Can trade be ethical in China?

Two factory workers in China

That was the question we debated at the first in our Ethical Insights Series. Conclusion? Well, as with all things to do with ethical trade… it’s complicated!

China has achieved an extraordinary reduction in poverty for millions of people over the past few decades with high growth rates, job creation, investment in education, health care and public infrastructure.  It became the world’s second largest economy in 2010, and will soon overtake the USA as the first.

Economic growth hasn’t benefited everyone, however.  One third of China’s wealth is held by 1% of the population. 12% of the population live in extreme poverty – most of them living in remote rural areas. Those who escape, migrate to the cities and factories in search of jobs. It is these migrant workers on whom the economy has been reliant for cheap and compliant labour.

But this is now changing. Over croissants and coffee, we heard from an impressive panel of Chinese experts about the growing labour shortage in the country. Rising skill levels and better wages are changing the nature of Chinese factories and relationships between workers and employers. 

The panel was chaired by my colleague, Yun Gao – a woman with bucket-loads of experience, expertise and insight about labour issues – not only in China, but globally on forced labour and many other issues. We are so fortunate to have her as ETI’s representative in China. We also had Dr Jinyun Liu, a Professor at the University of Michigan, and Dr Bin Wu, a specialist in Chinese migrant workers based at Nottingham University.

What we heard…

Today’s generation of workers are younger, aspirational and interested in travelling to different places – within China and abroad. They are interested in their career, collecting new experiences, and are less worried about money than their parents were. Their parents were willing to sacrifice everything – selling their land, working long hours for little pay in the interests of creating a better life for their children.

Their children want different things. They want to be respected and valued. The labour & skills shortages mean they have more choices. They won’t put up with things in the way their parents did. They’re willing to leave their job for another down the road that pays slightly better or has wifi. They have less patience. 

But freedom of association remains a problem, and there is a real split between the worlds of workers and their managers or factory owners.

There are still no independent trade unions. The ACFTU (All-China Federation of Trade Unions) remains the only legally sanctioned body ‘representing’ workers. But senior officials are rarely democratically elected, they’re appointed by the state. The head of the ACFTU is one of 25 members of the Politburo.

Despite this, there are growing signs that things are changing. Increasingly ACFTU officials in some provinces are willing to play the role that would be expected of them as workers’ representatives. There are more examples of democratically elected worker representatives in factories that form worker committees. Factories that have been seriously affected by high levels of turnover, strikes, go-slows or industrial sabotage are realizing they need to change their approach.

Ethical standards and the growing demand from civil society and consumers in the West have seen multi-national companies demanding changes in the way their suppliers manage and treat their workforce. Such suppliers are starting to realize the value of engaging and negotiating with more representative workers’ committees to resolve strikes, disputes and agree wages and working conditions. However, the vast majority of Chinese owned factories remain far behind.

It’s all about communication… 

“Communication is the problem’, Dr Liu told me during our pre-briefing session for the Insights breakfast. In most of the factories and farms, there is simply no communication between management and workers. The idea is completely foreign to them… they’ve never done it and most of them wouldn’t know how either.

Dr Liu has worked for the past 6 years building communication skills between management and workers. He said this work was shaped by his own experience as a 16 year-old when the Cultural Revolution began and he was forced to leave school and work in a factory. He described his own experience and challenges of being in an environment where workers and managers operated in two separate worlds.  There was no communication, separate places for eating and no opportunity for any discussion or negotiation.

This is something he is trying to change – bit by bit. Helping managers understand that talking to workers can be helpful to them – workers often know better ways of doing things that could save the factory money. They also want to be acknowledged and valued for their critical contribution to the success of the factory.  “It’s a win-win situation we’re achieving… we just need to be allowed through the front door to develop an approach we’ve tried and tested. It always needs to be adapted. There’s no blueprint model here, but we know what approach works and we’re seeing real success”.

This of course cannot replace free, independent and democratic trade unions. Freedom of association is a human right and a core labour standard. Hopefully the Chinese government will come to understand that workers’ rights and dignity need to be respected and that workers need to be able to negotiate their own terms and conditions of work through representatives they have elected. But in the meantime, this seemed like a good start to change the culture of work and communication in China.

What followed was a great conversation between our panelists and the 45 people who attended at 8.30 in the morning. Those who attended had lived and worked in China for many years, had tried many things, had a sense of what worked and didn’t work to advance ethical trade with their suppliers.

We all left the discussion having learnt something new and had great feedback on the session. We left with a better sense of the value of sharing and learning about ethical trade issues and challenges, and a common commitment to making a difference.

Our Series continues. Please come - it’s worth it. We start early so as not to interfere with the working day and before the Inbox takes hold of our creative thoughts…. And there’s the breakfast and coffee of course... 

The next two sessions are: When is a Job Empowering for a Woman (7th October) and ‘What can we learn about mobile and web-based technology to give workers a voice?’ (28th October). Book now for the series - places are limited.



ETI's blog covers issues at the intersection of business, news and ethical trade. We welcome a range of insights and opinions from our guest bloggers, though don't necessarily agree with everything they say.