What do you know about Chinese Factories?
What are the first three words that come to your mind when you think of a factory in China? If your answer is a “Three D” (Dark, Dirty, Dangerous) you would have been right… 40 years ago when it all started.
Since the introduction of economic reforms in 1979, China moved its strengths toward industrialization. Thus taking over the international manufacturing niche. Cheap and fast products flooded the markets worldwide. Behind the low prices and quick turnaround time, a benefit for any buyer, there were untold stories about the poverty, safety, intellectual property theft, child labor and abuse at the Chinese factories, exacerbated by government corruption. It all existed in China.
People from poor rural areas in a thirst for a better life moved to bigger cities where the numerous factories were appearing every month. They worked for the lowest salaries that the city could offer, but it would still be much more than they would do at home. Factory workers would save money and send it back home to support the family. If a woman worker had a child, she would bring it to the factory and the child would help on the floor. Factory owners paid children almost nothing, but the family could afford a chicken foot to add to the plain soup.
Factory owners were making money and it didn’t matter how or by what means. Government wasn’t involved much in the private sector’s labor regulations, but when they did, money and relationships ruled, so the established corrupted system worked for all. Workers poorly built factories in dirty, inexpensive areas of the city and didn’t provide much light or well equipped working spaces needed for manual work. Safety and security of workers were not the top priority for factory owners. Very basic benefits would be provided at the time- a bed in a dormitory near the factory and a meal or two per day. Workers would often work night shifts and weekends to make more money and would have only one day out of the month for rest.
Increasing number of factories arose in every corner of East China. Growing interest of foreign companies to participate in the manufacturing process of their brands brought new streams of attention towards Chinese factories. Foreign Direct Investments and management from overseas supported the improvement of regulatory measures and development of new quality control techniques. Competitiveness between Chinese suppliers led to the increasing interest of factory owners to establish safer, better and more appealing process. Both internally and externally, China was incentivized to take actions to diminish existing problems. Manufacturing in China started to mature rapidly.
Over the past 20 years, massive investments helped building of large-scale factories with very high-end, brand new, or newer equipment. China manufacturing is becoming very complex and high technology oriented. It is shifting from an assembly base to a full scale-manufacturing center for multinational companies. Factories not only were given an opportunity to compete technologically, but also intelligently. According to a 2015 World Bank case study, the Chinese manufacturing economy has “shifted towards new knowledge-based industries.” This includes advanced skills in handling electronic information, as compared to earlier years when the factories were largely comprised of unskilled laborers.
Where We Are Now
In the past 10 years, the minimum wage has also risen rapidly with an average increase of approximately 13% annually. In order to retain labor force and attract more workers, some factories began raising wages, creating more reasonable working hours, and offering benefits packages including basic insurance and free meals. (HOO, 2015) Some factories would build dormitories, libraries and basketball courts or gyms on the factory premises. Many factories started implementing the American way of team-building practices. They gather all employees and factory workers together for annual celebration meals, occasional KTV nights and even hikes. The large cadre of skilled, disciplined work force replaced rustic, low-skilled workers. In 2014, China’s Government put into effect a revised Workplace Safety Law. This law requires factories to create and enforce factory safety standards. It gives local regulators more power to enforce the rules, and metes out stricter punishments for offenses.
A lack of a regulations of intellectual property means international counterfeit black market risks for many startups all over the world. With a changing attitude of Chinese manufacturing the majority of suppliers in China are willing to take all steps needed to prove that they will protect client’s intellectual property by signing NDA’s, deleting sensitive information from their server or website if requested and not putting client’s product into the showroom. Trust your supplier, but verify his actions politely and he won’t let you down.
Environmental standards are also a hot topic in China. In January 2015, the government implemented amendments to the Environmental Protection Law originally passed in 1989. An increasing number of factories and fashion manufacturing brands have replaced old machinery with updated “green” equipment. This technology consumes less energy and emits less pollutants into the environment and started using recycled materials in production.
The growing acknowledgment of consumers expectations by Chinese manufacturers and its fast improving infrastructure are positioning China to become a key “world factory”. Knowing China’s best achievements and future tendencies will help you benefit from manufacturing in China. They offer low costs, great quality and new technological approach. To better find out how to help your business grow by outsourcing to China, please contact us.