Mixed Supervision Of Global Industrial Chain And Labor Relations In Textile And Garment Industry

The labor-intensive characteristics of the textile and garment industry determine that its development is highly dependent on labor costs. After World War II, Asian countries promoted the development of the textile and garment industry through the development of an export-oriented economy. The focus of the world textile and garment industry shifted from Europe and America to Asia, forming a global industrial chain.

Textile in mainland China

Overseas investment in garment industry

Labor relations risk

The textile and garment industry in mainland China has been the main force in the manufacturing industry, providing a large number of jobs. With the continuous increase of manufacturing costs and the conclusion of the free trade alliance in the external area, more and more Chinese textile and garment enterprises have transferred to overseas investment. According to the Ministry of Commerce statistics, foreign direct investment in China's textile and garment industry totaled 8 billion 830 million US dollars from 2003 to 2017, accounting for 7.61% of the total foreign direct investment of manufacturing industry. Because Southeast Asian and African countries have low, abundant labor resources and enjoy preferential tariff preferences granted by developed countries, Chinese textile and garment enterprises have shown the layout pattern of "mainland China + Southeast Asia + Africa".

In the process of overseas investment by Chinese textile and garment enterprises, the risk of labor relations caused by strikes is the main risk. The reason for the strike is that Chinese enterprises do not strictly abide by local labor laws and lack effective management means. However, no matter what causes the strike, it will bring reputation and property losses to Chinese funded enterprises, and even affect the acquisition of subsequent orders.

Vietnam is the largest country where Chinese enterprises invest in textile and garment enterprises in Southeast Asia, and Vietnamese workers are ready to take collective action at any time. According to the world bank survey, the number of strikes in Vietnam has been increasing year by year from 2005 to 2011, and the number of strikes reached the highest point in 2011, up to 857, of which the clothing and textile industry has the largest number of strikes in the manufacturing industry.

In addition to Vietnam, Burma is the second hot spot for Chinese textile and garment enterprises to invest in Southeast Asia. A SMART Burma project, funded by European Union and launched in 2013, aims to improve the working conditions and operational efficiency of Burma garment manufacturers through training. According to the information provided by the project, 60% of the more than 1000 industrial dispute cases accepted by the clothing industry in Burma occurred in foreign-funded enterprises (most of which are Chinese funded enterprises).

Similarly, how to deal with workers' strike in Kampuchea's textile and garment industry is also a major challenge for Chinese enterprises.

Labor standards for textile and garment industry

Global governance agreement on working conditions

With the extension of the global industrial chain of the textile and garment industry, the manufacturing enterprises in the host country constantly reduce labor costs in order to obtain orders, and the local government's ability to supervise labor is weak, resulting in serious damage to the rights and interests of workers. In the early 1990s, some of the world's leading brands were exposed to bad working conditions in the developing countries. Under the pressure of consumers, labor activists and NGO organizations, Brand Company considers itself responsible for the labor standards and working conditions of suppliers in developing countries. More and more western brands and retailers are adopting voluntary and corporate behavior to supervise the labor standards and working conditions of developing country producers. However, these regulatory effects are limited. Whether it is the audit arranged by the producers or the third party audit arranged by Brand Company, the producers will symbolically comply with the legal requirements, so that the conditions and labor standards of the work site seem to be compliant.

To this end, the governments of developed countries and the International Labour Organization (ILO) have actively participated in the supervision of labor relations in developing countries. There have been mixed regulatory projects involving major stakeholders and independent agencies in the global industrial chain. The first project appeared in Kampuchea, a textile and garment producer in Southeast Asia. In 1999, the United States and Kampuchea redrew the multilateral fiber agreement (MFA) of the US Cambodia bilateral textile trade agreement, which used labor standards and working conditions to raise more export quotas. Then, at the invitation of the US government, ILO set up a "better producer" (BFC) project in January 2001 in Kampuchea to improve the labor standards and working conditions of Kampuchea's garment export manufacturers, and provide credible labor standards and working conditions compliance information through supervision, training and suggestions and information disclosure to help the United States implement trade agreements. This regulation of labor quota and working conditions in exchange for export quotas, coupled with BFC's supervision and improvement of producers, has raised the compliance rate of labour standards and working conditions of Kampuchea's export garment manufacturers from 52% in 2001 to 95% in 2008. In 2007, the BFC project rose to the whole ILO project and changed its name to "better job" (BW). It aims to independently supervise the textile and garment industry around the world.

From the BW practice in Kampuchea, we can see that the government of the importing country and the International Labour Organization have intervened in the management of labor relations in the production base of the exporting countries, that is, the front-end of the global industrial chain extends further. "The labor standards and the compliance of working conditions have orders, so that tariff preferences can be obtained", breaking through the supervision pattern of the local government on the game between the employers and the employees, and introducing more stakeholders. Under such circumstances, the second countries in Southeast Asia are Vietnam. Since the economic reform in 1989, Vietnam has given workers more rights to join societies and to strike. This has also led to a growing number of strikes in the clothing and shoemaking industry. In order to protect the development of clothing and footwear industry and continue to attract foreign investment, in 2009, the Vietnamese government negotiated with ILO to take the initiative to request BW projects in Vietnam.

After Vietnam, two other countries in Southeast Asia have taken the initiative to join the BW program, including Indonesia, which joined in 2011 and Bangladesh, which joined in 2014. Bangladesh joins the BW project, and there are two five year regulatory projects similar to BW in operation. As of 2015, the BW project was operating in Kampuchea, Bangladesh, Haiti, Indonesia, Jordan, Lesotho, Nicaragua and Vietnam, covering 1057 manufacturers and 1 million 190 thousand workers.

Overseas investment of textile and garment enterprises in mainland China

Countermeasures to avoid labor relations risks

With the continuous development of the "one belt and one way" construction, we can expect that Southeast Asian and African countries will make full use of the opportunity of China's textile and garment industry transfer, draw up a series of policies to attract more direct investment, expand exports and improve the industrial chain. Accordingly, China's land enterprises will also encounter more and more kinds of labor relations risks. Therefore, there are two points to be taken to avoid the risk of labor relations: first, strictly abide by all kinds of labor laws and regulations in investment host countries and fulfill corporate social responsibility. Second, join the joint monitoring projects of various labour standards and working conditions that host countries are working on. In the global textile and garment industry, compliance with labor standards and working conditions implies the need for market access and order acquisition.

As the "going out" enterprises in mainland China, especially textile and garment enterprises, we should actively abide by the core labor standards and working conditions of ILO. BW's practice has proved that the compliance enterprises are conducive to the improvement of the company's overall profit margin, employee retention rate, output and efficiency, and at the same time, improve the management of labor relations and build a harmonious atmosphere of labor relations.

(this article is a major research project of the Ministry of education, "Research on the labor policy of China along the belt road" and the adjustment of China's industrial structure, and the National Social Science Fund Project "the research on the change of labor system and the protection of workers' rights under the background of industrial transfer").

(author: School of business administration, South China University of Technology)