China is not the Factory of the World

– how a Japanese businessman views China

From 在华6年多的日本商人对中国世界工厂的评价

Translated by EPIN and Jacky

I am a typical Japanese businessman called “the economic animal”.  I have been in china for more than 6 years. During these years, I have successively worked and lived in five cities. I can understand Chinese but cannot speak fluently. I can also get general meaning of Chinese words but cannot write. China is called “Factory of the World.” I have my understanding to this. As far as I know, China’s productivity has been improved a lot. However, there is still a long way for China to go to be factory of the world. 

First, factory of the world does not mean the sweatshop. Some people once compared Japanese to ants, but compared with the hardworking Chinese, Japanese are far behind. There are innumerable household factories in Pearl River Delta, Yangtze River Delta as well as Jiangsu and Zhejiang provinces. These factories are running on backward technologies, similar products, and slack management. They have low technology and poor efficiency. Their only advantage is that they have employees as tough breed as ants, as submissive as cattle and horses. These workers support the survival of these factories. The workers work more than 10 hours a day, staying in shabby rooms and living the lowest life, without basic social security. They are working on the lowest wages all around the world based on hourly rate. In some piece worker factories, the workers’ average working hours are more than 12 hours a day. They won’t stop unless the supervisor forces them to take a break. In my company, there were some Chinese female cleaners. They worked over 10 hours daily quietly with no grumble and never took a day off. They did not have direct supervisor. Not a single person pushed them to do so. They cherished their jobs greatly, just because they earned a bit higher than those in other factories. We were very surprised when hearing that they sent 80% of the earnings back home. To Japanese perspective, the remained money was insufficient to cover their basic living expense, not to mention the rental and the water bill. I had worked in many Southeast Asian countries. It was very difficult to get the workers work overtime even if in an underdeveloped country, such as Burma. Workers would ask for many extra things. In Philippines, workers would never do such hard works. The Filipinos would take one month break after one month’s working, and would not go to work until they used up the money. In Indonesia, there was no one would engage in such hard work. Therefore, in my opinion, these so-called international manufacturers in China are supported by the tough breed Chinese. They cannot survive elsewhere in the world without Chinese. 

Second, factories without skilled workers cannot meet the standard of factory of the world. In the big cities of Southern and Northern China, large quantity of labor force is waiting for the employment. However, there are very few skillful workers. That’s because most Chinese factories are lack of long-term plans and technology support. Many migrant workers keep changing job year after year. They make shoes this year but sewing clothing the other year. The personnel turnover is huge. There is neither efficient management nor basic profession training. Meanwhile, the factories do not have long-term plans, and often rush to manufacture the same best-selling products. So workers have to learn new skills as the production line shifted. Most of the time, factories would fire the existing workers, and then recruit some new from the market. As a result, most workers do not have chances of working in the same field for a long time; therefore they cannot improve their industrial skills. Japan does not dominant in technology development, but it has an unrivaled highly skilled labor force. They have been engaged in the same jobs for tens of years. Their skillful hands produce the most sophisticated products in the world. Higher learning institutes cannot produce such workers, and it is not possible to train one over short time. It takes years to sharpen their skills. Chinese were more skillful. They have produced superb handicrafts. However, the Chinese factories’ employment pattern does not help train the workers. The Chinese workers have been floating like quicksand year by year. They don’t have the conditions to acquire higher skills.

Third, the size of those factories does not reach the standard of world factory. Most of the factories in China are small and many of them are making the same products. In terms of Japanese standards, those can only be called as workshops. They do not meet the standards of industrialization. The Pearl River Delta area is the densest manufacturing area in China, but its total annual production value of all the factories only equals that of one Japanese big size enterprise. Numerous factories are making the same products independently. As a result, the factories do not have enough work to do and the cost of manufacturing is high. Therefore, the enterprises do not have the funding for research team. They do not have money to invest in technology development. At the same time, the enterprises also have no intention to get more advanced technical equipment due to the low cost of the labor force. In Pearl River Delta area, numerous enterprises, big or small, are making low-tech electrical appliances such as television, microwave oven, air conditioner, refrigerator, telephone and so on. There is no one world famous brand. There are factories engaging in rag trade, headwear and footwear and toys. Also, none of them meets the minimum standard of mass production.

Fourth, low-tech factories cannot meet the standard of world factory. A world famous enterprise usually is able to develop products on its own. Also, it can offer comprehensive services from R & D, manufacturing, to marketing, sales and after-sales support. However, most factories in China basically are just imitating. They are acting for others. They are chained by others in technologies. Foreign companies grip most of the profits. The links between the R & D system and the manufacturing system are broken. Chinese companies are weak in developing new products. They come up with very few self-developed products.

Fifth, Chinese factories’ managements are not efficient and does not meet the standard of world factory. A more advanced production demands a more stringent management. Chinese enterprises lack good management. There are much more factories in China than in Japan, but few Chinese factories are able to produce a complete plant. Most of the equipment is imported. In the Chinese factories, those more advanced equipment are all imported from other countries. China has the ability to produce such complete plant, but it lacks of the management skills. The requirement of making complete plants is different from making mass products. There might be only one complete plant sold in several years. It takes a comprehensive management of resources, manufacturers, specifications, standards, etc to make profits. The whole process is as accurate as assembling finest watches. If one component goes wrong in management, it will increase the cost and decrease the performance. China is short of such precise management. The management of the state-own companies is very bureaucratic and inefficient, while the small companies do not practice good management. I think, if the Airbus is produced in China and managed by Chinese, its cost will be much higher. In my opinion, China does not lack of managers. China needs a good filtering system for talents. A lot of incompetent persons who are incapable, vicious and crafty take the high paid positions. They are good at cutting corner. They impede the development of the good managers.

China has unrivaled tough breed labor in the world, but it lacks of skillful industrial workers. China has more factories than any other countries, but none of them is world-class size. Chinese can make all kinds of products, but they produce few innovative products. China has huge productivity, but it is not able to produce high-tech complete plant.

China has a long way to go to become the real factory of the world. For a long time in the future, China will be only a primary products processing base, not the factory of the world.