Xie Guozhong: After Killing Dreams

The new generation of Chinese migrant workers born after the implementation of the family planning policy has grown up in the rapidly developing economy.

This generation is not only satisfied with basic survival, they often have higher pursuit and yearning.

At this point, they are not very different from their peers in other countries.

Managers in China today, including government officials and business leaders, are mostly brought up in poverty.

They regard the marginal growth of income as the main goal of life. Besides, they have nothing to ask, but they do not care much about the environment around them.

The gap between the two generation's concept is the source of pressure behind the real estate bubble and the recent labour shortage.

If China's system is unable to meet the needs of the new generation, a series of social problems will probably erupt in the near future.

Machine and human

Ten years ago, I visited a factory assembly line of an electronic manufacturing contractor.

A row of young girls concentrated their parts together.

Factories have strict rules for their toilets and rest time.

Even during breaks, they can only sit on designated benches.

The workshop manager told me that these people are only 18 years old. "This job needs flexible fingers.

In a few years, we'll switch to another group of girls about 18 years old. "

After the visit, I wrote an article expressing the view that the miracle of China's economy is to rely on those extremely obedient Chinese workers.

What benefits from this economic power is not only western enterprises that provide technology, brand and distribution channels, but also outsourcing manufacturing companies in China.

The latter is especially famous for its rich and cheap labor force in China.

At present, the most successful development of the OEM industry is China's Taiwan enterprises.

In the modern times, Chaplin used the comic performance to show the inhuman essence of the modern factory system.

In most of the developed countries, the scenes that Chaplin has imitated has long been out of sight.

As labor costs continue to rise, factory owners have to buy automation equipment instead of manpower. For example, modern automobile assembly plants are mainly operated by robots.

However, when multinationals have outsourced production to China, capital intensive production has changed in the environment of low labor costs and adequate supply.

Some factories started with manpower instead of machines, including some battery manufacturers.

This is predictable.

However, what is unexpected is the outsourcing mode, especially the outsourcing of the electronic manufacturing industry. This mode is applied to the extreme, and the use of cheap labor to maximize the scale economy effect.

Economies of scale are usually associated with capital intensive industries.

If an enterprise needs a fixed investment, it needs a certain scale to get the return on investment.

In China, outsourcing is characterized by labor intensive and huge scale.

Some enterprises employ one hundred thousand workers (usually in the same place).

How do they develop economies of scale?

I think there are two major factors contributing to the growth of these enterprises.

First, it is not easy to establish partnerships with key customers such as Apple Corp or Hewlett-Packard Co.

It usually seems that years of communication can get trust from the other side.

Suppliers who stand out from their peers are more likely to gain favor.

Over time, the total number of suppliers is decreasing.

As a result, the size of the suppliers is constantly expanding, and its economies of scale results from good customer relationship management.

The second is labor management.

This is perhaps more important than the first point.

The core competitiveness of a successful Chinese foundry enterprise is to squeeze labor force to the maximum.

This is closely related to the organization system of the company.

If a company employs one hundred thousand Chinese employees, then it needs a huge system to organize recruitment, accommodation, training and staff management.

Tracing the source of militarization management

After the Meiji Restoration, Japan hopes to industrialize rapidly and face the challenge of pforming agricultural labor into industrial labor force.

Japanese companies choose the army as a model for learning.

Because at that time, the army was also faced with similar problems: training rural boys to be soldiers with combat capability.

The army has adopted the method of maximum pressure and strict overall control.

As a result, factory uniforms, morning exercises, loyalty to the company, and so on, became the characteristics of Japanese factories later.

This system has also been extended to other East Asian regions.

Taiwan is particularly affected by it.

Because Taiwan enterprises are well versed in the Japanese management mode and have a good understanding of the Chinese labor market, their factory management in mainland China is even better than that in Japan.

The success of Taiwan has promoted the pformation of the US economy.

In this way, multinationals focus on R & D, brand promotion and distribution.

The profit relationship between Brand Company, its distribution companies and Taiwanese OEM companies is sustainable. The premise is that China's labor resources are still abundant, and Chinese workers are still willing to accept the factory's working conditions.

In the early 90s of last century, I was optimistic about China's future development.

I saw many Chinese workers working for a lot of money to go far away, for two reasons: first, the influence of Chinese "bitter culture"; and two, the requirement of family responsibility.

The girls in the factory can earn 100 dollars a month to pay for their brother's tuition, buy medicine for their mother, and buy a house for their families if possible.

She sacrificed herself for the family, in other words, she did not have her own life.

In the final analysis, they accepted a difficult environment based on three factors: one, she can suffer hardships; secondly, their family needs the money to live; third, prices are low, and 100 dollars are already a lot of money.

Now these three factors have changed.

First of all, the new generation of China is not willing to bear hardships.

They are the first generation to grow in China's economic take-off. There is no need to worry about starvation and freezing.

Although the family planning policy may not be strictly enforced in some villages, the birth rate has been greatly reduced in general, so this generation has grown up in the favor of parents.

Not so hard-working character traits make Chinese teenagers more common with other countries' peers.

Secondly, the life of rural families is not so bad as it was ten years ago.

Every family has fewer children to support.

The government pays more attention to rural education than before. With the medical insurance system, families fall into economic crisis due to illness, and most rural families have built their own houses.

The family responsibilities of contemporary rural youth shoulder are not as heavy and urgent as before.

Third, inflation has seriously eroded the value of income.

Today's rural youth aspire to live in big cities, but the rate of increase in urban housing prices is 2 times faster than that of their wages.

Their dreams are more difficult to achieve than they were ten years ago.

Times have changed.

Recent events in enterprises such as Foxconn mean that a new face has emerged: labor resources are not as abundant as before, and workers are not as obedient as they used to be.

In the above cases, the way of dealing with the government and enterprises exposed their ignorance of this fact.

They still believe that these are only individual incidents, and that the normal situation can be restored by pressing and buying.

Here we need to consider two issues: generation gap and the unusual relationship between local government and enterprises.

Today's young people and the last generation seem to come from different centuries.

Today, government officials and business leaders belong to their fathers.

Judging from the recent labor crisis, the government and business circles seem to be dealing with the labour crisis from their own perspective.

Rulers' decisions often start with maximizing short-term marginal effects rather than personal dreams or long-term goals.

Young people are more concerned about their future development.

They want to settle in big cities, and like other countries' peers, they look forward to engaging in interesting and well paid jobs.

The current factory system is unable to satisfy their dreams.

Those factories are usually far away from the urban areas and are relatively closed.

Young people who have left the countryside to come to the factory have found it hard to really integrate themselves into the city life, which is more lonely here than in their hometown.

They live outside the city and the countryside and live the most isolated lives.

Under the existing salary system, their life is very difficult.

The basic salary is very low, and only a lot of overtime work can earn nearly 2000 yuan monthly income.

They have no time to plan, improve themselves, or integrate into the city.

In a few years, they will lose their youth and work, but still have no ability or money to enjoy the city life.

Business leaders and government officials will naturally ask: why can't the workers today accept the situation as they did ten years ago? They don't understand that the times have changed.

The previous generation of workers paid close attention to the economic benefits of their relatives rather than their own future.

The special relationship between local government and factory owners is a resistance to solve or avoid labor problems.

Most coastal factories recruit from the interior.

The local government has almost no responsibility with the workers.

On the other hand, the relationship between the government and factory owners is very close because of taxes and other benefits.

When dealing with labour problems, the local government naturally stands on the side of the enterprise.

To improve the status quo, the central government should strictly examine and approve large-scale industrial sites far away from the urban areas.

Factories in the future should be near developed cities, encouraging workers to rent local houses, rather than living in dormitories, as in other countries.

They deserve the opportunity to integrate into city life.

The best way is to locate the factory near the worker's residence.

Although some people are aware of the challenges of China's labor force, some government officials and business leaders may not be aware of this.

The impulse to maintain the original model and protect western customers' business has blinded their eyes.

When dealing with such crises like Foxconn, the measures they take are not effective.

I fear that a more serious crisis will happen again.

Ultimately, market forces will break down the current system.

Workers can choose to leave.

They can participate in urban services.

Though wages may be a bit low, life is much better.

Moreover, they have the opportunity to integrate into city life.

The rise in labor costs will eventually force factories to locate in labour intensive places and provide humane working conditions.

The coastal governments that refuse to change will be the biggest losers.

In order to ensure revenue, the government hopes to stand side by side with the factories, but eventually they will lose their jobs.