Consider the source, but according to an article in today’s Global Times (a fairly new English-language paper published in the PRC) western manufacturers are increasing their outsourcing activities in China:

Foreign countries have started outsourcing to China again after a brief slowdown last year.

The first nine months of the year saw 3,287 new enterprises providing services that have been outsourced to China launched, offering 585,000 new jobs. International service contracts won by Chinese enterprises in the first nine months are valued at $12.7 billion, up 212 percent from the same period last year, according to Ministry of Commerce (MOFCOM) figures released Tuesday.

As of the end of September, there were 8,060 enterprises with 1.4 million employees operating in the outsourcing industry.

The rest of the article cites the existing and potential threats to China’s outsourcing business, namely India with it’s large English speaking population, but others as well.

For those of us operating the the Pearl River Delta, where most of this outsourcing is being performed, it might mean that the PRD is still an attractive place to set up export-oriented manufacturing.  At the very least, since we assume that the GT writes what Beijing wants written, it means that the authorities are still interested in making China an attractive destination for western export manufacturing.

According to a CNN report,  NAFTA, proximity to the U.S. market, and lower costs (largely the results of inverse currency fluctuations of the peso and yuan)  have tipped the scales in favor of Mexico (and against China) as the new manufacturing destination of choice for U.S.- bound products.

There is talk that the Beijing and and Guangdong governments are starting to play hard-to-get with foreign investors, downplaying their importance in upgrading China’s manufacturing, R&D and local market offerings.

However one report in The Japan Times indicates that Dongguan, at least, is still welcoming foreign investment.

A vice mayor of the Chinese industrial city of Dongguan urged Japanese manufacturers Friday to expand on its turf and exploit its domestic market to help the city recover from the global economic crisis and fall in exports.

“We are looking for more Japanese manufacturers to build R&D (research and development) centers in our city and create domestic brands, securing distribution routes,” Jiang Ling, vice mayor of Dongguan in Guangzhou Province, said at a news conference in a hotel in Minato Ward, Tokyo.

In many ways, what Jiang is saying is in lockstep with what the central and Guangdong governments seem to be promoting– focus on domestic consumption, R&D and high-tech manufacturing.

But what makes Jiang’s comments interesting are that he’s actively courting foreign investment, stating clearly that it essential for the area’s recovery.  Moreover, he’s speaking on behalf of Dongguan’s townships and villages, and these are the organizations which will be interpreting and implementing whatever policies flow down from Beijing and Guangzhou.

While this doesn’t mean that Dongguan is a good place to set up labor-intensive manufacturing, it does indicate that Dongguan, at least, is still Foreign Investment friendly.

This China Daily article quotes Guangdong governor Huang HuaHua and Guangdong Party Chief, Wang Yang making it very clear that the pre-downturn initiatives aimed at moving the province’s manufacturing base up the value chain will continue.

With the outline of the reform plan for the Pearl River Delta formally approved by the central government at the end of last year, the delta scheme has now been adopted as part of the nation’s overall development strategy. This will see the nine cities in southern China’s Guangdong province transformed into advanced manufacturing and modern service centers.

The article doesn’t talk about what they plan to do about the low-value exporting factories currently operating here, but Huang was quoted by People Daily in April saying:

…the province will step up efforts to achieve a change in development pattern by evolving self-innovative industry and upgrading industrial structure, while boosting the transfer of labor-intensive industries in the delta region to less developed regions and transferring labor forces from the agricultural to the manufacturing sector as well as from the rural area to the delta region.  [italics mine]

For me it raises the following questions:

• How will they encourage/force the transfer of labor-intensive industries out of the province?
• How will they define “labor intensive”?
• How fast will they move?
• How will they deal with the most local government and semi government bureaucracies who are still benefiting from those labor-intensive industries operating in their villages and industrial zones?
  

A post on the Financial Times “Dragonbeat” blog helps to rectify the “migrant workers gone wild” media fest of the past few months.  These guys are getting it right.  Anyone interested in this topic should read the FT article. (h/t to Danwei)

My comment on the post:

[There] was never an apparent trend toward violence on the part of unemployed workers in Southern China. There were a few protests, and very little violence, by workers who were abandoned without severance pay. As these few anecdotes echoed between blog and newspaper and back again, it seemed as if the trend toward worker violence was growing. Actually, it was the same few recycled anecdotes over and over again.

Those of us who live and work here in Southern China (I run a factory in Dongguan) could see first hand how distorted and repetitive the media story was.

Yes there are many unemployed. No, they are not threatening anyone and never were. Not news to anyone living here.

The real news here is how so many of the media outlets, new and old alike, have lazily copied and amplified one another’s inaccuracies.

Newspapers complain about free content on the internet pushing them out of business.   Maybe it’s just poor quality ruining their business.

A new article in the Financial Times discusses the new face of migrant labor in Dongguan.  The article basically says that the oft-predicted worker unreast didn’t materialize because those predicting it envisioned the migrant workers of yesteryear (hordes  of rural, unsophisticated “factory  girls”) rather than the migrant workers of today (semi-urbanized, getting more sophisticated,  with more connection to the communities in which they work).

Seems accurate enough.   But what caught my eye were the last two paragraphs,  sharing the stated views of a famous Chinese labor activist:

[The activist]…once incarcerated for his efforts to establish an independent alternative to the government-sanctioned All China Federation of Trade Unions, notes that the last thing the country’s labour movement needs is more martyrs rotting away in Chinese prisons for daring to challenge the Communist party’s authority. Far better, he adds, to focus on factory-floor issues that affect workers’ daily lives. [emphasis mine]

As [he] said in an address to Hong Kong’s Foreign Correspondents’ Club earlier this year: “Why not let workers and employers settle their problems [independently] at factory level? That’s the best way to make a harmonious society.”

What does he mean by “factory-floor issues that affect workers’ daily lives”?   It looks like he’s telling us workers rights will improve not by workers banding together to cause unrest, but by going to the gemba and working together with management to ensure  that their working lives are safer, more comfortable, and more productive (with the assumption that increased productivity means increased compensation for the worker).

Not news to me… I’ve said elsewhere that LEAN, JIT, and related strategies and concepts can do more than just add value for shareholders and customers, but can add value for the workers and for the community as well.   What surprises me is hearing it from labor.

AS AN EMPLOYER IN DONGGUAN, I HOPE NOT

There’s more rumbling in the press about the possibility of China suspending (or choosing to ignore) the year-old Labor Contract Law (LCL). The following, from a recent  Wall Street Journal article (subscription required) suggests that the Dongguan City Government may be supportive of this effort, as it may help to mitigate the impact the downturn is having on enterprises operating there.

To aid businesses, Beijing has permitted local authorities to freeze minimum-wage levels and to reduce or suspend employers’ social-insurance contributions.

The vice mayor of Dongguan, in Guangdong, says many employers hope the central government will suspend the Labor Contract Law, and his office has sent that request to Beijing. “We can’t ourselves halt the implementation of a national law,” says Jiang Ling.

Giving business such leeway could ultimately undermine trust in the still-developing rule of law, says Andreas Lauffs, a partner at the law firm of Baker & McKenzie who focuses on Chinese labor issues.

As an employer in Dongguan, I hope this doesn’t happen for at least two  reasons.

It helps keep an even playing field:
While the LCL may be flawed (I don’t think the open-ended contracts are reasonable) it does help to ensure that the rules are stated, contracts signed, and that the existing Labor Law is followed.  That means that those of us who WANT to follow the law are not so easily undercut by those competitors who can take advantage of the murkiness of unenforced laws.

Happier, healthier community:
Those of us who live and/or work in areas where migrant laborers abound would like to see them develop into a happier and more satisfied population.   If my workers are happy but the workers in the surrounding factories are not, the entire community suffers.

Just my 2 cents worth.