“Labor is too expensive, so jobs are moving overseas.”
A phrase we’re used to hearing in America, where it has explained the flight for decades of American manufacturing jobs to Chinese factories overseas.
These days, it’s being heard in China, too.
The “Chinese miracle” – an economy that’s grown by at least 6 percent GDP every year since 1992 – has raised the country’s standard of living tremendously over that time. It’s also raised wages. Suddenly the Chinese aren’t the cheapest laborers on the market anymore, and factories are beginning to shut down as jobs relocate to places like Cambodia and Vietnam.
But that doesn’t mean all of China’s factories are closed yet. Not by a long shot. On Wednesday, my class of MBA students from the Cox School of Business visited a pair of factories in and around Shenzhen, China’s third-largest city: Twinkle Leatherworks, which manufactures luggage and bags for brands like Samsonite and Tumi, and TAL apparel works, which supplies shirts to Nordstrom, Dillard’s and Neiman Marcus, among others. The visits were an eye-opening experience.
Shrouded in fog so thick you couldn’t see the sky, roughly 2,000 laborers manufactured bags and suitcases at Twinkle Leatherworks, where they work six days a week (Sunday is the lone day off) with work days that span 7 a.m.-9:30 p.m. during the busy season, which runs April to September. At Twinkle, the average factory wage is 4,000 RMB per month – roughly $600 U.S. dollars. Nearly one tenth of that – 300 RMB – is paid back to Twinkle to cover rent on the 250-square-feet company-provided dormitories that sleep four to a room, and which half the workers call home. Showers are available, but not kitchens (too much of a fire hazard, we were told), so laborers are encouraged to buy their meals at the company cantina.
The story at TAL is similar, but the conditions are a bit better. Gray, featureless smog still obscured the sky during our visit, but dormitory rent is cheaper, a free medical clinic and library are available on site, and the work spaces don’t smell like glue or feature bleeping sirens that made me want to plug my ears. Still, TAL’s turnover rate isn’t any better than Twinkle’s – 10 percent of laborers walk away every month. The factory workers may be unskilled labor, but Shenzhen is a boomtown, and there’s plenty work to be found in other factories, restaurants or construction sites for anyone who tires of their job.
None of this means these laborers are worse off than they were before their factory jobs existed. According to everyone we talked to, this austere standard of living is far better than what existed before the “Chinese miracle” took off.
One of my classmates on this trip is the son of Chinese immigrants. Ten years ago he visited his grandmother on her farm in Jiangsu, one of China’s coastal provinces, and vividly remembers his grandmother being provided only a single barrel of clean water, which had to last a week.
As we drove to the factories, we saw workers toiling in small rice fields and wondered whether the tin shanties at the corners were their homes.
The jobs we saw at TAL and Twinkle would be unacceptable to American workers, and will never come back to the United States. But to the people of China they represent opportunity much like what our own forefathers pursued on our behalf. At TAL, I occasionally spotted a sign on the walls that, in Chinese and broken English, basically read that “if you work here, you can apply for a scholarship to send your child to school. Pursue the dream.” For Chinese laborers, that dream is the same one of parents around the world: a better life for their children.
Consider these factoids the next time you look at a dress shirt from Dillard’s, Nordstrom or Neiman Marcus – all supplied by TAL apparel:
• The factory manufactures 10.2 million shirts every year.
• 50 to 60 different laborers contribute to making each one.
• A 35-person assembly line sews the trimmed fabric and materials.
• The average shirt requires 17-20 minutes of collected sewing.
• There are 3,900 employees at TAL’s Shenzhen factory
• The factory operates a day crew and a night crew, each working 8-hour shifts, five days a week.
• Half ot TAL’s laborers live in its recently refurbished dormitories, where they sleep eight to a room in stacked cots.