consumption. Walmart reportedly sources 70% of its merchandise from China, and many of its earliest subcontractors were located in Shenzhen. Importantly, the level of worker exploitation at Foxconn Longhua and Zhengzhou cannot be understood outside the context of Walmart in China. With a global workforce of over 2 million people (or two Foxconns), Walmart is the world’s largest private employer and shapes daily life at the level of both supply and demand. By 2005, Walmart had become China’s sixth largest export market–just behind Germany–making it a larger trader partner than many countries. Indeed, Anita Chan argues that “When the two giants Walmart and China established a stable symbiotic relationsip at the turn of the millennium, and as Walmartization of the supply chain took root on Chinese soil, Walmart’s competitors had to use the same sourcing techniques to survive.” Walmart reported US$ 15.4 billion net revenue in 2011 (or roughly 15% of Foxconn’s net revenue for the same period).

As Walmart is to commercial products, so Foxconn is to high-end electronics. Given their global dominance in their respective niches, both companies are in a position to squeeze more labor out of their workers, demanding (as on Foxconn Zhengzhou’s iPhone 5 production lines) overtime work that effectively pushes wages down below even locally acceptable wage levels. Here, “forced overtime” can be understood in two ways. 1. As in Foxconn Zhengzhou, where workers are expected to put in extra hours to meet orders. And 2. as in South California Walmarts, where one worker does the job of several, so that even when working a “forty-hour” week, they may have put in 60 hours worth of labor.

Here’s the Shenzhen connection to new forms of labor exploitation. During the 1980s and through the 1990s, but especially during the pre-1992 Southern Tour years, Shenzhen business offered Chinese citizens an opportunity to opt out of the planned economy, in both cities and rural areas. The lure, of course, was a salary that was based on market demands, rather than fixed by the central government plan. Indeed, in 1988, the Shekou Tempest began when visiting Beijing officials accused local workers of being nothing more than gold diggers, who were motivated by greed, rather than by nobler sentiments, such as patriotism to modernize the national economy.

Shenzhen is not the first city to boom through low wage production. In fact, many of the earliest companies that set up factories in Shenzhen simply relocated from nearby Hong Kong and Taiwan. However, in retrospect, it is clear how small the 1970s Asian miracle actually was. With the establishment of Shenzhen, the world’s largest corporations suddenly had access to the world’s largest workforce — a workforce, moreover, that was trained, disciplined, and  eager to work for wages, making forced overtime a globally viable corporate strategy. Today, forced overtime has become one of the most effective means of labor management, not only because it results in higher profit margins, but also because exhausted workers are more docile.

Even as China debates pushing forward the Shenzhen model of production, it’s clear that this model has already gone global. Consequently, Shenzhen may be the key to understanding globalization in the post Mao era. In fact, Shenzhen has become the city that US Americans would recognize as “middle class” in both practice and ideology. Most residents are migrants, who came to Shenzhen to make their fortune. Moreover, they believe that individuals need to work hard in order to get ahead; Shenzhen espouses individual effort, transparency in business deals, and home ownership as simultaneously being the means and ends of the good society. As in the United States, Shenzhen residents talk on their iPhones while shopping at Walmart. As in the United States, this standard of living has not spread throughout the general population because it depends upon increasing levels of exploitation. Thus also as in the United States, now that the factories have moved to Zhengzhou and Vietnam, the squeezing of service industry labor has intensified, which leaves enquiring minds to wonder: when will workers in Shenzhen’s 12 Walmarts strike?

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