How old-school factories stay alive in China's south

Sat May 21, 2016 9:19pm EDT
 
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By Alexandra Harney

SHILING, China (Reuters) - Squeezed by high costs and unpredictable demand, some factories in southern China's manufacturing heartland are turning to a new strategy to survive: hiring workers by the day.

It is a far cry from Beijing's vision of a slick, hi-tech manufacturing future of computers and chip makers: on a warm morning in the southern town of Shiling, dozens of workers gather on a city street to haggle for a day of work making bags for $20 to $30.

Factory owners in this leatherworking town, and in those nearby, say just-in-time labor allows them to stay competitive, even if day wages can be higher, individually, than full-time salaries.

Workers, operating in a legal grey area, say they tolerate the conditions because many fear factories offering permanent jobs could fail to pay if clients dry up and the manager runs off.

"We never used to hire temporary workers, because labor costs were not very high. Our workers were on staff," said Huang Biliang, who runs a button factory in the southern city of Dongguan. "But recently we've started to hire more temporary labor."

In a stainless steel factory in the nearby town of Jiangmen, David Liang, manager of Chiefy, agrees: "Every additional (permanent) worker I hire is an additional risk."

The result is a section of China's manufacturing base that has adapted to volatile conditions and higher wages - keeping the country's hold on some labor-intensive work that it might have lost to cheaper regions elsewhere in Asia.

Struggling companies do occasionally turn to temporary workers - but this is a change for China, where authorities have sought to crack down on precarious employment, introducing tougher rules in 2012 to protect so-called 'dispatch' workers.   Continued...

 
Workers work at a small-sized factory producing bags at Shiling town in Huadu, Guangdong province, China April 28, 2016. REUTERS/Alexandra Harney