Foreign work is revolutionizing Chinese society
By Ron French
Detroit News
WUHU, China — The American businessmen raised their glasses for another toast during an hours-long feast.
Even without the alcohol, the past three days had been disorienting for KenSa executives John Nye and John Clough. They struggled with jet lag and unfamiliar food. They'd spent days poring over financial spreadsheets translated on the fly. They were tired and off-balance, struggling to keep up in this different world.
But the Americans and Chinese both had reasons to celebrate.
Yinghua He, general manager of Tianhai Electric Co., had sold controlling interest of a wire harness plant in Wuhu to KenSa, gaining a shot of cash and the promise of American manufacturing expertise. In return, KenSa was getting 250 Chinese workers who combined would be paid less than its 15 remaining assembly workers in Michigan.
Clough, KenSa's chief financial officer, and Nye, director of operations, had traversed 12 time zones to ask Chinese workers to do something that on a spreadsheet didn't make sense.
The workers made more errors than the experienced workersin Michigan, but they did something the Michigan workers could never do — they worked a full day for the cost of a Starbucks Frappucino.
Wuhu is a gray industrial town in Anhui province, a four-hour train trip from Shanghai. In a city the size of Columbus, Ohio, there are 104 factories owned or partly owned by foreign companies, up from 55 just five years ago. Some factories pay workers the equivalent of 30 cents an hour, with few of the benefits received by American or even Mexican employees.
Emerging from decades of isolation, China has opened its market to foreign automakers, in the hopes they will help transform its eclectic jumble of 300-odd vehicle manufacturers into a world-class industry. Both Ford and GM produce cars in China with local partners. They also have opened major purchasing offices in Shanghai to buy billions of dollars worth of Chinese-made components.
Many suppliers moved to China to feed auto parts to Chinese assembly plants of U.S.- and other foreign-based automakers, which were jostling for their share of the country's exploding auto market.
"You can't blame the auto companies," said Christopher Kirsch, general manager of Interstate Tool & Dye Co., a Madison Heights, Mich., auto supplier going out of business partly because of international competition.
"If you're in a purchasing position at a car company, and you get rewarded for saving your company money, why wouldn't you buy overseas?"
KenSa had already moved most of its production from Michigan to Mexico four years before. The company was working out of a temporary facility in Honduras while a new factory was built there. While owner Hal Zaima thought the company might open a factory in China someday, nobody in the summer of 2003 in KenSa's small management staff was ready to move.
Bo Andersson had different ideas.
In a meeting of General Motors suppliers in 2003, Andersson, the powerful vice president of worldwide purchasing for GM, named the price that the automaker would pay for wire harnesses in China. Anyone who wanted to do business with GM should meet that price, Andersson declared.
"I thought we'd better accelerate our plans," said Zaima. "I didn't think it was coming this fast."
Today, GM imports only one-tenth of 1 percent of parts used in U.S. assembly plants from China (Michigan factories supply 14 percent). But the company expects to increase its auto part purchases from China 20-fold in six years — from $200 million in 2003 to $4 billion in 2009.
Huang Wei loves Britney Spears. She sings American pop songs at the local karaoke. She talks on a cell phone with friends about boys and clothes and the Americans she's seen recently in her factory.
"All the workers know the Americans bought into the company," the 22-year-old said through a translator. "The workers think it is a good thing. They look forward to a better future."
Huang earns $22.50 a week cutting and bundling wires eight hours a day, almost twice as much as she earned as a schoolteacher.
KenSa purchased a controlling interest in the plant this summer. U.S.-owned factories often have marginally better pay and working conditions than Chinese-owned plants. This is especially true among auto supply companies, where high worker turnover leads to lower quality.
Still, the same product that allowed workers in the United States to buy two-story homes doesn't allow Chinese workers to rent an apartment.
KenSa's 250 workers earn between 45 cents and 60 cents an hour. Huang lives with her parents, a short electric scooter ride from KenSa.
Plants like the one purchased by KenSa are sparking a revolution in China and no one seems sure where it will lead. Some villages are virtually empty except for the elderly. Cities are growing faster than leaders can figure out what to do about schools, health care and housing.
Huang is surprised to hear her job may have recently belonged to an American. Like past generations of blue-collar workers half a world away, Huang believes she controls her future, that her factory job is hers to keep for as long as she works hard.
"I cannot say I like it, but I have adjusted to factory life," she said. "I feel very proud of my job. I'm confident that no one can replace me."
Yinghua He can.
"Wages in China are going up," said Yinghua, Tianhai Electric's general manager. "We are concerned about this problem."
Even in China, factories are moving to find cheaper labor away from the more expensive coast. Tianhai is building a new factory in Xiangtan City in Hubei province, where wages will be substantially less than the 45 cents to 60 cents an hour earned in Wuhu.
"Chinese workers will take American jobs," Yinghua said. "This is the reality of the market economy. If the American people don't want to go out to look for opportunity and Chinese people want to go out, then it is America's problem."
