When “Made In China” Moves Overseas. The Struggle of Indonesian Workers in the Smartphone Manufacturing Industry

 

China smartphone industry has expanding their sales in the global market considerably in recent years.  China’s four major phone companies, namely Hua Wei, VIVO,OPPO,Xiao Mi have gained significant share in the market. During the fourth quarter of 2018, these companies comprised 37% of the global smartphone sales volume.  India and Indonesia are among the populous countries where smartphone sales continues to expand, and become important battlefields for smartphone companies.

 

India has adopted a policy on raising tariffs on imported smartphones in recent years to successfully force all main smartphone companies to set up factories in the country. Indonesia government has implemented similar policy to attract foreign smartphone companies to establish factories in the territory. A regulation that came into effect from January 2017, requires 40% of the parts in smartphones and 4G tablets are to be manufactured locally. Companies that fails to comply to the regulation will effectively give up the Indonesian market. Apparently, such policy intends to make Indonesia an important base for smartphone production.

The four Chinese smartphone manufacturers have already set up either their own factories or original equipment manufacturers (OEM) factories in Indonesia. These include Xiaomi’s OEM manufacturing plant in Batam. Xiaomi’s factory and headquarters are both located in Batam in collaboration with Sat Nusapersada, which employs more than 1000 workers. In 2014, OPPO has set up a factory with a floor area of 30,000 sq. m. in Tangerang near Jakarta. The factory started its operation in the first quarter of 2015. Huawei has its own factory set up in Sidoarjo near Surabaya. By the end of 2016, VIVO has also established its first factory in Cipuka in Banten. While 2017, VIVO further expanded its operation by opening up a second factory.

 

As the investment and the scale of operation expands, a large number of local people are employed in the industry. For instance, in the fourth quarter of 2017, VIVO employed almost 14,000 workers with the majority of the workforce were locals.  But at the meanwhile, while the industry continues to grow drastically, so as the number of labour disputes. After the democratization of Indonesia, the government has made substantial revisions on the labour laws to protect labour rights. For instance, “Labour Union Law” is  among such revisions to protect workers’ rights to freedom of association and collective bargaining. Moreover, the labour law stipulates broader protections on working conditions such as working hours, minimum wage, child labour, women workers, layoffs and employment termination, as well as establishing a labour court that handles labour disputes. Despite such revisions, the government had drawn criticisms for its incompetence to enforce the law.  For instance, only few dozens inspectors are responsible for the inspection of an industrial park that has tens of thousands of workers. Consequently, many workers fell victims to issues such as low salaries, insufficient occupational health and safety protection, precarious work conditions, and no dismissal compensation, let alone health insurance or pay rise.

For those workers who do not have established employment relations with their employers, they are often the most vulnerable due to the lack of legal protection. As employers try to evade their responsibilities employers, many workers are subjected to unfairness and discriminations. In 2013, workers in Huawei’s production plant in Jakarta went on strike. The workers were enraged at the management’s importation of illegal Chinese workers and dismissal of the striking workers. In Indonesia, foreign workers are required to apply for work permits under employment contracts that regulate the term of employment and job duties. However, workers who are imported by illicit channels are no longer bounded by such regulations, and hence, apparently lifted the term limitation placed on foreign workers. Moreover, many local workers are being treated unfairly by and large. Despite five Chinese workers and one Egyptian worker were subsequently detained and questioned by the Immigration Office in Surabaya, Huawei claimed that the incident was a misunderstanding, whereas the workers insisted that it was only the tip of the iceberg, meaning that only a small fraction of companies were fully complied to the government regulations.

Chinese investment and the influx of migrant workers is causing great concerns in Indonesia. A video shared on social media illustrated that local workers in Sulawesi were protesting against illegal Chinese workers who allegedly snatched jobs from local workers. However, the local government later denied such accusations and asserted that the protesting workers merely demanding pay rise. Local people are worried that the influx of visa-free Chinese tourists are, in fact, illegal migrant workers. However, the Indonesian Government reiterates legal foreign workers are welcomed in Indonesia to enhance the technical level of local workers and insists that they have to go back to their country of origins when their contracts run out. However, as labour law is not being implemented effectively in Indonesia, the magnitude of the problem is often played down by the Government. It is commonly believed that the actual number of Chinese workers working in Indonesia far exceeds the official statistics would suggest. Even according to the official statistics in 2018, workers from China have far surpassed their counterparts from Japan, Singapore, and India to become the largest migrant workers population in Indonesia.

 

As labour rights awareness continues to enhance, coupling with the frequent breakout of labour disputes, labour policies will become more important on the national agenda. The plethora of workers strikes for pay rise and other issues in 2012 and 2013 involved millions of workers in industrial parks across the country. Foreign migrant workers have also become a hotly debated election issue this year. Presidential candidate, Prabowo Subianto, from the opposition party criticized the current situation and suggested to put the local workers first, “we are not anti-foreigner but we need to take care of our own people, if we open our door to foreign workers, then what is left for us?” As China’s foreign investment increases its scale in Indonesia, greater controversy may elicit.