Being a “Boss” in China

Posted on September 22nd, 2009 by david

Last week I had the opportunity to eat dinner with three bosses from four factories that we were doing a couple projects with this last month.  One owns a large-box printing factory with 200+ employees.  Another was the owner of a plastics stamping factory with about 150-200 people.  And the most vocal guy was the owner of two factories, a wood furniture factory and a clothing factory.

(I’ve written about bosses before and I find these guys, a generation of true entrepreneurs in China, to be fascinating.)

As we sat around the table they started to tell me how difficult it was to be a boss in China nowadays.  At first I took this as the usual “poor me, I’m not making (enough) money on your project” ploy.  But as it went on I realized that there was much sincerity in what was being said regardless of why and I started to take (mental) notes that I immediately wrote down once I got in the taxi to go home.

Some of the specific issues they shared are these:

Control. Worker control is more difficult than ever.  The “new generation” is more independent and has a worse attitude toward work than previous generations.  (Boy, haven’t we all heard this before?!) It’s get worse every year as workers seem to be less willing to do the repetitive daily jobs that are necessary to get production done.

It used to be that they could staff the factories with young women, but now they have to have boys, older women and sometimes older men for the more physically demanding jobs.  With so many of the migrant labor pool gone now, they have to hire more locals–and locals talk.

Turn over is high and always rising. This is partly because there are indeed other options out there and people know about them from friends and the internet.  But it’s also a result of the maturity of the workforce—they know when something is bad and they don’t have to tolerate it any more.  They are increasingly exposed to information about the law and factories and (particularly foreign) bosses have been publicly villainized lately so workers are more courageous/brave.

QC standards are up. We hear this every time we do QC, so I don’t buy it for a minute.  But all these bosses seemed to sincerely believe that they are being held to higher standards now than they were 10 plus years ago.  I doubt it.  I just think that margins are tighter now so they are looking for reasons other than taking responsibility for waste or mismanagement .

Prices are down. Actually, prices of raw materials are up but large retailers are keeping prices constant (because of the bad economy) despite the smaller order qtty’s.  As someone that is the “middle” of many transactions myself, I agree with this—prices are not rising as fast as input costs are and that means that margins are being squeezed.

Labor costs are up. Even though there is unemployment this year, labor in Guangdong province specifically is still expensive as compared to more inland provinces.  All three of these bosses complained that the quality of employee for the money is lower than before.  All of them said they thought that labor cost should have gone down this year but didn’t because so many people left (when back to hometowns) that they’ve had to pay more since there are not so many available.

Management is very rudimentary. This was the first time that I’d heard Chinese bosses (as opposed to foreign bosses) complain about this. I’ve experienced it, I’ve heard everyone from box-store expats to first-time foreign manufactures complain about it.  You read about it in just about every book written (by foreigners) about China.  But all three of these guys when on and on about it.

There were two main items and a lot of other little stories/comments.  First, the fact that while you may have a good manager with years of experience it doesn’t mean that he can solve problems.  Over and over these guys gave examples of how they’d personally have to go in and solve problems because no one else could get it done.  They all said that this was one of the most difficult and time consuming parts of their job.

Second, most of the older (40+ years-old) managers have experience but very little education and with all the new technology they are becoming less and less effective with new processes and are neither the source for new methods nor the solution to new problems.

Theft. Employee graft is always a big deal and getting worse with the continually bad economy.  Not just office supplies but product, recyclable materials, IP, uniforms and phones are the items that go missing the most often.

Speaking for myself and our QC guys, outside of the fact that I must have a target painted on my chest (I’ve been robbed so many times if I hadn’t made a list I’d have forgotten them all), we’ve had pretty good experiences staying in hotels and factories (knock on wood).  This last month was the was just the second time in the last 6 or 7 years that our QC have had things stolen while staying/working in factories.  I’ve never been robbed in a hotel or factory.  Train and bus stations and shopping streets are a different story entirely.

But factory workers and bosses complain of much more crime within their factory.  I was very surprised that they’d talk about this in front of me since we put so much emphasis on protecting our product and our IP.  I’m guessing that either they don’t care, can’t control it or just assume that I know this already.  Probably some of all three.

No one cares. There is no desire to do anything well.  People just want to do their job, not think and go home.  No one really tries to do a good job and no body cares if they do it wrong.

I can personally attest to this being a major problem.  Most recent example: Last week as we were finishing shipping (late) the last container of a large multi-container project the workers in the factory were required to work over time to get the project completed so that we could get all the containers to the port before the closing date.  The boss had mandated the over time, the managers had established the standards and confirmed the processes.  But by 2AM the only people in the factory were line workers and our QC—there was no way that two QC could control the quality of more than 150 people both finishing product and finishing packaging.  Especially since the workers were only required to work until the container was loaded.  Well, you can guess what happened.

Broken items, unpackaged items, master cartons filled with unfilled boxes, incomplete product—it all made it into the container.  We had to call the boss, get him out of bed and into the factory to get things back under control.  He was pissed that he was awakened at 2 AM and that none of his managers were on site.  I was pissed too!

The only people that will pay special attention to you are your spouse and your mother.  Certainly not line workers at 2 AM.  Not a factory administration that thinks they’re not making enough money.  Even if you are just demanding that you get what you were originally promised (contracted for), be aware that the longer you (indirectly) make people work the more spit you’re going to get on your burger.  No one cares about your product as much as you.

Do it or you’re fired! More than once these guys all said that without this threat they wouldn’t get much of anything done.  Since managers can’t solve many problems they are where the proverbial buck stops.  They said they use this threat all the time and every now and then actually do fire someone to keep the threat real.

No Transparency. Every one of these guys says they have a relative running the finance for their factories (one wife, one sister in-law and one sister—all women too) an that they can’t share complete financial information with anyone.  If managers find out about margins they’ll “feel unbalanced: and may be angry or quit.”  If the government finds out they’ll be hit up for more “taxes.”

Over specialization. Under-skilled employees are just too specialized and so can’t be counted on to either do other jobs, creatively solve problems and they require a lot of training (e.g. money) to get them to be able to do other jobs.  You can hire a ton of people off the street to do simple stuff, but finding skilled professionals for more sensitive positions is much more difficult.

I’ve mentioned this before to in relation to finding office employees with work experience in different jobs/industries—especially the equivalent of the mid-level to upper level manager with both advanced degrees and decades of experience.  These guys just don’t exist here.  Anyone with an advanced degree is under 35 (e.g. no or very little experience) and anyone with experience has no education (they basically didn’t go to school in China in the 70’s).  What’s really interesting to me is that this group of bosses are themselves part of this very conundrum.

Many of these issues are specific to the cultures that these bosses created themselves, but they are also general problems across industries that I’ve seen in factory after factory in multiple Chinese provinces for years.


Tags: Business, China, Culture // 6 Comments »

6 Responses to “Being a “Boss” in China”

  1. This is a pretty good summary of all the issues the factories have to face, thanks.
    Actually I do think QC standards were lower 15 years ago, when there was not so much competition and buyers were lining up to sit down at a booth and sign a P/O right away. Importers have a lot more choice–and experience–these days. Not an excuse, though. Manufacturers had time to adapt.

  2. Many of these problems can be solved with money. “Unfortunately”, China is much too expensive now to compete with other countries on low level items while at the same time allow the big boss to earn enough for another top class BMW. I completely disagree with your first conclusion that this time they were not whining about not making enough money. They definitely were, and it was clarified later on in the article. It also wouldn’t be a surprise if they themselves did not implement a rigorous system for bonuses and penalties, employee manual, work procedure manuals and so forth.
    In addition, if the manager “don’t care” it’s definitely the fault of the Boss. The truth is, that previously these Bosses could simply swing it, and make a ton of money. Now they also have to be real managers and leaders, just like the rest of us.

  3. [...] Dayton, who writes the excellent SRI blog, reported a conversation he had with several factory bosses. He described how some factory owners feel about their workers, [...]

  4. Great post!

    I think every company in every industry in every country has all of these management problems to a degree.

    The difference is that in China we expect to get more done, for less money, with fewer and less experienced people.

    The only way to solve these more obvious problems in China is with the same improvements in management that you see all successful businesses making. At the heart of this is systematization.

    How often in China do we see Chinese managers systematizing anything? The very concept is considered western and alien, e.g. your comment about “transparency” and trusted family members in finance. From the Chinese point of view, as we know, that is not seen as a problem but in fact the best and smartest way of doing things.

    Similarly if you make staff document their work so you can move them to different jobs easily, train new staff, and use job descriptions to allocate HR efficiently, this is seen as madness in China… resisted by the staff themselves who don’t want to be replaceable, and if effective, resulting in IP that immediately gets stolen and carbon copied into hundreds of mini “copy-petitors”.

    The challenge in China is finding ways to systematize that don’t utterly go against the grain of How We Chinese Do It Best.

  5. Agreed. I think that we do see a lot of this everywhere. As the marketd mature, the individual factories will too. We saw some of this in the last couple of years as many smaller factories couldn’t keep going with the scandals, labor issues and bad economy.

    But the point of the post was that the Chinese themselves are very aware of the problems too (verses foreigner that have complained for years). I’ve not heard much of this type of complaining before from owners–they’re usually a bit more guarded and optimistic in public. It was, quite heartening to hear that owners across industries recognized that there needs to be some fundamental changes to the way things are done.

  6. While at the boss level most are uneducated, and in my opinion, about as useful as a rock, the educated youths are slowly gaining more and more experience, and with the help of their connected relatives, will be the leaders of tomorrow. This change will completely leave these factories in the dust, however, since all talented youths will opt for more money and visibility at international and trendy corporations. Very few will become entrepreneurs in the beginning, but the number will grow. Absolutely none will choose to work for subsistence wages for a moron of a boss at a plastics factory. These factories will slowly die out as China transitions to higher industries, and will continue the slow move to the heartland and cheaper countries.