Factory Closings in China Arouse Workers' Fury

Stephen E Philion philion at hawaii.edu
Wed Aug 30 22:08:37 PDT 2000

What is fascinating to me about the case of China is both the extent of conflicts betweeen workers and managers/ministries over the terms of SOE reorganization and the almost complete lack of any active reaction on the part of the left faction of the CCP. There is missing any strategy whatsoever to show support for workers in these conflicts. What makes this so remarkable is how much space exists in China for making this possible through legal means. Intellectuals/cadres in China possess enough knowledge of labor and enterprise conversion laws that make it feasible for them to set up the equivalent of legal aid organizations, institutes studying systematically the different problems workers face in specific segments of SOE industries, strategies for defending SOE workers' legal rights (as they exist on the books) and the like.

One of the clearest reasons why cadres/intellectuals don't do this is their fear of engaging in such activity as it can be easily labelled illegal or subversive. How does one defend SOEs' rights in the Party if one is kicked out of the Party? This is not a new dillemma, but the level of conflict in China is only going to intensify according to most who observe the situation, especially with the onset of WTO 'reforms'. Just how long horse trading with fewer and fewer bargaining chips can remain the only strategy the left in China pursues remains to be seen.


August 31, 2000

Factory Closings in China Arouse Workers' Fury



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T IANJIN, China, Aug. 29 -- The brick-walled Meite Packaging

factory compound is nearly deserted now, its managers and machines

hastily transferred in the last couple of days to a special

development zone 30 miles outside this industrial city.

Although the closing had long been planned, the sudden departure

was prompted by an unusual event here, Last week, desperate Chinese

workers expecting layoffs seized six foreign managers from Meite's

American parent company and held them hostage in the factory for 40


In the space of a decade, the Meite plant was transformed from a

state-owned company making pipes to a beverage packaging firm

jointly owned by the Chinese and an American corporation -- and,

just recently, to a factory wholly owned by the foreign partner,

the Ball Corporation of Broomfield, Colo.

And so this sweltering summer, middle-aged workers who not so many

years ago were promised cradle-to-grave security by the state

factory found their livelihoods suddenly threatened by a capitalist

corporate restructuring and felt they had no where to turn.

"Every day since the beginning of August they were there at the

gate, protesting and trying to block deliveries and people from

going in," said Liu Qiuling, a retiree who lives next to the

factory and knows many who worked there. "But the managers didn't

meet with them. I think that's why the workers were so mad."

Taking foreign businessmen hostage is rare in China, despite the

thousands of often fractious business partnerships between Chinese

and foreign companies. But the workers' frustrations that touched

off the incident are commonplace, leading to hundreds if not

thousands of protests in recent years.

Under government orders to become economically self-sufficient,

many formerly state-owned factories have tried to transform

themselves, often with the help of foreign partners.

The sink-or-swim strategy promoted by Prime Minister Zhu Rongji,

who oversees economic policy, has no doubt rescued thousands of

companies from bankruptcy and prepared them to compete in the

global market. It has also often enriched many former state factory

officials, who are often offered lucrative positions in the

revamped business.

But it has been painful and confusing for China's tens of millions

of workers, echoing similar privatization efforts in the former

Soviet bloc. The workers are unfamiliar with the intricacies of

buyouts and severance packages, generally lack effective labor

unions and have little outlet for their complaints against new,

often absentee, bosses.

"Workers' rights are not protected much when this happens," said

Anita Chan, a labor expert at Australian National University.

"These are people who worked for the state and thought they would

work and then retire and enjoy certain benefits: health care,

pensions, things like that.

"But then one day it's just finished. And they are 40 and have many

decades of life ahead of them. What will they live on?"

She said the workers at Meite, who were offered a severance

package, did better than many others who get nothing at all.

The conversion of state factories has often left the workers at

odds with new employers, both foreign and Chinese. And protests,

though rarely reported in the Chinese media, are a frequent result.

Earlier this month, also in Tianjin, disputes erupted between

workers at a state-owned liquor company and its German partner,

which wanted to sell factory parts for scrap metal. The workers

blocked a truck, insisting that the profits from the metal were

rightfully theirs.

Late last year, workers at the formerly state-owned Red Lion Paint

Factory in Beijing ended up in a near-fatal standoff with the

management after a new private owner, a Chinese company from

Shandong Province, wanted to close the plant and sell the land.

When a delegation of workers failed to persuade the management to

keep the factory going, some of the workers attempted suicide in

the office of the factory's Communist Party secretary, who had

sided with the new owners. One women swallowed a bottle of

pesticide, and two men slashed their wrists.

Workers are often particularly incensed when factory bosses reap

profits from restructuring while the workers suffer.

Opportunities for corruption abound when state property is released

into the private market, because it is often difficult to place a

value on such companies. Some former factory bosses have managed to

buy profitable ventures at bargain basement rates.

"What laid-off workers particularly hate to see is their factory

taken over by the factory management and converted to private

assets," said Dai Jianzhong, a specialist in labor issues at the

Beijing Academy of Social Sciences. "They see factory assets being

used to buy cars and houses."

Often the desperate acts reflect the dire situation of middle-aged

workers who find themselves abruptly without jobs in a country

still poorly prepared to deal with unemployment.

Until a decade ago, nearly all urban Chinese workers received

housing, health care and pensions through state jobs. Although that

is changing, China has yet to develop an effective social security

net for the unemployed or elderly. Its embryonic welfare system

offers no health care or jobless benefits for people like those

laid off from Meite.

And the ranks of such workers are likely to grow, because Meite was

the victim of what in the West would count as business as usual.

Through a series of joint-venture partnerships in the 1990's,

Meite's parent company, the Ball Corporation, has ended up with

four packaging plants in Tianjin, mostly making soda and beer


The plan now is to consolidate the four into one -- in the special

economic development zone, which offers tax advantages, said Scott

McCarty, a Ball spokesman.

Ball has 17 wholly owned or joint-venture companies in China and

has been doing business in the country for more than 15 years.

The folding of four factories into one meant layoffs, and the

company invited some workers at Meite, mostly people in their 20's,

to move with it, a worker who answered the phone at the plant said.

The decision is typical for downsizing Chinese companies, experts

say, since the younger workers tend to be better educated.

The rest of the workers were offered a one-time severance payment

of about $1,200, which many considered inadequate, prompting the


On Wednesday last week, when executives from Ball's Hong Kong

office went to post a closing notice in the factory, workers

detained them in an office and would not let them leave, Mr.

McCarty said. He said that the six men had not been physically

harmed, but that the workers were verbally aggressive at times.

"Just like in the U.S., people were upset that their plant would

close -- that's understandable," said Mr. McCarty. "From our point

of view the incident is over now and it's fine." Still, he said the

company would probably change some procedures, including those for

closing factories.

The police did not enter the factory during the ordeal, calling it

an "internal" matter. They would not say today if there had been

any arrests.

The foreigners -- an American, two Malaysians and three Hong Kong

residents -- were released after 40 hours early Friday. Mr. McCarty

said he was unsure if concessions had been made, although a worker

at the factory said the severance payment had been raised a bit.

But in a city with hundreds of thousands of laid-off and unemployed

workers, that may provide little comfort. Of 30 jobs listed outside

the district employment center near the factory, only one was

listed as open to applicants over 35.

"People count me as lucky," said Mr. Liu, sitting on his old

bicycle cart. "I retired a long time ago, so I have a pension. But

what will these workers do if they get sick? How will they pay for


Farmers in Violent Protests

BEIJING, Aug. 30 -- Thousands of farmers protesting high local

taxes smashed government offices and looted homes of the rich in

the southern province of Jiangxi earlier this month, local

officials told Reuters.

Similar disturbances have been reported from many rural areas as

farmers with stagnant incomes face growing tax burdens from local

governments, but this is one of the larger known cases, enveloping

numerous towns and villages over 10 days until the police were


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