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Global Commodity Chains and Labor

Global Commodity Chains and Labor. Outline. Economic integration of “Greater China” (China-Hong Kong-Taiwan) and China in East Asia Concept of “global commodity chains” Experience of labor in low-wage m anufactur ing Actors affecting labor rights.

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Global Commodity Chains and Labor

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  1. Global Commodity Chains and Labor

  2. Outline • Economic integration of “Greater China” (China-Hong Kong-Taiwan) and China in East Asia • Concept of “global commodity chains” • Experience of labor in low-wage manufacturing • Actors affecting labor rights

  3. Economic Integration of “Greater China”: A Player in Global Production Chains • How did China become a player? • enabled by political initiatives • driven by economic complementarities • Geographic proximity • Exchange rates • 1980s appreciation of New Taiwan Dollar • Stricter environmental regulations in democratizing Taiwan • Ex: electro-platingarsenic in ground water • Land values increase in Taiwan in 1980s • Upward pressure on wages in Taiwan in 1980s • facilitated by linguistic and cultural affinities • Question: Where were the first special economic zones located? Why?

  4. Economic Integration of “Greater China”: A Player in Global Production Chains • Chinese government policies to attract foreign direct investment in export-processing zones strategically located near Hong Kong and Taiwan • “Special economic zones” • Tax breaks for exporters • Duty-free import of inputs • Infrastructure development

  5. Origin of Direct Foreign InvestmentCumulative 1990-2004 6

  6. Two Types of Global Commodity Chains 7 • Distinguish • Producer-driven commodity chains • Capital, technology intensive • Exs: automobiles (GM, Toyota), aircraft (Boeing, Airbus), electrical equipment • Core multinational corporations invest directly

  7. Two Types of Global Commodity Chains 8 • Distinguish • Buyer-driven commodity chains • Labor intensive, low technology • Exs: apparel (Gap, Levi), shoes (Geoxx), toys (Brio, Disney) • Core corporations own trademarks, engage in sub-contracting • “Just-in-time” inventory control • Very short production lead-times • Low barriers to entry in manufacturing  High barriers to entry in design and marketing

  8. Global Commodity Chain Analysis:Roots in Dependency and World Systems Theory Dependency World Systems Core Core Periphery Semi-periphery Periphery Global commodity chain studies draw on the insights of dependency/world systems theory

  9. Global Commodity Chains • What functions take place in the • Core? • Semi-periphery? • Periphery?

  10. Where is power located in the buyer-driven commodity chains? locationfunctiondivision of profits core design/marketing $$$$$$  orders, contracts ex’s: Reebok, Nike semi-periphery higher-end mfg’ing $$$ trade intermediary for low-end mfg’ing quality control, financing, shipping (middle-man role)  direct foreign investment ex: Yue Yuen periphery low-end mfg’ing $ (paid by middle-man) ex: Lili (working sister 打工妹） Dongguan 2007 wages now ~$3/day

  11. Links in the chain

  12. Sample industry breakdown • 75 billion dollar industry 36 billion  brands/stores 48% 25 billion  transportation logistics 33% 14 billion  factory oversees 19%

  13. “Sweatshop Labor” • Objective and subjective interpretations • Video • http://video.google.com/videosearch?hl=en&q=labor%20china&um=1&ie=UTF-8&sa=N&tab=wv# • 5:20-10:33; 20:11-24:00 • Why might “sweatshop labor” seem desirable to workers?

  14. Questions to reflect upon • Identify several pro’s and con’s associated with “sweatshop labor.” • Is low-wage labor in export processing industries • “a route out of poverty”? or • “a race to the bottom”?

  15. Is low-wage labor in export-processing factories a… • “route out of poverty”? • Higher paying job oppor-tunities for rural surplus labor • Labor remittances important source of capital • “China Blue” & “Working Sister” • Open small business • Help pay for sibling education • Dowry—more independence in choice of marriage partner

  16. Is low-wage labor in export-processing factories a… • “Race to the bottom?” • Low or unpaid wages • Wages for unskilled workers rising very slowly (in part due to intense competition both locally and internationally), • while wages for skilled workers rising dramatically (note: not a level playing field in terms of access to education for children in remote, rural areas) • Abusive working conditions

  17. New Developments in Labor Politics:Strikes Hit Honda Parts Factories

  18. Discussion Questions • Pun Ngai • What has improved as a result of corporate codes? • What has not improved as a result of corporate codes? • Try to identify and list all the of institutions/actors affecting labor conditions, as cited by Ngai. • Which institution/actor(s) has the biggest effect on labor conditions? • Friedman and Lee • What would Friedman and Lee add in terms of institutions/actors affecting labor conditions? • Other questions

  19. Discussion Questions • Pun Ngai • What has improved as a result of corporate codes? • Upgraded factory, dormitory facilities • Contracts • 1 day off in 7 • No labor deposit • No holding of id’s • What has not improved as a result of corporate codes? • Mandatory overtime • Below minimum wage • Free trade unions

  20. Discussion Questions • Pun Ngai • Try to identify and list all the of institutions/actors affecting labor conditions, as cited by Ngai. • SA 8000 • non-governmental, multi-stakeholder organization whose mission is to advance the human rights of workers around the world • auditable social certification standards for decent workplaces, based on conventions of the ILO, UN and national laws • “works with brands to focus their corporate social responsibility programs on management control of working conditions” • Western (European) transnational corporation • Western audit firm • Clean Clothes Campaign (Europe)/Worker Rights Consortium (US) • Foreign investors • Taiwanese co-owner of China Miracle • Hong Kong owner of China Galaxy • Chinese private investor • Co-owner of China Miracle • Chinese factories • China Miracle Garments • China Galaxy Apparel • Chinese Government (Labor Laws) (local labor bureau tasked with enforcement; who is labor bureau subordinate to?) • Garment industry Federation Trade Union • Factory trade union branches

  21. Discussion Questions • What institutions/actors would Friedman and Lee add? • Powerful, fiscally interested local governments • Hukou (household registration system) • Legal system (arbitration--committees, litigation—courts) • New social media • Labor NGOs

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