Doing business in China was supposed to be cheap. As the old saying goes "cheap gets expensive." The central government wants all of the foreign companies with local operations to have unions. All of those workers will be able to stage stop strikes if they like. They can ask for more cash. They can demand more benefits.
China does not say this, but getting U.S. companies to take on unions means that there is a good chance insurance and other services, which the government might pay for, can come out of the pockets of firms like Wal-Mart (NYSE: WMT) and McDonald's (NYSE: MCD).
According to The New York Times, "The union push is coming at a time when global corporations are already facing rising labor and commodity costs in China." Of course, the communist government probably forgot to mention the labor issue when corporations from the U.S. started moving into China to get cheap manufacturing and access to the rapidly increasing consumer base. A classic bait and switch move.
China is putting the screws to foreign companies and that may backfire. The temptation to move manufacturing to other countries like Vietnam and Mexico is likely to grow. China may see some of its best employers begin to leave.
The Chinese may want to see conditions improve for its workers who are employed by outside companies, but the push could put a lot of local workers out on the streets. Doing business in China isn't what it used to be.
Douglas A. McIntyre is an editor at 247wallst.com.











Reader Comments (Page 1 of 1)
9-12-2008 @ 9:19PM
Eli said...
"classic bait and switch move?" I'm sorry, but I find it a little curious that you would be so cynical about a government's attempt to, at long last, try to provide its citizens with decent wages. Do you think it would have been more honest for the government to say, "ok foreign capitalists, you can brutally exploit our downtrodden masses, but only for 30 years or so, then we're going to taking minimal steps to ensure that these workers can actually survive and provide for their families?" I'm so tired of hearing the argument that workers must be paid slave wages in order to keep business happy, otherwise the employers will go elsewhere. Try talking to someone other than corporate managers and financiers, you know, like normal people, and you will find that the overwhelming majority of working folks in China are incredibly supportive of the union's resurgence.
9-13-2008 @ 10:50PM
Mitchel Eisenstein said...
It should be lauded that China is allowing unions at long last. And it is a crying shame that US companies will be moving out to find the last vestiges of friendly 3rd world dictatorships who that will enforce slave wages, no benefits, no environmental standards, no retirement.
Is this what America has come to represent? Slavery? It just shows that the market is against democracy. There is a fundamental split between Capitalism and Democracy. Capitalism seeks to find the lowest price at all costs. but it realized that if it divorces itself from democracy, then it can reap windfall profits. thats why american corporations abandoned the United States and its loyal citizens for the haven of Communism. It is astonishing. That we fought and died in Vietnam and Korea to stop communism, and then Capitalism itself slid behind our own principles and climbed into bed with communist dictators. And no they want to leave China for Vietnam. And when Vietnam starts to care about its citizens they will move to North Korea. I predict North Korea will one day become the engine of Capitalism, where slavery is ruthlessly enforced and business can be guaranteed an endless supply of emaciated slaves to work for a penny an hour. Think of the profits. think of how Walmart is salivating at the prospect of beating the starving poor into making widgets for Walmart. this is the America no one wants to look at, but I am going to stare into hell and find it because the filth needs to be cleaned out once and for all. People need to know that America was founded both on opportunity and freedom. and some of this opportunity was based on slavery. Most of it in fact. the residual effects of this are that business goes beyond morality and seeks cheap labor even if it turns people into disposable peons. Look at how GM abandoned the entire city of Flint Michigan when it closed down the automobile plant there. The entire city died as was so eloquently chronicled in Michael Moores documentary, Roger and Me. the realization by business that they could go abroad and exploit third world nations and abandon american workers was the ultimate windfall. when a plant is closed in the USA, it is opened up in China the following month. What is amazing to me is that the religious right, who are made up of working class people, the very people who are thrown out of work when the factories close, snuggle up to the Republicans who are firing them. It appears to be because of the expedient stance by republicans of Right to life. the platform of Right to life draws the believing Christians even if they are thrown out of work by the very republican policies they support. I have felt that the democrats should accept limited abortion rights to bring the Christian right into the fold of human rights. After all, if you are going to care for the fetus, why not care for it when it arrives and throughout the life of the person. The mongoloid baby that Sarah Palin brought forth will need to be taken care of by the state for its entire life. There should be consistency of philosophy is a party. Well thats about all for now. I have given you some things to think about. I encourage you to email me at mitcheisenstein@aol.com to explore this further.