Boot Camp at the Shoe Factory:

Where Taiwanese Bosses Drill Chinese Workers to Make Sneakers for American Joggers

DONGGUAN CITY, China -- If you doubt that many Asians think business is a lot like war, consider a gigantic shoe factory in one of south China's busiest industrial zones. Here, where athletic shoes for Americans are assembled by young Chinese peasant women supervised by Taiwanese bosses, the myth of the Confucian ideal of worker-management harmony has been overtaken by a model straight out of the military textbooks.

One evening this summer, I watched as two platoons of workers were marching in a flood-lit courtyard and shouting in unison, "Be respectful toward my work! Be loyal! Be creative! Be of service!" Behind them forklifts were weaving back and forth between buildings, as production continued round the clock.

The enterprise, called Yu Yuan, is not exactly a sweatshop -- the pay is relatively decent and living conditions are adequate compared to other nearby Taiwanese-owned factories, though the hours are very long. Yu Yuan, which produces 10 brands of shoes including Nike and Reebok, may simply be the reality of the next phase of the Asian "economic miracle": giant factories in places like China and Vietnam, built with off-shore Asian capital, staffed with the rural poor and managed with ruthless efficiency to gain maximum competitive advantage.

Popular wisdom has it that the success of overseas Chinese and Korean businesses can be traced to a Confucian culture in which mutual trust, flexibility and interpersonal relationships predominate. What is taking place in many of these factories in China that are run by Taiwanese and Koreans is incompatible with that image. What prompts the chairman of the Taiwanese Business Association in Dongguan to order his security guards to salute and snap to attention every time he passes through the factory gate? Not Confucian beliefs, but a hankering for modern army standards of discipline and unquestioning loyalty.

In Taiwan and South Korea, all young men have to undergo military training, and until recently an unusually rigid discipline was instilled by regimes that considered themselves besieged. It is an experience shared by almost all of the Taiwanese and Korean managers now working in China. In some Taiwan-owned factories the owners fly in retired army officers to impose a similar martinet discipline on both mainland workers and Taiwanese staff.

One evening I stood outside the gates of a newly opened factory in Dongguan. Any new factory holds out the possibility of higher pay and better conditions, so at 6 p.m., a few dozen young migrant workers, all of them speaking in the accents of poorer regions of China, waited eagerly at the factory gate for security guards to let them in to take the recruitment test.

There is the normal check on IDs, education certificates and statements from their hometown government attesting they are unmarried. What is new at this particular factory is that the female applicants are ordered to stand at attention as if they are applying to join the army, are told to run a mile and then to do as many push-ups as they can within a minute.

The young women emerging from the gate are suspicious. The more experienced workers know that screening for strength and stamina and military-style obedience portends nights of enforced overtime in a shoe industry already notorious for its long work hours. They'd better stick to the jobs they've got, several told me. Leave this new factory to the green migrant workers.

The Taiwanese are the largest investors in Dongguan City and, second only to Hong Kong, the major foreign investors in China, having poured more than $20 billion into the mainland during the past decade. With labor costs rising in Taiwan, they have moved labor intensive industries such as shoe manufacture into China lock, stock and barrel. China today produces almost half the world's shoes, along with a vast array of garments, household gadgets and electrical appliances that not long ago were assembled in Hong Kong, Taiwan and South Korea.

A decade and a half ago, Dongguan City was a small sleepy rural town set amid rice fields not far from Hong Kong. Today, the entire county has been engulfed by frenetic industrial activity. The rice fields surrounding Dongguan have been transformed into seemingly endless concrete industrial estates. Whole clan villages live off the rents of the factory buildings that have displaced their fields. The local people can afford not to work in these factories. They leave this to the many tens of thousands of migrants from poorer parts of China who have taken up temporary residence here, filling the dormitories that have been thrown up alongside the factories.

The leaders of Dongguan City's Taiwanese Business Association, which boasts 1,350 member firms, complain of the job-hopping mentality of the migrant work force. "A few years back," one of them explained, "workers who were fired knelt down on the floor begging us to let them stay; but now they feel they can get work elsewhere." The reason, he says, is that the hordes of new applicants from the countryside who used to wait outside the factory gates have shrunk.

The wages the factories are offering have not been keeping up with inflation, and many rural Chinese have decided the money's not enough to make the long trip from the provinces worthwhile. The golden age of inexhaustible cheap labor may be drawing to an end, and the Taiwanese businessmen are beginning to talk about moving their manufacturing equipment onward to Vietnam rather than raise wages.

In the meantime, they have instituted harshly regimented labor conditions. They scoff at what they consider the local Hong Kong-owned firms' slack management practices. In interviews around the country, I was told that corporal punishment is common to the management style of many of the factories owned by Taiwanese and Koreans.

By far the largest of the Taiwanese enterprises in Dongguan is Yu Yuan, one of three factories in the region owned by the Bao Yuan company. It employs some 40,000 workers, 70 percent of them female, who work and live at a single enclosed site. The Nike logo "Just Do It" covers the wall of one of the enterprise's cavernous buildings. A huge "Adidas" sign sits atop an adjoining building. Other sports shoe brands that are produced in the same plant include Reebok, Puma, LA Gear and New Balance.

Yu Yuan is run in a decidedly military style. New recruits are given three days of "training." The first day, according to one of them, is largely spent marching around the compound, barked at by a drill sergeant. At 6:30 p.m., commands could clearly be heard in the background: "Left! Right! Left! Right! About turn! March!" Three formations, each of about 40 workers, were still being drilled, while thousands of other workers scurried back and forth between factory buildings and mess halls to take their meals in shifts.

"The factory management is precise down to the minute," explained a worker who was taking a rest after dinner. "You see those workers waiting outside the gate to go up to the third floor for their dinner? The gate opens at 5:30 sharp. The workers file up the stairs on one side, while those who have finished their dinner descend on the other. When they get to the canteen, they sit eight to a table and wait. Only when the bell rings can they begin to eat. We have 10 to 15 minutes to finish the meal, then we file downstairs again."

The factory compound is perched along a river where the company has built a pleasant promenade flanked by green lawns and dotted with flower beds. It is an unusually quiet and serene spot in a city that resembles a gigantic construction site. But each of the evenings I was there only a few workers were taking advantage of it. They are too busy, I was told.

Some work 12-hour shifts called "long day shifts"; others are on "long night shifts." Often these exceed 12 hours. Much of the work involves sitting at industrial sewing machines and stitching together the various shoe parts. As one of the workers explained, "You work longer if you can't finish the day's allocated quota. Another unpaid extra hour or so is spent in preparation before the shift begins. In addition, because there are long queues, you need to arrive early at the gate so you can punch your card on time, do the drills and then line up to get to your shop floor. You can't afford to be late because there's a penalty equal to half a day's wages."

A large number of other workers are on eight-hour shifts, but they are required to do considerable overtime work. I was there during a slack period and a worker noted that he was putting in only one or two hours of overtime a day, seven days a week, and got one day off every second week. But during a busy period, he said, he had to work his day shift from early morning till 11 p.m. or midnight. The slow workers stay even later.

Workers get a bit over 2 yuan an hour (about 25 American cents), which is just above the minimum legal wage. With about 80 hours of overtime work a month, their monthly wages hover around 600-700 yuan (US $75-80 a month).

The amount of enforced overtime is in violation of China's labor laws, which stipulate a maximum of 36 hours of overtime work each month. Yet, all things considered, conditions at this city-sized factory are above average for the district. The meals are subsidized, and there is medical care and relatively low-density housing of 10 to a room.

Nevertheless, the factory's turn-over rate is a high 7 percent a month, according to one manager I spoke with. Other factories in Dongguan that offer poorer conditions resort to increasingly extreme measures to keep workers from quitting. In violation of China's labor laws, many of them demand a "deposit" of a few hundred yuan (from two weeks' to a month's wages) to ensure workers cannot leave before their contract expires. They also lock up the migrant workers' ID cards, without which they cannot job-hop or even remain in the city. Anyone found without the right papers can be rounded up by the police and sent back to the countryside.

Yu Yuan does not demand a deposit or hold its workers' ID cards, but those who quit before their contract ends will not receive their last two weeks' pay. This is easy to enforce because there is a two week time lag in wage payments. New recruits who quit during the six month probation period will also cause a month's loss of pay to the fellow worker who introduced them to the factory and served as their guarantor, often a relative or friend from their hometown.

The worst factories in south China do not even allow workers to leave the factory compound after work. In extreme cases the isolation and iron discipline are prison-like. The official press has reported cases of unpaid workers enslaved in heavily guarded compounds who have staged escapes. In the worst example that has come to light in this region, a Taiwan-managed joint-venture factory employs more than a hundred guards for 2,700 workers, one of whom recently died in an escape attempt.

Some of the Korean-run factories in north China, which is where almost all of Korea's investments are concentrated, are even harsher and more unscrupulous in their treatment of workers. During many months of interviewing in China about factory conditions, officials and business people repeatedly confided to me about Korean employers who resort to beatings, tight military control and public humiliation to cow workers. In one case a woman worker was locked inside a dog cage with a large dog and placed on public display in the factory compound. So bad are the conditions that, according to a Chinese newspaper, nine out of 10 of the spontaneous strikes that broke out in the large northern city of Tianjin in 1993 occurred in Korean-managed enterprises.

These abuses have persisted because of extensive collusion between such factories and the local governments. Many of the Chinese partners of joint-venture firms are actually local government organs and departments, which reap considerable profits from these factories. They are as eager to make money by overworking and underpaying the migrant workers as are the outside investors, and look aside when cases of imprisonment and other serious violations of law occur. Those who should be acting as impartial overseers and law enforcement agencies are, instead, management's accomplices.

Local officials in south China seem sympathetic toward these factories' militaristic approach. Not so long ago under Mao Zedong, the Communist Party leader, the loyal discipline of the People's Liberation Army was upheld for the entire nation to emulate. To a surprising extent, conversations with various government and trade union officials in China reveal that many of these 40-to-50-year-olds had once been junior army officers, assigned to coveted positions when they were demobilized. They, too, see military-like control as a quick fix to the problem of a migrant labor force. The common underlying beliefs that they and the Taiwanese and Korean managers share is not in Confucianism but militarism and authoritarianism.

Some Western commentators suggest that China's industrialization and modernization, spurred by flows of foreign investment and by contacts with the rest of East Asia, will gradually pull China in a more democratic direction. So far, the experience of Dongguan suggests otherwise.

[Anita Chan, a sociologist at the Australian National University, has published four books on China. For the past several years she has been conducting research for a book on Chinese labor issues.]

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