Thursday, July 06, 2006

A trip to China, part 2: where your clothing comes from

I made a side trip to a city near Guangzhou that is filled with approximately 2000 factories making clothing and visited one smallish factory. The common view of such places is that of a sweatshop and, believe me, in the hot, humid weather of southeastern China, there certainly was a lot of sweat. Most of the sweat was probably from me, though, since as a resident of the Seattle area, I'm not used to a climate more similar to the US deep south. So, what were working conditions like? Un-airconditioned, to be sure, but frankly the same could be said of most non-upscale workplaces, especially outside of Guangzhou. Safety was probably not up to US code, but then again was probably above local code, if there is any. There are closed-circuit cameras on the work floors, but the owners don't spend much time actually looking at the workers via TV -- it's more important for them to be seen on the work floors in person.

In many ways, the factory was like many medium-sized, family-run businesses in the US. The owners are around most of the time. When deadlines loom, they put in very long hours, and generally work longer hours than their employees. And they're not getting rich (I'd say, upper middle class for China, a similar lifestyle to their American counterparts). For example, the profit on a pair of jeans is US$0.25 to US$0.50. And this factory specializes in higher-end, lower-volume products. The big factories (ones that turn out a million pairs of jeans a month) make half that.

The workers aren't getting rich, either, but I don't think they're being taken advantage of. They get room and board (required by the government) and a pay that tops out at around US$100/month. Yes, it's not pleasant work and the living conditions are not good, but it's better than living and working in the countryside. It's probably a better situation than clothing manufacturing in the US at the turn of the 20th century (which isn't saying much).

So, who's making all the money? Well, let me tell you a little story. You see, the factories in this city generally don't sell direct to the clothing companies like Levi Strauss. Instead, they sell to middle-men, companies headquartered in places like South Korea. These companies in turn re-label the clothing so that it shows the point of origin as being someplace else and then re-sell them to the big labels. I'd say that most of the money is made in the US or Europe, but that the middle-men take a healthy cut. The US and European companies benefit from this arrangement by being able to distance themselves from the working conditions under which their products are made.

Why do the Chinese manufacturers put up with this arrangement? Because of the intense competition among factories. Remember, there are 2000 factories, some producing up to a million pieces of clothing a month, in one Chinese town. If you won't sell to the middle-men, if you try to work around them, then there are many other companies they can buy from. There are other towns filled with factories, both in China and other countries. The message is, "Shut up and be satisfied with what you have, or we'll take it away." And companies like Levi Straus piously state that they receive every assurance from their suppliers that their products are manufactured in South Korea or whereever under good working conditions. It's like outsourcing to the mob.

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