Conclusion

This study has striven to unravel the imperative behind the corporate codes of conduct. It highlights a fundamental paradox of TNCs in regulating new labor standards in China: the “economic” imperative of global capital to make money using “race to bottom” strategy. The ethical code movement, however, keeps a check on the dark side of global production by putting a brake on the tyranny of management at the expense of labor rights. In this way, corporate code practices are inherently contradictory, and this contradictory nature continuously shapes labor standards in China within the global system of production. On the one hand, the improvement of work and living physical environment as a result of corporate code implementation helps justify the argument that the practices of companies in China have been improved when they compete to meet international standards.²⁵ On the other hand, rather than leading to workers enjoying, better work conditions, shorter work hours and higher pay, labor rights collective bargaining is co-opted by capital. The result is at best managerial paternalism and if workers have any labor rights, they are granted from the above.

These two case studies demonstrate how global capital penetrate into the sphere of labor rights in China. It is true that some improvements have been made, including investment to upgrade company facilities and the normalization of employment relations through the provision of labor contracts, one day off in seven, and the ending of the deposit systems, and the like. However, regardless of these improvements the whole idea of a code of conduct that the companies initiate was for the supplier companies to secure a firmer place in the global production chain in attracting more production orders and expansion into new markets. This results in a rapid process of formal institutionalization in the workplace in terms of procedures and systems built up for codes compliance. As these two factories showed, the companies had devoted huge resources to setting up systems and procedures, but they demonstrated no genuine concern for labor rights, less still workers’ representation or participation. In particular, the numerous labor complaint mechanisms looked like business gloss and the trade union was a formality set up without workers’ support or even knowlwdge. The grievance mechanisms and trade unions further demonstrated the trend of business “co-opting” labor rights which should be a sphere that belongs to the workers.

The cardinal concern of this study has been to let the voices of staff and workers be heard at a time when most of the big TNCs such as Reebok, Adidas, Levi Strauss and The Gap are competing to implement codes of conduct practices in China.²⁶ Derived from staff and workers’ views, this article has argued that the codes represent a process of capital-defined labor rights in Chinese workplaces, and hence generates a containment of labor empowerment. The new wave of setting up code compliance mechanisms is reflected in three aspects: first, the rapid institutionalization of labor relations by the capital imperative at the workplace level; second, the turning of labor mechanisms and trade unions, newly established in the factories, into management institutions for facilitating the production and business goals of capital; and, third, the possible subsumption of workers’ autonomy and labor power since it is deliberately confined in the company codes of practice as a top-down regulatory process. In replacing the role of the Chinese state in regulating labor standards in the workplace, this top-down process of granting labor rights could result in perpetuating authoritarian factory regimes in which the management played a paternalistic role in “protecting” their workers from labor exploitation, while exploitation continues.

 The author would like to thank Anita Chan, Jonathan Unger, Eva Hung and the two anonymous reviewers for their valuable comments on this paper. This research is also supported by the Hong Kong Research Grant Council on a project ‘Living with Global Capitalism: Labour Control and Resistance through the Dormitory Labour System in China’.

1 The pioneers in this area are Stephen Frenkel, ‘Globalization, athletic footwear commodity chains and employment relations in China’, Organization Studies, issue 4 (2001), pp531-562. Tan Shen and Liu Ka Ming, Kuaguo gongsi di shihui zeren (Transnational corporate social responsibility in China) (Beijing: shihui kexue wenxian chubanshe, 2003); and Anita Chan and Wang Hongzen, “The Impact of the State on Workers' Conditions: Comparing Taiwanese Factories in China and Vietnam," Pacific Affairs, Vol. 77, No. 4 (Winter 2004).

2 On the latter see, e.g., the writings of Anita Chan and in particular her China’s Workers under Assault: The Exploitation of Labor in a Globalizing Economy (Armonk: M. E. Sharpe, 2001); Ching Kwan Lee, Gender and the South China Miracle: Two Worlds of Factory Women (Berkeley: University of California Press, 1998); and Hsing You-tien, Making Capitalism in China: The Taiwan Connection (Oxford: Oxford University Press, 1998).

3 The anti-sweatshop campaigns have been run by NGOs such as the National Labor Committee and the Worker Rights Consortium in the US, Labor behind the Label in the UK and the Clean Clothes Campaign (CCC) in Europe. Some of the organizations have been quite moderate, such as the Ethical Trading Initiative, which even includes governments and corporations.

4 See Jean-Paul Sajhau, ‘Business ethics in the textile, clothing and footwear (TCF) industries: Codes of Conduct’, ILO Bulletin, no. II-9, (June, 1997).

5 Women Working Worldwide, “Company Codes of Conduct” (2000), at http://www.poptel.org.uk/women-ww/company_coc.htm.

6 For instance, the Clean Clothes Campaign (CCC) even produced a unified international code of conduct for all its affiliated companies and others. The CCC is a network of organizations from a number of countries working to improve working conditions in the textile, clothing and footwear industries. Its aim is to raise consumer awareness about how clothes are made and to put pressure on retailers to take responsibility for labour conditions throughout subcontracting chains. More information is available at the CCC website http://www.cleanclothes.org/codes.

7 See, e.g., Jean-Paul Sajhau, “Business Ethics in the Textile, Clothing and Footwear Industries: Codes of Conduct”, ILO Bulletin, No. II-9 (June, 1997); Nina Ascoly, ‘About the Clean Clothes Campaign: A Brief Overview of the CCC’s Development and Areas of Activity’, paper presented at Forum on Industrial Relations and Labour Polices in a Globalizing World’, Beijing, 9-11 January 2000.

8 R. Jenkins et al. (eds), Corporate Responsibility and Labour Rights: Codes of Conduct in the Global Economy (London: Earthscan, 2002)

9 Reebok, The Gap and Switcher are among the few companies to have included freedom of association (i.e., a right to organize unions) in their company codes.

10 See Ching Kwan Lee, “From the Specter of Mao to the Spirit of the Law: Labour Insurgency in China”, Theory and Society, Vol. 31, 2002, pp.189-229; Feng Chen, “Industrial Restructuring and Workers’ Resistance in China”, Modern China, Vol. 29, No. 2 (2003), pp.237-262.

11 Ching Kwan Lee, “From the Specter of Mao to the Spirit of the Law: Labour Insurgency in China”, pp.189-229. Also see Marc J. Blecher, “Hegemony and Workers’ Politics in China, The China Quarterly, No. 170 (June 2002), pp. 283-303; Dorothy J. Solinger, “Labour Market Reform and the Plight of the Laid-off Proletariat”, China Quarterly, No. 170, June 2002, pp. 304-326; Feng Chen, “Industrial Restructuring and Workers’ Resistance in China”, pp.237-262.

12 See CIC, Feb 2000; LARIC, July-August 2000; Global Exchange, ‘Executive Summary of Report on Nike and Reebok in China’, (Sept 1997), at http://www.globalexhange.org/economy/corporations/nike/NikeReebokChinaSummary.html.

13 See Stephen Frenkel, ‘Globalization, athletic footwear commodity chains and employment relations in China’, Organization Studies, issue 4 (2001).

14 We interviewed these workers one by one in meeting rooms provided by China Miracle as well as providing labour legal training in China Miracle. I would like to thank Yu Xiaomin and Emily Leung for helping in carrying out the interviews.

15 A worker’s dormitory building was planned but construction was not yet started. The company rented dormitory rooms outside for their workers, which required a fifteen- minute walk to the company premises.

16 China Miracle had been certified ISO9000, a kind of standard certification for product quality in 2000, ISO 14000, a standard certification for environment protection in 2002 and aimed at certifying SA 8000 in the mid of 2003. Few companies in China really paid attention to achieving certification of SA 8000.

17 International NGOs such as Oxfam International, Clean Clothes Campaign and the Maquila Solidarity Network are well aware of the workers’ precarious situation in providing “correct answers” to the monitors and have attempted to make recommendations regarding monitoring practices.

18 The code stated that “A contract based on local legislation has to be established between employee and employer.” The code also required the contract to contain the following points: workers are paid at least the minimum legal wage; overtime pay meeting the legal requirements; pay annual leave and holidays as required by law; and an understandable wage statement which includes number of days worked, wage or piece rate earned per day, hours of overtime at each specified rate, bonuses, allowances and contractual deductions. However, the contract provided by the two enterprises contain only: date of start; name of the work unit; need for the worker to abide by the factory regulations; need for the worker to follow the work arrangements concerning a change of position without arguing against it; ensure and respect safe company environment; dismissal of a worker in case he or she does not follow the company regulations and causes loss of production; and company pays wages, insurance, overtime in accordance with the Labour Law.

19 According to the China Labour Law, workers should have two days off in seven.

20 Supervisors, technical, managerial and office staff were paid on monthly rates, ranged from RMB 1000 to 2000.

21 The legal minimum wage in the Yangtze River region was RMB 430 in April 2002 which was raised to RMB 460 in December 2002. Management insisted that meeting the legal requirement was not their problem because most workers would receive more than that amount. However, the workers did not know what the minimum wage was and most of them were not aware of the provision.

22 Interview, 22 December 2002.

23 The Code further states that “Factories may not interfere with workers who wish to lawfully and peacefully associate, organize or bargain collectively.”

24 The company said it would contribute to 2% of total employee’ wages to the union, but it was not proved.

25 See Doug Guthrie, Dragon in a Three-Piece Suit (Princeton, New Jersey: Princeton University Press, 1999).

26 I would like to acknowledge that most of the NGOs involving in the labour code monitoring have provided a critical stance in stating that the major limitation of code implementation is lack of workers’ participation.

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