Foreign companies and local workers in China by Merete Lie and Ragnhild Lund

15. Jun 2009

Over the past twenty years the authors have studied how Norwegian companies have transferred production to Asia. Their focus is on the micro-level of globalization processes and their ambition is to bring ordinary people into studies of globalization by showing how Norwegian companies in Asia function as meeting places for global and local actors.����� During the early 1980s, we studied the relocation of Norwegian production to the Newly Industrialised Countries (NICs) such as Singapore and Malaysia and what impact this development had on local female workers. Another shift of global production took place during the early 1990s, when the increasing flows of information, knowledge, and services became more prominent. We studied how these changes affected production as well as workers in the increasingly more consumer and market-oriented societies in Southeast Asia.� This development coincided with the new economic policies in China, which facilitated a shift towards China becoming the main target of foreign investments.

The story of one Norwegian company’s transfer to China, as described in the box below, may serve as a good example of the development referred to above. It is useful as a backdrop to understanding different dimensions of social and economic change, and how this changes the lives of those who are recruited to work in the foreign-owned companies.

The company in case is a 100 percent family-owned Norwegian enterprise. At present, it has subsidiaries all over the world, but the major part of the production takes place in Asia.The company became �international’, by setting up a factory in Singapore in 1972. The main purpose was to gain admittance for its products on the market in Asia and Oceania. At the same time, production of some of the more labour-inten�sive products was transferred from Norway. The Singapore factory was made as technologically advanced as the one in Norway, and the products were mainly of the same type.

After some years in Singapore, the simpler manual tasks were set out to home workers, often wives or relatives of employees, and eventually transferred to a subcontracting company which established itself in a residential area and employed former housewives. Wages were rising quickly in Singapore during the 1970s, which resulted in a scarcity of this type of labour. The Singaporean authorities encouraged companies to transfer labour intensive production elsewhere, because they wanted to attract high-tech enterprises. Accordingly, in 1979, the company established a subsidiary across the border in Southern Malaysia.

In the beginning, the Malaysian company was set up on rented premises. It was owned and managed by the company in Singapore, supplemented by a small share by a local owner. The production in Malaysia was almost entirely manual, and the great majority of the workers were young women. After 10-15 years a subcontractor was established in the Philippines to take care of the most labour-intensive tasks.� Some of the manual tasks were also gradually transferred to a subcontractor in Mauritius. The factory in Malaysia was reorganized with machinery transferred from the enterprise in Singapore and became a production unit technically in-between the advanced one in Singapore and the low-tech one in the Philippines.

In 2001, the company established itself in China. Machinery was transferred from the other production sites. In China, production has expanded fast, whereas activities have been scaled down in Norway, Singapore and Malaysia.

Our study in China is based on interviews in seven Norwegian companies in the Shanghai area, where we have interviewed employees from the top to the shop floor level. Here, we will focus on the blue-collar workers.

In this work, we have understood globalization as interface situations, in which the foreign companies are meeting places of local and global actors. Too often, globalization is presented as a one-way process where multinational corporations (MNCs) are seen as the vital actors and driving forces, whereas local populations are presented as passive recipients of social change. Based on our previous studies in Southeast Asia, however, we hold that globalization is not just a one-way process. The strategies of local actors are important to the global actors, though this is not saying that they have equal influence on the processes of change.

Questions raised in relation to globalization are usually of a general character and concern macro-level issues. For example, will globalization result in increasing or decreasing social difference, and will people and places become homogenized throughout the world? Too seldom do we hear about what actually takes place when global actors such as multinational companies meet the local population. Our ambition in our research is to bring ordinary people, who live their lives locally, into studies of globalization. How do people at the local level experience and adapt to the changes brought about by the processes of industrial restructuring, and how do they try to benefit from a new situation?

Company motives

Asking why the companies have chosen to move production to China, the motives can be summed up as a combination of costs, skills, infrastructure and market.

Production costs are an important reason for most companies to locate themselves in China. The low costs are mostly related to wages but also to cheaper raw materials. The estimates given suggest that labour costs are about 10% of the costs of running a similar factory in Norway, whereas in Malaysia 20 years earlier, the same estimate was 20% of running costs in Norway. The low wage-level relates to China’s great surplus of labour, providing a never-ending stream of applicants for unskilled work.

However, it is not only cheap labour that is available in China but also highly skilled personnel. This concerns technical staff from operators to engineers, as well as management personnel for sales, marketing, human relations, etc. A well-qualified staff, including human relations officers, accountants, commercial managers, and technical managers, is usually recruited locally. Thus companies are not only attracted to China because of an inexhaustible pool of labour for industrial work, but also because they can recruit well qualified staff. Companies are dependent upon a staff with local knowledge of how to deal with workers, customers and authorities. In addition to their professional work, they play important roles as mediators between foreign managers, boards and owners on the one hand, and the local
employees on the other. This large and growing number of ambitious young people for high-level positions has not received the same media attention as the large number of industrial workers.

Workers in the �New China’

Most workers in the companies we studied were below the age of 35. In the job market, companies generally specify their preferred gender and age (for instance 18-22) when they advertise for new production workers. Accordingly, to be over 30 years old is considered �old’, and workers who fall into this category have more difficulties in finding new jobs. Still, there was a sharp distinction between workers who grew up in the 1970s and those who have grown up since China opened up its economy. Workers in their thirties represent �old China’, many have work experience from local, state-owned companies (SOEs) and are generally married, some coming from formerly rural areas. The young ones, who grew up during the 1980s, represent �new China’. They have limited experience of working under the old communist regime, many have grown up in the city or in towns, and they are generally unmarried. We found these two groups to be different in their ways of approaching industrial work and in terms of ambitions, dreams, and future plans.

The majority of the young unmarried workers we met live with their parents. Some workers share a flat with friends from their home town, or they live in dormitories or flats provided by the company they work for. We also found that after marriage, young people prefer to live by themselves, leaving the parents on their own. The husband-wife relationship is becoming the stronger tie in the family relationships, not the tie between parents and children.

All the young workers emphasised that a convenient age for marriage is around 25 years. This is the time when they consider themselves mature and to have managed to consolidate their education or work ambitions. However, the interviews show that women now increasingly get married in their early thirties, which is regarded as late by most Chinese. As to the question why, they claimed that times have changed; they have more pressure at their present work-places, they have ambitions of getting more education and work experience before they settle down, and some even consider it to be difficult to raise a child in today’s China because of the high costs of living, long working hours, time spent commuting, and lack of child care.

The elderly are increasingly left to look after themselves in their old age because of the preference for nuclear family households. However, our data shows a different type of dependency, namely that of the young depending on the old because of the lack of a proper child care system.

The two-income family is the common pattern in urban China today. Young couples tend to set up households separate from their parents, and increasingly so because of labour migration. The changes in family patterns and family support relating to child-care facilities and how people solve these new challenges will have a marked influence on the direction of China’s future development.

Global enterprises – are they all the same?

Studying foreign companies as meeting places of global and local actors in China, we understand that the foreign companies position themselves so that they can benefit from the new situation, but so does the local population. To a certain extent, their aims are compatible, in the sense that the foreign companies bring job opportunities and economic growth. Among the older generation of workers, job security is of foremost concern. The young generation is, however, eager to succeed in the new economy. They are highly career-oriented and expect promotion, that is, a rising salary over time. If it is not achieved within one company, their strategy will be to change jobs as they see fit.

We find that among workers, Norwegian companies are not considered particularly attractive work places. Even though their work conditions and work ethics are appreciated compared to those of other foreign companies, Norwegian companies are not generally held to be better than others. Their salaries are considered to be in the low range, while the working conditions are considered better than in large multinational companies, especially Japanese and other Asian ones. In one significant respect, however, they are found to be much better: they are said to be �women friendly’. Unlike other companies, both among workers and among highly qualified staff, women feel they are given opportunities for advancement and that skills are recognized and valued.

[i] The research is presented in Lie, M, R Lund and GH Hansen (eds): Making it in China. Kristiansand: H�yskoleforlaget/Norwegian Academic Press 2008.Ragnhild Lund is Professor of Geography/Development Studies at the Norwegian University of Science and Technology, NTNU. Her main research interests are�gender and development, development induced migration, post-crisis recovery and crisis communication, youth and organisational learning of NGOs. She is author of Gender and Place (1993), In the Maze of Displacement (2003), and Global Childhoods, Globalisation, Development of Young People (2008). She has also published articles on orphanhood and HIV/AIDS, urban poverty and livelihoods.

Merete Lie is a professor in the Department of Interdisciplinary Studies of Culture, at the Norwegian University of Science and technology, NTNU.

Her main research interests are gender and technology, and gender and globalization. She is i.a. editor of He, She and IT Revisited: New Perspectives on Gender in the Information Society (2003)

Lie and Lund have co-authored Renegotiating Local Values. Working Women and Foreign Industry in Malaysia (1994) and co-edited Making it in China (2008, with GH Hansen).