The China Price by Alexandra Harney

Though I’m only 50 pages in, The China Price by former Financial Times writer Alexandra Harney, is a fascinating read. Among the myriads of articles about recalls due to toxic chemicals found within toothpaste to plastic toys, this book rather delves upon the inner workings of the Chinese manufacturing industry, more particularly in the booming southern region of Guangzhou.

The duality of keeping demands high and prices low have cost many Chinese manufacturing companies to break laws with little supervision, extend working hours, and create shadow (non-monitored) factories with the “five star” factory (for show for auditors). The irony of the name “The China Price” has a double connotation that we know China’s price for goods are very low and also the price that Chinese workers, mostly migrants from other provinces, pay in order to earn more money.

See today’s article in the NY Times about Chinese economy slowing down

When it comes to Chinese mentality, I perfectly understand their work ethic as to why they would be willing to work 80-90hr work weeks and get paid for very little. Chinese mentality is nothing like North American mentality where we fear of being taken advantage of if we work really long hours and are not compensated for our extra work. Instead, many migrant Chinese workers come from the country in poorer districts thus they have no choice but to work and care about money. According to the book, one factory manager says that if they do not give more hours to their workers, they complain. They would ask him what are they to do with their extra time? Sit on their bum? They’d rather work. Much of the money they earn is sent back to their families, which isn’t much different from many foreign students or workers who work in North America and send a good chunk of it to the families they’ve left behind.

The reality is that large companies place ridiculously large orders, expect factories to abide by labor laws, limit working hours between 8-10hrs, and expect the goods to be delivered in a timely fashion. Thus many manufacturers create “shadow factories” which aren’t monitored by their clients in order to meet their demands. The worst is that if these manufacturers only abide by the rules, they would lose business to other competitors and thus will be force to close and fire thousands of workers.

It’s come to the point as to what possible solution can there be to solve the large orders, keeping prices relatively low and still make a profit legally? If migrant workers are put out of a job, how will they be able to earn money? Let’s not even talk about work conditions as we all know the majority are held in poor conditions.

Low pricing affects our daily lives. Our Dollarama’s and IKEAs wouldn’t exist without the China Price. If the world would suddenly just buy locally (which probably will never happen), that means millions of jobs in the Chinese market will be lost. The economic turmoil will be beyond our wildest imagination. So how can foreign and local Chinese governments find a solution and common ground? And how can they prevent other third world countries from following the same disastrous footsteps? Keep in mind that even countries like Africa face the same dilemma, only their end is more on agriculture (see Stuffed and Starved by Raj Patel).

It is indeed a race to the price of zero.

Can we really survive without our cheap goods? Made in China just took on a whole new dimension.