From production to retailing, Wal-Mart's China operations display a dystopian collaboration between low-wage employer and autocratic state. With a global trade war increasingly likely, Walmart may be particularly exposed. Most of its suppliers are from China, so products it is importing. is wal-mart good for america? [home] A closer look at the debate over U.S. trade with China: What has been the result of .. china connection + interviews + producer's notebook + american radio work's companion reports.
Only in the past decade have local Chinese companies, having learned the ropes of manufacturing for export, been drawn increasingly into this supply chain—first as subcontractors for the Little Dragon—owned factories and more recently as direct producers for Wal-Mart. To cut procurement costs, Wal-Mart moved its global outsourcing headquarters from Hong Kong to the southern Chinese city of Shenzhen in and began focusing intensely on directly sourcing from factories in China rather than buying through wholesalers and agents.
As Wal-Mart has squeezed its China-based suppliers for lower prices, their workers, largely poor migrants from the countryside, have borne the brunt of the pressure to cut costs. Chinese research assistants stood outside factory gates and interviewed 88 workers when they left at the end of the day. Overall, the workers were paid an average of only 59 cents per hour.
Most of the garment workers were on piece rates and were paid at a lower rate when doing overtime work than during their first 40 hours per week, even though Chinese law requires a higher wage for all overtime work.
Until aboutmost of the export factories in south China recruited only young women between the ages of 18 and Managers explained that young female workers have nimble hands, are more meticulous, and, above all, are more obedient. But once the young women reached their mids, they were considered too old to keep up with the very rapid pace of work. However, the supply of young, poor rural women workers under the age of 24 was not endless, especially as new factories kept pouring into China, and starting aroundthe export-goods factories began to run into labor shortages.
So managers had to employ workers they had previously turned away. At the nine surveyed factories, the blue-collar workforce included a sizeable number of men and also a lot of women older than 23, even up into their 40s. The level of overwork in these nine Wal-Mart supplier factories is extreme.
The vast majority of the interviewed workers 88 percent worked more than 11 hours per day, and 81 percent of them had fewer than the four rest days a month required by Chinese law.
Making matters harder for the workers, the supplier factories responded to the cost pressures they faced from Wal-Mart by increasing the pace of work. Fifteen percent said the work speed was a lot faster.WALMART IN CHINA - BUYING IMPORTED FOODS
Worse yet, the workers were not being paid more for working faster. The consequence of the fast pace and excessive hours is burnout.
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Workers wake up one morning and simply cannot physically and mentally endure another day of such exhausting toil. Despite this, the interviews revealed that the majority of the workers in these Wal-Mart supplier factories lasted less than a year. More and more have refused to travel to Guangdong, which is filled with factories like those that supply Wal-Mart. Wages there have begun shifting upward as a result.
Wal-Mart’s China Connections
The search for cheap labor never ceasing, another wave of relocating export manufacturing is taking place in China right now. A growing number of the manufacturers have begun moving inland from Guangdong, closer to where migrant workers come from and where factory sites are cheaper. Some of the stores in China feature large parking lots to accommodate this new auto-owning class. To find out, we arranged for Chinese research assistants to interview employees and managers at three Wal-Marts in Beijing in and three in Shenzhen between and First, the good news.
Many of them are migrants from the countryside, and in previous jobs, they often encountered serious problems of delayed payments and owed wages.
Similar to Wal-Mart workers in the U. At the Beijing and Shenzhen stores that we studied, Wal-Mart also kept labor costs low by not giving employees paid overtime work, which legally requires higher hourly pay. Wal-Mart also cuts back on the wage bill by employing a large percentage of its workforce as part-time or casual staff, who receive an even lower hourly pay. They work an average of four to six hours per day, six or more days a week, and their schedule may change from day to day depending on how busy the store is.
The interviewed employees complained that they work under enormous pressure. Conclusion The growing U. Wal-Mart alone is responsible for the loss of nearlyU.
The current unbalanced U. The United States is piling up foreign debt, losing export capacity, and facing a more fragile macroeconomic environment. Meanwhile, China has become dependent on the U. Treasury bills and other government securities in recent years in order to artificially and illegally hold down the value of its currency, and thereby lower the cost of its exports to the United States and other countries.
It has repressed the labor rights and wages of its workers, making its exports artificially cheap, further subsidizing its exports. This is assuming that the imported vehicles displace domestic production, as would be the case if the domestic assembly plant in question closed and production moved offshore. See Methodology Appendix in Scott for further details. This report distinguishes exports produced domestically and re-exports—which are goods produced in other countries, imported into the United States, and then re-exported to other countries, in this case to China.
Re-exports do not support domestic employment because they are not produced domestically and they are excluded from the model used here. See Table 1 for information about the levels of U. This model assumes that everything else is held constant; the trade and job loss estimates shown here are based on counterfactual simulations. His estimates for and replicate the previously cited figures. Based on these estimates, Table 1 assumes that Wal-Mart maintained a stable 9.
This calculation is based on average sales per international Wal-Mart store in fiscal year ending January 31,here-in-after referred to as FY Wal-Mart Stores, Inc. Export estimates in this paper assume that sales per store in China were equal to the average for all Wal-Mart international stores, and that all Wal-Mart imports into China came from the United States.
This is clearly an upper bound on total Wal-Mart exports to China because it assumes that all Wal-Mart imports into China originated in the United States, which is highly unlikely. Assuming that all these imports were shipped from the United States, Wal-Mart was responsible for 0. The Bully of Bentonville: Bianco, Anthony, and Wendy Zellner. Is Wal-Mart too powerful?