New Page Turning With Pain

On a chilling morning in Dongguan, Guangdong Province, a middle-aged man turned a rusted iron gate closed. “Dad, will we come back again?” his little girl asked. “No, we won’t.” the man answered sadly. He was the boss of this small shoe factory. Having weathered many ups and downs, he had no way to continue operating but to close it down. Let’s wish him good luck.

But this is just one of the 10,000 businesses that are on the brink of collapse, in Guangdong Province solely.

Ever since the New Labor Contract Law came into effect on January 1, 2008, the costs of companies in various industries are all soaring up, especially manufacturing industry. Intensified by other factors such as higher minimum salary, enhanced state requirements for environmental protection, rise in raw material prices, and appreciation of Yuan, cost of middle to small-scale plants is expected to rise up by 40% to 50%, a staggering figure which a great number of companies find too heavy a burden to shoulder. They are mostly labor-intensive, producing low value-added products, struggling in a fiercely competitive market in which price rising isn’t an option. Once the worker’s salary swells, they are left with a very slim profit, or nothing. This seems to me one very direct reason that leads to the consequences mentioned above.

However, if the impact is so seemingly destructive to our economy, why introduce the New Labor Contract Law in the first place, what’s wrong with the old one? In case you didn’t notice, there is a bigger scheme behindвЂ"bring our country to a higher level. And this, in my opinion, is the reason in a deeper sense.

Financially, it is time that we shed the sweatshop image, replace “made in China” with “designed in China”. Remember, the companies being severely affected are not top-500 multinationals, but rather those old-fashioned and low-efficient. They occupied about 25% of the whole province’s workforce, but only created 8.5% value in return. On one hand if they close down or move out, there’s more room for advanced companies. On the other hand, if they choose to upgrade their management and productivity, good news for both sides. Either way, China is moving up the industrial ladder, heading for modernization, less-pollution and higher efficiency.

Socially, the gap between the poor and the rich is dangerously widening than ever. Our workers have long been deprived of their due benefits. The average payment per hour equates to perhaps 2-3% of what workers earn in the west. The country’s total wage payments fell from 53% of GDP in 1990 to 41% in 2005, not to mention the living environment of the labor force coming from