The Chinese will work seven days a week for
US$0.50 to US$1
an hour with no benefits for social security, health care, vacations, a
pension or worker safety. … In America, the going wage would be 10 to 20
times higher including all benefits.
— Economist Richard Benson, Benson's Economic & Market Trends,
February 27, 2004
Now, what's happened to the U.S. workers whose jobs have been
outsourced to China? Thank goodness that not even the most vehement
anti-NAFTA, pro-Labor Union website can't come up with "unemployment"
as the answer. The problem is that those who previously had manufacturing jobs
that've been outsourced have typically taken service-industry jobs at as little
as half the annual compensation and fewer benefits than they had before. It's
not within the scope of this writeup to address the economics of the steady flow
of manufacturing jobs out of the United States.
In a perfect world,
manufacturing workers with only a high-school education or less would still
realize that if their unions don't make wage and benefit concessions in order to
make their employers profitable, their employers are going to take whatever
actions necessary in order to turn a profit for shareholders. That argument,
however, only goes so far when outsourcing is such a tremendously profitable
option for marketers of all manner of low-tech products.
magazine mentioned in a February, 2006 article that while America gains access
to cheaper products (or more profitable products, from a shareholder's point of
view), one of the attendant problems is downward pressure on wages. They cite
Seattle Times data: Laid-off manufacturing laborers are largely switching
into lower-paying jobs in the service industry. Where they once made an average
of $51,000 annually, they now make $16,000 in leisure and hospitality, $33,000
in health care, or $39,000 in construction.
The public outcry
about outsourcing of garment manufacturing to sweatshops in
Southeast Asia is old news. NAFTA has all but left the radar screen of the
media, replaced by the illegal immigration hot potato.
In an article as
early as 2003, Pat Buchanan bleated: "Free trade does to a nation what
alcohol does to a man: saps him first of his vitality, then his energy, then
his independence, then his life." I thought that was quaint. Mr. Buchanan then
bemoaned the growing trade deficit, etcetera, etcetera.
Why did I choose to
address the topic of outsourcing at this time? Well, another writeup herein
piqued my interest. Read on:
What Happens When Outsourcing Backfires?
There are some writers who contribute to this venerable site whose works I
"save for dessert" while perusing the "New Writeups" nodelet. I say "save for
dessert" because after wading through negative XP drivel and performing CE
tasks, I long for something I can savor. Borgo is one of the wordsmiths whose
work I save for last; for the pure pleasure of reading something that more often
than not makes me laugh, and always makes me think.
So it was a shock
to read one of his latest pieces, Lead Poisoning. The lede was a departure from the node for the ages suggestion in that it had to do with current events. I was also taken aback by
Borgo's broad-brush indictment of the Chinese toy industry (and other
Chinese industries), particularly because I interact with many Chinese people during the
course of the day, many of whom have become citizens of the U.S., and some of
whom are visitors to this country.
I've excerpted the source of my concern for
These days it seems like a day doesn’t go by when you don’t hear about
a recall of products made in China, mostly toys, that contain too much
lead in the paint. So far, as of this writing at least twenty four
different types of toys ranging from Barbie doll accessories to
Fischer-Price [sic] toys for infants have come under fire for
containing too much lead.
This is probably a subject for another node but what’s up with the Chinese anyway? First it was poisoned pet food, then toothpaste, now this.
Where does it come from?
The truth is, the truth hurts. So I decided to find an answer to the
question, "Why the hell are the Chinese so damned careless about the stuff they
manufacture, much more so the stuff they make for export?"
My first thought about this situation was, "well, what do you expect from a
country where in many cities the gutters are running streams of raw sewage, the
smog has caused the cancer rate to skyrocket, and 'clever' has replaced
'honorable' as the descriptor of choice for successful businessmen?" This is not
a good assumption, as my research turned up that China indeed has legislated
national standards intended to control the use of lead-based paint, particularly
in toys. The standards apply to all items which are painted, and includes items
manufactured for export.
In fact, the Managing Director of one Chinese toy factory committed suicide
upon learning that a close friend had sold him below-standard paint to use on
millions (yes, millions) of toys destined for the U.S. market. His
underlings accused the paint-seller of ruining his friend by selling him an
inferior product. The toy factory boss "lost face;" a concept
foreign to most people in the U.S. but in many Asian countries literally a fate
worse than death (particularly to this poor individual). My assumption is that
lead-based paint is cheaper, and therefore more profitable, than safer paint;
multiply savings by enough paint for millions of toys and I guess that's enough
for a person's greed to exceed their need for friendship.
Taking the "U.S." out of "Toys 'R Us*"
In the name of profits for their shareholders, corporate leaders in the toy
industry have slowly but surely increased the amount of product sourced from
China. Nearly 80% of all toys sold in the United States are made in China. The
dolls, trucks, building blocks, and action figures — fewer than two in ten of 'em
are made in the U.S. For Heaven's sake, the December holidays might as well be
celebrated with fireworks and called "Chinese New Year II: The
the hell happened to the people who used to make toys in the United
States? They're working lower-paying jobs in a variety of industries, as
Now, the workers in the Chinese toy factories are provided with many
benefits. Good food in a commissary that's cheap, if not
free. Free housing (in dormitories where they sleep a hundred to a room, their
beds lined up not unlike U.S. prison dormitories). And plenty of free time (if
one considers a day off a week plenty). Monthly compensation for their
labors equals what most folks in the U.S. consider a reasonable price for a
nice dinner for two; $140.
*"Toys 'R Us" is a registered trademark of Geoffrey, Inc.
Will China Shoot Itself in the Foot?
Only time will tell if quality control issues persist in Chinese exports to
the U.S. It's a pipe dream to think that should Americans completely lose
confidence in Chinese goods that there'll be a resurgence in American
manufacturing. There are far too many countries who'll more than gladly pick up
the slack. India comes to mind; they've already decimated the numbers of
American-employed high-tech customer service representatives (a blatant
stereotype but again, the truth hurts).
For China, the status quo rules. Change is hard. "Business as usual"
is, well, business as usual.
The logical mind would assume that should there be a problem with the goods
of one's competitor, it'd be a good move to be acutely aware of the quality of
one's own goods. Regardless of price, quality still is a concern when the
physical safety of the consumer is considered. Sadly, China doesn't seem to be
paying attention. Granted, after the pet food debacle, the Chinese Government, in their infinite wisdom, decided to pay token attention to their troubles, even going as far as admitting, on a state-controlled news website, that certain goods that had been exported were of inferior quality and perhaps dangerous.
Last August, Chinese Vice Premier Wu Yi described a new government campaign designed to weed out what she called "the tiny number of enterprises" guilty of intentionally producing inferior or downright dangerous products. The campaign addressed goods which affect human health or well-being produced for Chinese use as well as goods produced for export. The campaign lasted for four months and is not ongoing.
"Ruse in Toyland: Chinese Workers' Hidden Woe" by Joseph Kahn, The New
York Times, December 7, 2003:
"As More Toys Are Recalled, Trail Ends in China" by Eric S. Lipton and David
Barboza, The New York Times, June 19, 2007:
"China Recall Toy Factory Boss Hangs Himself: Report" Reuters UK,
August 13, 2007
http://investing.reuters.co.uk/news/articleinvesting.aspx? type=tnBusinessNews&storyID=2007-08- 13T085237Z_01_PEK157559_RTRIDST_0_BUSINESS-CHINA-SAFETY-MATTEL-DC.XML
"Toy Recall Shows Challenge China Poses to Partners" by Jane Spencer and
Nicholas Casey, The Wall Street Journal, August 3, 2007,
http://online.wsj.com/article/ SB118607762324386327.html (Accessed 10/29/07)
"The Death of American Manufacturing: Globalization and Outsourcing are
Hammering Our Icons of Industry" by Robert Morley, The Trumpet, February,
http://www.thetrumpet.com/index.php? page=article&id=1955 (Accessed 10/30/07)
"Job Loss From Imports: Measuring the Costs" Institute for International
Economics (no date specified)
http://www.iie.com/publications/chapters_preview/ 110/2iie2962.pdf (Accessed
"Death of Manufacturing: The rise of free trade has eroded America's
industrial base and with it our sovereignty" by Patrick L. Buchanan, The
American Conservative August 11, 2003
http://www.amconmag.com/08_11_03/cover.html (Accessed 10/30/07)
"China Launches Crackdown on Inferior Goods" Chinaview.com http://news.xinhuanet.com/english/2007-08/24/ content_6594010.htm (Accessed 10/30/07)