Police and workers inside the Yue Yuen complex (Photo credit: China Labour Bulletin)

Police and workers inside the Yue Yuen complex (Photo credit: China Labour Bulletin)

The recent strike by workers at a Chinese plant operated by Taiwanese footwear manufacturer Yue Yuen was as much to do with the status of migrant workers as the firm's sharp practice, believes Mike Flanagan. And it certainly doesn't mark the start of a Guangdong Spring uprising.

Some Western media reports made a recent strike at Yue Yuen's shoe factories near Dongguan in China's Guangdong Province sound like the protests that brought down governments throughout Eastern Europe in 1989 or the Middle East in spring 2011.

Yet the strike was settled peacefully. Activists at New York-based China Labour Watch claim to have uncovered similar justified grievances in every Chinese business investigated over the past decade, but there have been no similar strikes.

Which makes me suspect the Chinese government has a better grasp of what matters to Chinese workers than most Western reporters and activists.

What actually happened
In early April, Yue Yuen workers who'd moved to Guangdong from Western China found they couldn't get their children into local schools, because they didn't have the right papers. The document problem turned out to be connected with Yue Yuen under-reporting their wages and paying fraudulently low social security contributions - thus cutting workers' health coverage and pensions.

Over 30,000 workers went on strike. They settled at the end of April, costing Yue Yuen $27m in lost production, a further $37m in extra contributions for 2014 and a so far uncalculated sum for earlier unpaid contributions.

How the Chinese government reacted
The possibility of mass unrest unseating China's government has preoccupied the country's rulers since 1989 - and they've developed a carrot-and-stick strategy for avoiding the fate of Europe's Communist governments.

1: Accommodate worker demands
Strikers in Poland and Egypt were being paid peanuts; Yue Yuen workers are just about the highest paid people in Asia, outside Japan and Korea.

Industrialising to create profitable firms able to pay those wages has meant the biggest migration in history from China's rural western provinces to the cities on the east coast. Those migrants around Shanghai and Guangdong are resentful at being treated as second-class citizens - but their housing, healthcare and schooling are far superior to slums in Dhaka and Mumbai.

The Chinese government is positively encouraging activism on issues (like pollution) where it agrees with activists - and leading the way in scrapping plants that poison water supply and air.

2: Discourage potential dissidents
There's just one, government-controlled, trade union - derided by western activists and journalists as a government lapdog. The government firmly outlaws anyone else organising workers.

3: Allow no publicity for dissent

  • Strikers have complained that the Chinese people are getting a tiny part of the truth behind Yue Yuen, as Chinese reporters have been kept away from the strike.
  • The line the government tells Chinese papers to take ("its all the fault of a dubious Taiwanese company, and the government's taking the lead in seeing them punished") completely ignores the second-class status of migrants and their children.
  • Internet sites have been instructed to block stories or postings referring to the strike.
  • Labour activists at Yue Yuen have been arrested and charged with "creating a public disturbance".

4: Enforce a system of residence permits
The second-class status of migrants is as much to blame for the Yue Yuen mess as the firm's sharp practice.

To simplify a hugely complicated system, the government has believed since 1954 that to preserve order it has to control the drift to cities - and who, watching the constant riots of Bangladesh's underemployed urban masses, can seriously disagree?

So everyone needs residence permits, or "hukou," which fix where most people have full citizenship rights. Most migrants (and their children) have hukou for migrants' home villages, on the basis that they'll eventually be encouraged back to where they come from, as the rest of the country industrialises.

The government has recently started trying to reform the system - but even so, its National Health and Family Planning Commission discovered last year that 70% of migrants from the countryside had no wish to give up their rural hukou. Apparently they value the right it gives them to move back home when their village gets rich.

The strategy has certainly led to peaceful working conditions. Before April, practically all the "incidents" in our industry on the China Labour Bulletin (CLB) database were violent protests by workers unpaid after a garment factory closed and owners disappeared.

Yue Yuen is almost the only case of employees at a profitable footwear or textile business improving their conditions by temporarily stopping work.

How strikers reacted
Strikers seem cynical about everyone involved in this affair.

  • The...government, labour bureau, social security bureau and the company were all tricking us together" said one Yue Yuen striker to Reuters.
  • "Workers would generally not report violations if their bosses were Chinese nationals," said Taiwan's China Times, adding that "employees consider...Taiwan- or foreign-funded companies should be more law-abiding than local firms."

But that cynicism about the government is also why many don't want the hukou system to be changed: they see it as the one guarantee they'll belong somewhere in China.

As with many knotty political problems everywhere, people hurt most by a policy are clear what they resent, but aren't necessarily going to be happy with the proposed alternatives.

How they'll react next
China's official line on unions may be as much about keeping the Communist party in power as preserving a stable environment for businesses to pay workers better. But there's little evidence that disturbs many Chinese.

Hong Kong's CLB recently claimed a 31% rise "in the number of strikes and worker protests" in Jan-Mar 2013 - to just 202 across all industries in a country of 1.3bn people. Cambodia, about a hundredth of China's size, had about that many in its garment industry alone last year.

One key reason productivity in China is so much higher than elsewhere in developing Asia is that China doesn't have the endless industrial disruption plaguing Bangladesh and Cambodia.

Many Chinese are as unenthusiastic about their rulers as the British are about their weather. I think they're just as unlikely to do anything to change them.