Chinese Workers’ Labour Dispute in Saipan Exposing Major Issues in Chinese Overseas Investment
This summer, an industrial action broke out on the quiet island of Saipan, a popular vacation destination in the western Pacific Ocean which is a commonwealth of the United States. Chinese construction workers, employed by Chinese out-contractors Metallurgical Corporation of China Limited, Nanjing Beilida New Material System Engineering and Suzhou Gold Mantis Construction Decoration staged a protest to claim missing wages and labour insurance while working on the Imperial Palace Casino Project owned by the Hong Kong listed company Imperial Pacific International Holdings Ltd. According to the online version of People’s Daily, each of these workers paid 10,000 Yuan to the labour agencies before leaving China while being promised to earn 300 Yuan per day on Saipan Island, which is far lower than the local minimum wages. Furthermore, workers found themselves arriving at the island without valid work permit and their daily wages shrink to 200 Yuan1. In March 2017, a worker fell from the construction site and died. It triggered workers’ anger and they started to fight for their rights. At the time of writing, their struggle is still ongoing with 37 workers, employed by Metallurgical Corporation of China Ltd., staying behind Saipan and demand for back wages from February 2017 2.
In line with President Xi Jinping’s “One Belt, One Road Initiatives”, Chinese enterprises are encouraged to invest overseas. For Chinese enterprises, investing overseas is also a solution to tackle the escalating labour costs and help absorbing the industrial overcapacity in China. But at the same time, Chinese overseas investments creates a number of labour and environmental issues in other countries. The labour dispute on Saipan Island is just the tip of the iceberg as reports of violations of labour rights committed by overseas Chinese-owned enterprises are not uncommon. In the age of globalization, the transfer of capital and production process is becoming more mobile than ever. Even decades ago, transnational corporates as well as small to medium enterprises have been actively tapping into unexplored areas in exploiting cheap labour and emerging markets. In order to maximize profit, basic labour rights are often sacrificed, as we have seen in sweatshops of suppliers for Apple Inc. and the military management style of Korean enterprises. With Chinese investments going global, their overseas practice is also under the spotlight. Despite Chinese overseas investments may have its unique experience, there are five common major issues in their practices:
1. Disregarding local labour laws
In order to slash labour costs, Chinese enterprises often ignore labour legislation in China and behave similarly in other developing countries. Most of the labour disputes involving Chinese-invested enterprises took place in developing countries with relatively backward legal system. Chinese enterprises tend to corrupt local officials to “resolve” labour disputes, which intensify the conflict with local workers. In January 2017, a three-week long strike broke out in Hangzhou Hundred-Tex Garment (Myanmar) Company, because the enterprise did not pay wages as required by Burmese labour laws and dismissed the trade union chairperson 3.
2. Violations of trade union rights and rights to collective bargaining
Chinese enterprises commonly suppress trade unions. Due to cultural difference and language barriers, Chinese employers generally refuse to engage in collective bargaining with overseas workers. They even retaliate workers and union leaders by dismissing them, when labour disputes break out. In September 2015, Ningxia Zhongyin Cashmere Co. Ltd. illegally dismissed 47 workers and three union leaders, due to their participation in the Cambodian Apparel Workers Democratic Union (C.CAWDU) 4.
3. Massive import of Chinese workers
In order to settle the labour surplus issue in China, Chinese enterprises tend to import Chinese migrant workers for their overseas construction projects. Statistics show that by the end of November 2015, 7.96 million Chinese workers have been recruited through agents to work overseas. Together with the undocumented migrant workers from China, who are believed to come in overwhelming numbers, they would be considered as a threat to local jobs by the local workers. Chinese and local workers might get different wages and live in different quarters, which arouses more tension. In August 2016, Kenyan workers staged a strike, attacked and injured 14 Chinese workers at China Road and Bridge Corporation (a subsidiary of state owned China Communications Construction). On the one hand, Kenyan workers complained about formidable labour conditions, wages and importation of Chinese labour for the local railway construction project 5 On the other hand, Chinese workers are also victims of exploitation from labour agencies and multi-level of subcontractors. The Chinese workers on Saipan Island is a vivid example of labour exploitation.
4. Labour exploitation from multi-layer of subcontractors
Different from foreign companies which mainly invest in the manufacturing sector, Chinese enterprises also invest heavily on large-scale overseas infrastructure construction projects and develops a multi-layer subcontracting system to recruit workers. Higher-level of subcontractors maximize their gain by exploiting the lower-level subcontractors and avoiding responsibilities. As a result, Chinese migrant workers’ rights to employment, wages, occupational safety are often not protected and thus, labour disputes break out frequently. As illustrated, the industrial actions on Saipan Island and in Kenya both took place in the construction industry.
5. Lack of corporate social responsibility
Transnational corporate have a long history of labour exploitation and Chinese enterprises are not the only offenders. Yet, the difference is, China is neither treated as a developed country, nor being a member of OECD. Thus, Chinese enterprises are not required to comply OECD’s guidelines for multinational enterprises and mechanisms adopted by the international community to monitor multinational enterprises do not apply to Chinese firms. Moreover, as civil society is underdeveloped in China, consumer campaigns are relatively powerless to supervise and call for action against misconducts of the enterprises. In short, Chinese enterprises have not built up a management style which can effectively put corporate social responsibiliies into practice. They might be concerned about negative media attention internationally and in areas they invest in, or they might want to keep a good image for the state, but in practice, they are not obligated to comply with any monitoring mechanisms.
Without a functioning civil society and independent trade unions in China, the voice of international community and local trade unions / labour organizations would be vital to check and balance Chinese enterprises’ behaviours overseas. In future, we should further unite with other overseas trade unions and labour organizations, to expose and put pressure on Chinese enterprises when they violate labour rights, support local workers’ struggles and make Chinese enterprises realize the importance of collective bargaining and CSR.
1 Chinese workers lured exploited by overseas employment agency, 9th May 2017. People's Daily Online: http://en.people.cn/n3/2017/0509/c90000-9213002.html.
2 As Saipan Casino Opens, Migrant Construction Workers Still Fighting for Wages & Injury Compensations, 10th July 2017. Hong Kong Confederation of Trade Unions: https://goo.gl/JH5knb
3 Strike at Chinese factory in Myanmar another bump along 'One Road', Kinglin Lo, 11th March 2017, South China Morning Post: http://www.scmp.com/news/china/diplomacy-defence/article/2077951/strike-chinese-factory-myanmar-another-bump-along-one.
4 UNIQLO 縱容其柬埔寨代工廠打壓工人運動, 12th October 2016. Inmedia: http://www.inmediahk.net/node/1045126
5 14 Chinese rail workers nursing injuries after attack, 2nd August 2016. Daily Nation: http://www.nation.co.ke/news/Angry-youth-attack-Chinese-rail-workers/1056-3327302-h7p9ljz/index.html