Global Commodity Chains and Labor
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Outline
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



Economic integration of “Greater China”
(China-Hong Kong-Taiwan)
and China in East Asia
Concept of “global commodity chains”
Experience of labor in low-wage mfg’ing
Actors affecting labor rights
Economic Integration of “Greater China”:
A Player in Global Production Chains
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
How did China become a player?
enabled by certain political initiatives
 driven by economic complementarities

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
Geographic proximity
Exchange rates

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Stricter environmental regulations in democratizing Taiwan



1980s appreciation of New Taiwan Dollar
Ex: electro-platingarsenic in ground water
Land values increase in Taiwan in 1980s
Upward pressure on wages in Taiwan in 1980s
facilitated by linguistic and cultural affinities
 Question: Where were the first special economic zones
located? Why?

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Economic Integration of “Greater China”:
A Player in Global Production Chains
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
Chinese government policies to attract foreign direct
investment in export-processing zones strategially
located near Hong Kong and Taiwan
 “Special
economic zones”
 Tax breaks for exporters
 Duty-free import of inputs
 Infrastructure development
Origin of Direct Foreign Investment
Cumulative 1990-2004
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Global Commodity Chain Analysis:
Roots in Dependency and World Systems Theory
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Dependency
Core
Periphery
World Systems
Core
Semi-periphery
Periphery
Global commodity chain studies draw on the insights
of dependency/world systems theory
Global Production Chains
(aka Global Commodity Chains)
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
Distinguish
 Producer-driven
 Capital,
commodity chains
technology intensive
 Exs: automobiles (GM, Toyota), aircraft (Boeing, Airbus),
electrical equipment
 Core multinational corporations invest directly
Global Commodity Chains
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
Distinguish
 Buyer-driven
commodity chains
 Labor
intensive, low technology
 Exs: apparel (Gap, Levi), shoes (Geoxx), toys (Brio, Disney)
 Core corporations own trademarks, engage in subcontracting
“Just-in-time” inventory control
 Very short production lead-times
 Low barriers to entry in manufacturing
 High barriers to entry in design and marketing

Global Commodity Chains
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
What functions take place in the
 Core?
 Semi-periphery?
 Periphery?
Where is power located in the buyer-driven
commodity chains?
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location
core
function
design/marketing
 orders, contracts
ex’s: Reebok, Nike
division of profits
$$$$$$
semi-periphery
higher-end mfg’ing
trade intermediary for low-end mfg’ing
quality control, financing, shipping
(middle-man role)
 direct foreign investment
ex: Yue Yuen
$$$
periphery
low-end mfg’ing
(paid by middle-man)
ex: Lili (working sister 打工妹）
Dongguan 2007 wages now ~$3/day
$
What is “triangle manufacturing”?
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Orders
from core
(US)
Products
from
periphery
(China,
SE Asia,
Latin America)
Contracts
from semiperiphery
(Hong Kong,
Taiwan)
Sample industry breakdown
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
75 billion dollar industry
36 billion  brands/stores
25 billion  transportation logistics
14 billion  factory oversees
48%
33%
19%
“Sweatshop Labor”
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
Objective and subjective interpretations
 Video
 http://video.google.com/videosearch?hl=en&q=labor%20c
hina&um=1&ie=UTF-8&sa=N&tab=wv#
 5:20-10:33; 20:11-24:00
 Why
might “sweatshop labor” seem desirable to
workers?
Discussion Topic
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
Identify several pro’s and con’s associated with
“sweatshop labor.”
This question relates to the debate about whether
low-wage labor in export processing industries is
 “a
route out of poverty” or
 “a race to the bottom”
Competing Theories about Impact of Global
Commodity Chains
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
Dependency vs. Neo-liberalism vs. Statism Debate
Is low-wage labor in export-processing factories a

“route out of poverty”?

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Driven by market forces (neo-liberal)
Does a developmental state promote


Labor protection
Policies toward higher-tech, higher-wage jobs (statist)?
or

“race to the bottom”?


Driven by multi-national corporations (dependency)
Driven by predatory state (statism)

Lack labor protection, etc.
Is low-wage labor in export-processing factories a…
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
“route out of poverty”?
 Higher
paying job opportunities for rural surplus labor
 Labor remittances important
source of capital
 “China
Blue” & “Working Sister”
 Open small business
 Help pay for sibling
education
 Dowry—more
independence in choice of
marriage partner
Is low-wage labor in export-processing factories a…
route out of poverty”?
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
“Race to the bottom?”
 Low
or unpaid wages
 Wages for unskilled workers rising very slowly (in part
due to intense competition both locally and
internationally),
 while
wages for skilled workers rising dramatically (note: not
a level playing field in terms of access to education for
children in remote, rural areas)
 Abusive
working conditions
New Developments in Labor Politics:
Strikes Hit Honda Parts Factories
Discussion Questions

Pun Ngai





Friedman and Lee
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
What has improved as a result of corporate codes?
What has not improved as a result of corporate codes?
Try to identify and list all the of institutions/actors affecting labor
conditions, as cited by Ngai.
Which institution/actor(s) has the biggest effect on labor
conditions?
What would Friedman and Lee add in terms of institutions/actors
affecting labor conditions?
Other questions
Discussion Questions

Pun Ngai
 What
has improved as a result of corporate codes?
 Upgraded
factory, dormitory facilities
 Contracts
1
day off in 7
 No labor deposit
 No holding of id’s
 What
has not improved as a result of corporate codes?
 Mandatory
overtime
 Below minimum wage
 Free trade unions
Discussion Questions

Pun Ngai

Try to identify and list all the of institutions/actors affecting labor conditions, as cited by Ngai.

SA 8000
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Western (European) transnational corporation
Western audit firm
Clean Clothes Campaign (Europe)/Worker Rights Consortium (US)
Foreign investors

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Co-owner of China Miracle
Chinese factories

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Taiwanese co-owner of China Miracle
Hong Kong owner of China Galaxy
Chinese private investor


non-governmental, multi-stakeholder organization whose mission is to advance the human rights of workers around the world
auditable social certification standards for decent workplaces, based on conventions of the ILO, UN and national laws
“works with brands to focus their corporate social responsibility programs on management control of working conditions”
China Miracle Garments
China Galaxy Apparel
Chinese Government (Labor Laws) (local labor bureau tasked with enforcement; who is labor bureau subordinate to?)
Garment industry Federation Trade Union
Factory trade union branches
Discussion Questions

Pun Ngai
 Try
to identify and list all the of institutions/actors
affecting labor conditions, as cited by Ngai.

What would Friedman and Lee add?
 Powerful,
fiscally interested local governments
 Hukou (household registration system)
 Legal system (arbitration--committees, litigation—courts)
 New social media
 Labor NGOs
Discussion Questions

Pun Ngai
 Which
actor(s) has the biggest effect on labor
conditions?
Publicity over Rash of Suicides Drives
Changes at Taiwan-Owned Foxcomm

Actors at Different Levels of Analysis
Affecting Labor Rights in China
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Supranational Level

Global Compact

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World Trade Organization

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United-Nations-sponsored initiative
http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.h
tml
“social clause”  failed
International Labor Organization

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China signatories to more conventions than US
But

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
Multi-national Corporations
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“reservations” QUES: What’s a likely Chinese “reservation”?
No teeth
Corporate Codes of Conduct
International Non-Governmental Organizations (NGOs)
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Global Exchange

http://www.globalexchange.org/campaigns/sweatshops/
Actors at Different Levels of Analysis
Affecting Labor Rights in China
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State Level
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Developed Countries—U.S. example
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Developing Countries
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U.S. Department of State
U.S. Congress
China: Labor Law effective 1994
Organizational Level
Unions
 Other Interest Groups
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China Labor Watch—Li Qiang
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http://www.chinalaborwatch.org/
China Labour Bulletin--Han Dongfang

http://www.clb.org.hk/public/main
Actors at Different Levels of Analysis
Affecting Labor Rights in China
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
Individual Level
 Students
 Labor
Activists
 Consumers
SLAP campaign wants
UW to be sweatshop-free
March 7, 2007
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Senior Rod Palmquist, a representative for SLAP, emphasized the
responsibilities of college students in particular to “take ownership of
knowing where their clothes come from and that they are ethically made.”
In order to ensure every article of clothing that bears the UW logo has been
constructed ethically, SLAP has petitioned the University to adopt the
Designated Suppliers Program (DSP), an agreement sponsored by the
nationwide United Students Against Sweatshops (USAS).
The program aims to secure at least 75 percent of all UW apparel from
factories with workers’ rights, including living wages (salaries high enough to
support the standards of living depending upon the country) and the right to
unionize.
Contracts with collegiate apparel generate huge profits for athletic apparel
companies such as Nike and Reebok, Palmquist said.
The Seattle Times
November 17, 2000
UW to join Worker Rights Consortium
University will continue to monitor groups' involvement in issues related to
sweatshops
“The University of Washington will join the Worker Rights Consortium, despite
earlier concerns about the fledgling anti-sweatshop group's refusal to allow
garment-industry representatives on its policy-making board.
“The school also will maintain its affiliation with the Fair Labor Association, a U.S.
Department of Labor program that has been criticized by student activists for
including corporate partners such as Reebok, Eddie Bauer, Nike, and Kathie Lee
Gifford.
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Wal-Mart Wins Ruling on Foreign Labor
December 19, 2006
“Wal-Mart Stores cannot be held liable under United States law for labor
conditions at some of its overseas suppliers, a federal judge has ruled.
A complaint filed last year in Los Angeles by the International Labor Rights Fund
contended that employees of Wal-Mart suppliers in China, Bangladesh, Indonesia,
Swaziland and Nicaragua were forced to work overtime without pay and in some
cases were fired because they tried to organize unions.
The complaint said that the contracts required suppliers in the five countries to
comply with local labor standards and that what the plaintiffs deemed the
company's failure to enforce those terms meant the employees were working
under ''sweatshop'' conditions.
''This is basically a local wage and hours violations case and should be handled in
those countries,'' said Beth Keck, a spokeswoman for Wal-Mart. ''It is very
inappropriate that Wal-Mart should be made part of this.''
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China Drafts Law to Empower Unions and
End Labor Abuse, October 13, 2006
“China is planning to adopt a new law that seeks to crack down on sweatshops and
protect workers' rights by giving labor unions real power for the first time since it
introduced market forces in the 1980's.
The Chinese government proposal, for example, would make it more difficult to lay
off workers, a condition that some companies contend would be so onerous that
they might slow their investments in China.
The skirmish has pitted the American Chamber of Commerce -- which represents
corporations including Dell, Ford, General Electric, Microsoft and Nike -- against
labor activists and the All-China Federation of Trade Unions, the Communist
Party's official union organization.
On Friday, Global Labor Strategies, a group that supports labor rights policies, is
expected to release a report in New York and Boston denouncing American
32 corporations for opposing legislation that would give Chinese workers stronger
rights.
Who is responsible for sweatshop conditions?
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
Multinational corporation based in the core?
Do corporate codes of conduct exist? Enforced?
 Pressure on price, delivery schedule, etc.


Subcontracting middle man who owns/manages the
factory in the periphery?


Subvert codes of conduct?
Government where the factory is located?
Enforce local laws? China’s Labor Law passed 1994
 Note: independent trade unions--illegal

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Consumers based in the core?

We are what we wear?