China’s Economic Transformation: Protests Emerged in the Internet Plus Sector. Workers of State Owned Enterprises’ 17 year-Fight

A press conference was hosted by the Hong Kong Confederation of Trade Unions (hereafter: HKCTU) on 23 October 2018, to release its annual “Investigative Report on Labour Rights in China of Hong Kong Enterprises and Hong Kong Listed Companies 2017-2018” (hereafter: The Report). 104 cases were identified, including 12 collective actions in Hong Kong-invested enterprises, according to The Report. In those 12 cases, at least 3000 workers were involved in the struggle. Listed companies, such as CK Hutchison Holdings Limited was named in The Report. 92 cases involved China’s state-owned enterprises (hereafter: SOEs), which are listed in the Hong Kong Stock Exchange (hereafter: HKEx) and operate in Hong Kong, such as China State Construction International Holdings Limited and PetroChina Company Limited, affecting a minimum of 1,800 employees. However, China’s severe media censorship on workers’ struggles offers limited details of these cases. Thus, over 30% of the cases regarding listed companies did not included the numbers of affected employees and the scale of protests.

Compared with the previous annual reports, some changes on research method were made in The Report. China is actively acquiring more significance and influence internationally through its “One Belt One Road” cooperation programs, investing and contracting numerous infrastructure projects. HKCTU’s research discovered that SOEs are the worst offenders of labour rights violations and many protests take place in the SOEs, thus, it questions if such a “China Model” would be exported together with China’s foreign investment. As an international financial centre, HKEx hosts many of these SOEs and therefore, the HKCTU included China’s SOEs which are listed in Hong Kong in its research, to ensure stakeholders in Hong Kong to have a clearer picture of these companies’ labour conditions.

 

Hong Kong-invested Enterprises in China

Among the 12 collective actions in Hong Kong-invested enterprises in China, 50% (6) of the cases were caused by missing economic compensation (known as “severance pay” in Hong Kong). Over 50% (7) of the cases were due to missing wages, including listed companies such as CK Hutchison Holdings Limited. 23% (3) of the collective actions were strikes, and the rest were collective protests. The number of the cases has declined by 43% in 2017-2018, the number of strikes has also declined by 7%. One of these cases draws most of the attention, namely Chinese workers in a Hong Kong-invested Internet Plus enterprise launched a collective action.

On 29 April 2018, drivers of Lalamove in Changsha City, Hunan Province launched a strike to protest against the company’s cut on their fee without consulting them. They demanded the company to pay them the original fee and resolve issues such as harsh penalties on order refusals. Within days, the strike spread to Xian, Chengdu, Kunming. Shenzhen and other cities, becoming a cross-provincial collective labour action. The protest lasted till 7 May.

 

In recent years, competition between on-demand van services intensified. In 2017, Hong Kong-owned GoGoVan’s branch in China merged with 58 Suyun, the freight business arm Chinese online classifieds giant 58 Home and became the largest logistics platform in China. As the competition between Lalamove and 58 Suyun became fierce, enterprises started to cut prices and keep their profits by sacrificing the front-line drivers, namely to cut their income. Some of the 58 Suyun drivers supported the Lalamove strike on 29 April, to protest against the competition and its negative impact on their livelihood. Though drivers of 58 Suyun in other provinces did not take part in Lalamove workers’ protests afterwards, it is clear that the competition-led exploitation has irritated front-line workers in the Internet Plus sector.  

The Internet Plus sector is emerging in China as the technology advances. On one hand, it makes life more comfortable and creates new jobs, but on the other hand, it also brings in new forms of labour exploitation. In fact, catering logistics providers such as Meituan, Ele.me are found as the very exploitative employers. Protests from their workers in recent years increase, to demand better fees and the cancellation of the vicious fining system. It is expected that more Hong Kong capital would enter this emerging sector and thus, in future, labour rights in the Internet Plus sector would become a major concern.

 

SOEs Listed in Hong Kong Stock Exchange

It is the first time that Hong Kong-listed China’s SOEs are included in the research scope of The Report. 92 cases of collective actions in this category of enterprises were identified. 95% (88) of the cases were caused by corporate offences, 82 cases involved wages arrears. Most SOEs workers protested through sit-in, street demonstrations, demanding the government to assist them in resolving the disputes.

Construction SOEs are the Worst Offenders

Over 80% (72) of the 92 cases took place in the building industry and were all due to wages-arrears. The number of cases might appear high, but the number of workers involved in each case is fewer than 50. This might reflect that employment in this industry is fragmented, with lower labour density. Paying workers on time is a basic responsibility for employers, yet many SOEs, despite their official role and linkage to the government, fail to abide such a basic responsibility. In recent years, China is investing abundantly in infrastructure projects internationally through its “One Belt One Road” programme. While SOEs are making enormous profit elsewhere, they turn their backs to workers in their home country. At the same time, some might start to worry, if China’s SOEs would export such a “China Model” to other countries and exploit workers elsewhere.

 

SOEs’ Arbitrary Repression of Workers’ Protests

20% (18) of the 92 identified protests were monitored by the police, with protesters being attacked by thugs sent by the employers or being detained by the police. Thugs’ attacks on workers were seen in 11 cases, they illustrate that instead of seeking legal means to resolve labour disputes, SOEs use violence to repress workers when they attempt to safeguard their rights.

The protest of retrenched workers of PetroChina Company Limited’s Sichuan Branch in June 2017 is a typical example, as The Report shows. During the SOEs’ reform in 2000 in China, PetroChina Company Limited adopted various means to force or trick workers to sign “buy-out offer” agreements (i.e. workers would receive a payment for their long term services to end the labour relations, then they would be either re-employed as new workers or retire early. The payment workers receive is far lower than the pension premium the enterprise would have to pay to ensure workers have proper pension), in order to avoid paying for workers’ pension insurance. Reportedly, a total of 370,000 workers were forced to sign the buy-out offer with PetroChina Company Limited during the era of SOEs’ reform. As workers retire far earlier than their retirement age, their medical insurance coverage and pension are too low to sustain. Ex-workers found themselves in such a difficult situation and started to fight for their rights. Over 1,000 ex-workers were planning to protest in Chengdu, the capital of Sichuan Province on 12 June. However, many of them were stopped by their local governments and only 300 could reach Chengdu. They launched a sit-in protest overnight at the Sichuan Petroleum Administration Bureau. On 13 June, Sichuan City Government sent a task force of 500 police officers to remove them, injuring at least 4 and detaining 15 protesters. Protesters recalled that the police had called their sit-in protest with some 200 protesters as an illegal assembly and dispersed them.

This case shows that with the help of public authority, SOEs could repress workers’ collective actions arbitrarily and therefore, avoid responsibility for the vicious means they adopted to force workers to give up their lawful pension. This is a shameful abuse of public power and the HKCTU believes such a case is just the tip of the iceberg. More SOEs’ ex-workers are expected to continue their quest for justice.

Labour Rights Violations Continue in Listed Companies

The Report disclosed 94 cases of collective actions in 26 Hong Kong-listed companies’ subsidiaries or daughter-companies in China. 24 of them are Chinese enterprises listed in Hong Kong and 2 are Hong Kong-based listed companies, including the infamous CK Hutchison Holdings Limited. 4 collective actions were launched in small-scale, with 10 or fewer participants; 48 were taken part by 10 to 100 workers and 5 were joined by over 100 workers. There was not enough information to determine the scale of the other 33 cases. With strict media censorship in China, the outside world knows very little about China’s labour conditions. Ironically, Hong Kong-listed SOEs, such as China State Construction International Holdings Limited, China Railway Construction and China Communications Construction Company and PetroChina Company Limited, all failed to disclose the collective labour actions in their annual reports, but repeatedly emphasized to be law-abiding employers in the chapter of corporate social responsibility. In its Sustainability Report 2017, PetroChina Company Limited described its labour rights in a paragraph as “(the company) improved its the performance appraisal and pay system, linked it with productivity; established, improved and emphasized the value of the positions. work performance, innovative results, to meet the wages and welfare system with the characteristics of different employees”. There are no words about the ongoing protest of ex-workers, who were tricked or forced by the enterprise to give up their pension. Obviously the current requirement of voluntary disclosure could not push the enterprises to disclose the true labour conditions.

 

Conclusion

This year’s Report analyzed how the new, emerging business model in China would exploit workers; how China raises up as a major investor internationally and in the developing world through its “One Belt One Road” programmes, but its SOEs fail to pay their fellow workers and continue to repress workers’ protests. The HKCTU urges the Chinese Government to stop repressing workers’ protests, respect their freedom of association and rights to collective bargaining, improve its legislation to protect workers in the emerging sectors. In addition, as the HKEx fails to demand its listed companies to truly disclose their labour conditions, the HKCTU recommends that it to specifically include collective actions in the scope of compulsory disclosure, to ensure all stakeholders to understand the listed companies’ conducts in terms of corporate social responsibility. It also recommends HKEx to develop a disciplinary mechanism,  to punish enterprises which violate labour legislations and to ensure listed companies to respect workers’ rights overseas.