When Communism meets Capitalism

I just finished reading an article in the BusinessWeek (www.businessweek.com) magazine about Chinese factories and American companies – the meeting of Capitalism and Communism. The magazine focused on factory work conditions and American investment – 3 points came up as ‘obstacles to reform’ within those factories (concerning work conditions).

(1) Price Pressures: American’s expect to pay less for the goods they recieve and since 1996 prices on many articles (ex: clothes, toys, and games) has been dropping – Americans have become accustomed to paying the low prices.

(2) Few Alternatives for Manufacturers: Other low wage nations enforce their codes of conduct more stringently but China is very efficient in workforce, infrastructure, supply base, and massive ability to manufacture so much in so little time. Problem is China doesn’t enforce codes of conduct as efficiently.

(3) Worker Demands: The Chinese workforce is quite alright with getting as much hours as possible and not making overtime pay (3-4 hours OT a day on a 5 day workweek) – however this is not what American companies endorse yet they never use their leverage to change the situation.

The problem with the whole scenario is that these Chinese factories are breaking all the American rules for ‘code of conduct’ in an effort to keep American business on their soil. The problem really lies with the ‘pricing’ – most Chinese factories admit that on order to meet American demand for what a product should be produced for (ex: $0.64/hour) they have to not pay overtime – and there isn’t much they can do to change that (since Americans demand a low price on a lamp or sweater).

The Chinese ‘doctor’ the accounting books during audits to make it look like all is fair – they only get found out during routine visits by American companies visiting those factories first-hand. There is even Chinese companies willing to help ‘doctor’ those books for the factory – as a help to keep them in business. All the while, even when the American companies know some of the discrepencies (ex: no OT or underage kids working) rarely do anything since that’s a Chinese thing to deal with – again, bottom line is the focus for both sides. The end of the article even states this is still an ‘economic reality’ – so this is still happening (right now as I type on a Dell computer).

So next time you shop at Wal-Mart, Target, Nike, Adidas, Eddie Bauer, Nordstrom, Hewlett-Packard, Dell, Motorola (owns a literal factory), General Electric (owns a factory also), McDonalds, Walt Disney, Home Depot, Sears, retailers under ‘Young Sun Lighting Co., and J.C. Penney – remember they all do business with China so you can ‘pay less’ for their products.

Of an even greater note, we can’t solve the inequitable problem in China but we can learn this simple lesson – with all the money we save for buying at these outlets on all the products we buy each month – possibly we can use that money we save to help someone struggling here with poverty – although the Chinese still will be worked to death – let’s not let their sweat go wasted on a Capitalist machine that also forgets it’s poor here.