Editor’s note: China’s “miracle economy” is faltering. In this multi-part series, GlobalPost brings you the latest from the struggling Pearl River Delta, where much of the world’s merchandise is manufactured.
DONGGUAN, China — Johnny Wu said very little all day, but when I brought up the factory workers, he became animated.
“Everything has changed,” he said, looking up from one of several smartphones he had taken to lunch. He lit a cigarette and offered his pack around the table, which held several large dishes: pig intestine, eel, glazed chicken.
“You see, the relationship between factory owners and workers used to be like between a grandfather with his grandson. But now it’s reversed. If the workers are not happy, they just go to another factory.”
A fashionable, faux-hawked man in his early 30s, Wu was no grandfather. But as the son of the owner of Alex Macedon furniture company, and its likely future heir, he took a keen interest in an issue that’s been vexing manufacturers across southern China, the country’s industrial heartland: the rising cost of labor.
Over the last four to five years, wages had more than doubled, Johnny said, from 2,000 yuan — about $320 a month — to 4,500 or 5000 yuan.
“They demand high pay,” Johnny said. “You tell them the basic salary is three or four thousand [yuan] a month, they’ll immediately turn away.”
The experience at Alex Macedon is hardly unusual. As factories have moved inland, away from the coastal areas, and China’s working-age population has begun to decline, manufacturers around southern China have had to offer higher salaries and better amenities to keep their workers.
Two years ago, Johnny recalled, the company dorms had one hot water faucet per floor. All the employees shared it. After installing a solar-power heater so workers could have hot water in their rooms, complaints shot up.
“The late-shift workers said the early workers used up the water,” Johnny said. “It’s funny, for many years they had no problem with the bucket. Then we gave them better facilities and they complained.”
“The younger workers take things for granted."
In his privileges and anxieties, Johnny epitomizes China's young capitalist elite.
He has a BMW, an iPhone and a formidable belly. Yet he also understands that as competition increases in China, his position has become more precarious. Johnny used to have his own business manufacturing knockoff phones — “whatever brand you like.” But two years ago, he had to close it down because competition became prohibitive.
Things were different for his father’s generation. When Johnny’s father, Wu Zhongwei, got his start as one of the first capitalist entrepreneurs in the late 1970s, the field was wide open. Wu started in medical products, moved into electronics, and at last moved into furniture in the 1990s.
But for Johnny’s generation, they have to contend with competitors on every front.
“Even kids born in the 1990s are out there now,” he said. “There are still lots of opportunities, more than there were for my father. But now the competition is more fierce.”
When I met Wu Zhongwei, he did not seem to feel the same urgency as his son. He stayed mostly silent, watching us with glassy eyes. Later in the afternoon he took a nap and declined an interview, saying he expected a visit from an official.
Also at the lunch was Geng Hongtao, a genial man in his 50s with a loquacious air and an easy smile. Geng, the company's chief financial officer, was candid about the challenges facing Alex Macedon.
In 2005, he said, the company had more than 500 employees. Now it’s down to 300 or 400. At their peak they sold over 100 million yuan of furniture a year to America, their main market, filling 500 shipping containers a month. After the 2008 collapse they shifted focus to the domestic market, selling primarily to high-end hotels in China. In 2012, the sales were less than 70 million yuan.
Geng said it was possible the factory would have to move out of Dongguan in the next few years, perhaps to a location further inland, with cheaper land and more abundant workers.
Until then, however, the furniture company owned by Johnny Wu and his father will continue to face challenges. While we spoke, Geng took a call reporting that a team sent to install furniture at a hotel had been told to hurry up in order to meet their deadline.
The workers' response?