Relocating Factories

 

Vocabulary

fierce	issue (3)	march in place
slipper	sack (2)	straight ahead
deliver	hope (2)	times are tough
tough	decision	shape (2)
wage	shutter	productivity
idle	ruin (2)	attention
lay off	malaise	take to the streets
unique	agrarian	aftershock
crisis	migrant	plummet
rely	meager	domestic (2)
willing	respond	considering
barely	pose (2)	competition
tier	shift (2)	number crunching
mood	spot (3)	assemble
rather	crunch	convince
glib	as far as	far reaching
tout	capacity	impressed
suburb	precious	up to standards
reveal	fire (2)	quality control
insist	expand	skeptical
visibly	goal (2)	outskirts
regret	box up	at first glace
hire	payroll	obedience
ritual	decision	surrounding
glance	achieve	meaningful
dozen	expand	squander

 
 
 

Video: Factory Relocation

 
 
 
 

Transcript

The early shift is about to start in the world’s largest women’s shoe manufacturer, located in the outskirts of Huajian in southern China.

The boss has ordered the employees to assemble — and each and every one of them knows their spot.

Time to march in place.

Zhang Huarong, Shoe Manufacturer: “Attention! Look to the right . . . Look straight ahead . . . Good morning!

Zhang Huarong has some important news to deliver — and it isn’t good.

Zhang Huarong, Shoe Manufacturer: “Times are tough and management has come to a decision: some workers will have their wages cut — others will be sacked.

Many of you are idle. But until now, you’ve been paid for those boring hours. By doing this, you are ruining your precious future and development.

I hope all of you understand this.”

It’s a difficult step, but one that’s becoming the norm as China’s economy slows. Hundreds of plants are already shuttered in and around Huajian alone.

And laid-off workers are increasingly taking to the streets in violent protests.

The police respond with force.

As the malaise deepens and stock markets plummet, the economic aftershocks are being felt around the globe.

And it’s forcing Zhang Huarong to make tough decisions in hopes of keeping the company in business.

He started here 30 years ago as a migrant shoe salesman. China was largely an agrarian nation then.

Journalist: “How many shoes do you make per year?”
Zhang Huarong: “China produces eight million pairs of shoes per year domestically, and another million internationally.”

Zhang’s top flight customers include Guess, Calvin Klein and Marc Fisher. His success relies on a workforce willing to labor long hours for meager wages.

But over the past ten years, payrolls have increased 300% to about €500 per month. Not much considering the cost of living, but it poses a major problem for manufacturers.

Zhang Huarong: “Fewer contracts, falling prices, competition is fierce and we’re barely making a profit.”

Zhang has called his top tier of managers together for a crisis meeting. He may be wearing slippers, but the mood is deadly serious.

The number crunching begins: which employees are too expensive to keep on the payroll.

“I won’t squander five years of profits on the workers,” he says.

The next morning, Zhang hurries to another meeting, this time with one of his best American customers, Ugg Boots.

Zhang is first and foremost a salesman with glib and convincing answers to each of his clients’ questions and concerns.

He’s no longer touting goods made in China . . .

Rather another continent with endless supplies of cheap labor: Africa.

The American is impressed.

It’s a negotiation that will have far reaching effects in the years to come.

China became an economic superpower based on cheap labor costs.

But that’s a thing of the past.

The future lies 8,000 kilometers to the west: Ethiopia, in a suburb of Addis Abba. A massive production facility with capacity for 4,000 workers — the very facility that so impressed Zhang’s American client.

Zhang is taking his top management on a tour of the plant. China’s King of Women’s Shoes is also doing a quality control check.

But the standards and productivity aren’t up to expectations.

Zhang Huarong, Shoe Manufacturer: “The culture is more westernized in Ethiopia. China has its own unique way of life.

For instance, we demand 100 percent obedience of our employees. Here we have to explain and describe work procedures.”

Still, Zhang insists on the morning exercise ritual. Commands are issued in Chinese — and the new employees are visibly skeptical.

It’s as if an entire factory were boxed up and shipped from China directly to Ethiopia.

The one major difference: workers here earn only €50 per month.

It’s time for the morning exercises.

At first glance, it looks a lot like back home.

But Zhang has big dreams for the years ahead . . . soon the company will employ thirty thousand workers in Africa.

As business contracts in China, here it expands.

And the entrepreneur has no regrets.

Zhang Huarong, Shoe Manufacturer: “When business is good, we hire people . . . when it slows down, we fire them.

In private enterprise, profit is the one and only goal.”

Zhang reveals another secret: his company owns the surrounding land, almost as far as the eye can see.

He plans to build a massive production plant. It will be shaped like a shoe.

Zhang Huarong, Shoe Manufacturer: “I’m very excited. I must achieve this. And I will achieve it. It’s a very valuable and meaningful project.”

And dozens of Chinese companies are doing the same: moving production to the new, cheap labor nations in Southeast Asia and Africa.

*     *     *     *     *     *     *

Questions

1. When employees come to the shoe factory, they go straight to work. Is this correct or wrong?

2. Does the CEO have good or bad news to tell the workers? What does he announce?

3. Zhang Huarong told the employees, “Many of you are idle. But until now, you’ve been paid for those boring hours. By doing this, you are ruining your precious future and development.” What is his message or point to them? Do you think he is telling the “real truth”?

4. Would it be better for them to be laid off (made redundant)? How do some laid-off workers respond?

5. Zhang is cold-hearted and wants his workers to suffer. Yes or no? What is he basing his decisions on?

6. Does he make decisions alone, without outside influence or consultation?

7. Are Chinese and Ethiopian workers the same or do they differ?

8. The Ethiopian employees are enthusiastic about morning exercises. True or false?

9. If Chinese workers are more productive and do better quality work, why was the shoe factory relocated to Ethiopia?

10. Is Zhang Huarong optimistic or pessimistic about the future?

 
 

A. What does the expression “The race to the bottom” mean? Is history repeating itself?

B. Is it good, bad, neither or both that (shoe) factories are relocating from China to Southeast Asia and Africa?

C. Have companies relocated to your country or moved out or both? What are some examples?

D. What happens to laid off factory workers? What should they and their government do?

E. What will happen in the future?