SHANGHAI — Global, and particularly American, consumers have become accustomed to inexpensive goods from China. Low-wage manufacturing for export has largely driven the Mainland’s economic juggernaut since its ascension to the World Trade Organization in 2001, as well as fueling consumption around the world.
But behind every $2 T-shirt lies the overworked, underpaid human face of a Chinese migrant worker.
In her new book, “The China Price: The True Cost of Chinese Competitive Advantage,” Alexandra Harney gives a voice to some of these workers. She tells of the pressures and aspirations that prompted them to join the hundreds of millions of workers migrating from rural China to the coastal manufacturing centers, the many tribulations and occasional triumphs they encounter there, and above all the abysmal labor conditions due to the “race to zero” in sourcing expenses.
“The China Price” was conceived in 2003 when Harney, then working for The Financial Times, interviewed a sweatshop worker in Zhuhai and realized such stories deserved telling. “I wanted to show American lives and Chinese hopes and dreams are not that different,” Harney said. “I profile ordinary Chinese people, dispelling the stereotypes and the political debate. The world and individuals are more complex than that. I look at the global supply chain on the human level.
“Americans don’t think of China’s Generation Y as being the same as their own, but in fact they are,” she argued. “China has a lot in common with the U.S….Shenzhen faces the same challenges as Ohio, of how to deal with globalization while minimizing social disruption. Like the U.S., like Italy, they are all struggling.” The book is aimed at both American companies that source from China and consumers, starting with an exploration of U.S. perceptions of China as a rising economic menace, and arguing throughout that both demographics should be willing to pay a premium for socially responsible manufacturing. Global morality aside, Harney points out, the manufacturers that cut corners on labor and environmental ethics are also the most likely to compromise on product safety and quality.
Moreover, the issues explored in “The China Price” are not unique to China, Harney explained. “[All of these problems are] not China-specific, it’s a supply chain problem. When China becomes expensive, it will continue on to Vietnam and Indonesia, so hopefully it can be addressed more before then.”
She added, “Unpaid health care, education costs, environmental costs are all added into the China cost. The bill is global. Still, nowhere is as efficient as China.”
“The China Price” delineates these systemic problems, with a focus on labor abuses. After outlining the myriad American economic fears of China in particular and outsourcing in general, the book’s second chapter explores the evolution of American outsourcing and global trade over the past several decades. Then, Harney delves into the local meat of the China situation. The issues include:
l How many suppliers maintain parallel factories: For each clean, modern one with legal hours and pay to satisfy buyers, the same company can operate several run-down facilities with poor safety but that provide workers with coveted but illegal overtime and allow suppliers a profit margin in the face of low prices.
l How many manufacturers cook their books to pass buyer and government inspections, and how the government usually turns a blind eye.
l How the lack of safety precautions endangers the lives and health of over 200 million Chinese workers.
l How difficult it is for Chinese workers to seek redress when they or a relative are maimed or killed on the job.
l How small, illegal operations can provide a sole and tenuous lifeline to impoverished Chinese.
“Every factory manager has a thousand others to compete with, so they will do whatever it takes to survive. They make money while they can, never knowing when the opportunity will change. It’s part of the China price, they’re all trying to survive. Competition plus pressures domestically and internationally are intense,” Harney explained. “Surviving means [manufacturers] can’t make money by following the law. It is so widespread, it is normal. Even the coal mine owners doing illegal operations just want a better life for their kids. I can’t endorse what they do, but I understand why they do it. It’s a gold rush mentality, with coal in the ground.”
Rather, she argued, responsibility lies with buyers eager to shave a few pennies off prices regardless of the human cost, and there “The China Price” is not all doom and gloom. The book proffers several stories of workers turned activists who have taken on the system, of factories out to show that ethics are not antithetical to productivity, and offers prescriptions for international companies and consumers wanting to source responsibly from China.
“They can start by bringing their buying practices and social responsibility compliance together. They can’t have First World conditions at Third World prices,” she explained. “The mind-set requires a lightbulb moment where companies realize it’s in their own interest. That workers are assets, not liabilities. A lot already have people, inspectors on the ground, but with a check-the-box mentality” that easily overlooks China’s creative accounting practices and shadow factories.
“A lot do well, though,” she added, citing the Gap, Nike and Adidas as apparel manufacturers who “are all fairly honest in their reports and provide the data. The difference is transparence.”
However, “Brands are the first to say how hard it is to know for sure. Whether they have thought about it, even enough to lie about it, is telling.” In the interview, Harney offered several suggestions specific to the fashion industry, criticizing its propensity to high supplier turnover. “Apparel generally moves very quickly from factory to factory, with style delivery time short and fast fashion, which results in immense pressure on factories. They cannot improve conditions in a factory if they are only there three months. Only if they shrink their number of factories, and reduce churn-over, only then can they have significant impact on and leverage with their suppliers,” she stressed. “It also benefits quality, as it ensures less chicanery. For example, factories lie to buyers about hours, wages and quality — if factories are trying to cheat on one thing, they are probably also doing it on others.
“It’s not just a few; a majority, like 90 percent, falsify records, although it varies by region,” she explained. “The price pressures mean it will continue.”
Harney advised that buyers establish more direct, proactive and permanent relationships with their China suppliers. “They could all do well to spend time with their workers and managers, get them to tell the truth, to talk honestly — both would learn a lot,” she observed.
She suggested that change start with “more direct reporting to senior management,” eliminating the self-interested middleman.
Second, buyers should consolidate their number of suppliers; “One thousand is better than 3,000, 300 better than 1,000; fewer is better,” and more easily managed. Finally, they should “award more business to socially compliant factories. When they don’t there is no incentive or benefit to factories to be more so rather than to view it as irrelevant. This will improve quality also. There are great factories in China — work with and reward them.”
Whether or not consumers pressure brands to change, the impetus is already growing as China is changing. Its economy and society continue to lurch in new directions, wages and the yuan are rising, and the government has espoused increased commitment to corporate social responsibility. “With environmental and labor behavior, [the government] is damned if they do, damned if they don’t. There are reasons China needs to do it, but at the same time it leads to inflation,” Harney said. However, she added, she has not witnessed any spike in labor standard enforcement to accompany the stronger labor law that China implemented at the beginning of this year.
The biggest shift, however, is demographic, as China’s current and future crop of workers hail from the so-called “Little Emperor” generation that resulted from the country’s one-child policy. “A lot of Chinese companies are not equipped to motivate and keep these kids. For example, I talked to one manager overseeing 40,000 workers, who said it was his biggest human resource challenge, that Generation Y is ‘spoiled rotten.’ It is hard to say what will happen with them,” said Harney.
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews