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The labor-intensive characteristics of the textile and garment industry determine that its development is highly dependent on labor costs. After World War II, Asian countries promoted the development of the textile and garment industry through the development of export-oriented economy. The production focus of the world textile and garment industry shifted from Europe and the United States to Asia, forming a global industrial chain.

textile in mainland china

Overseas investment in garment industry

Labor relations risks faced

The textile and garment industry in mainland China has been the main force of the manufacturing industry, providing a large number of jobs. With the continuous rise of manufacturing costs and the conclusion of external regional free trade alliances, more and more textile and garment enterprises in mainland China have transferred to overseas investment. According to the statistics of the Ministry of Commerce, the total foreign direct investment of China's textile and garment industry from 2003 to 2017 was 8.83 billion billion US dollars, accounting for 7.61 of the total foreign direct investment of the manufacturing industry. Because Southeast Asian and African countries have the advantages of low-cost, rich labor resources and enjoy the tariff preferences given by developed countries, Chinese textile and garment enterprises show the layout mode of "mainland China + Southeast Asia + Africa.

In the process of overseas investment of textile and garment enterprises in mainland China, the labor relations risk caused by the strike is the main risk. The cause of the strike is often that the Chinese enterprises do not strictly abide by the local labor laws and lack of effective management means. However, no matter what causes the strike, it will bring reputation and property losses to Chinese enterprises, and even affect the acquisition of subsequent orders.

Vietnam is the country with the largest number of Chinese enterprises investing in textile and garment enterprises in Southeast Asia. Vietnamese workers are ready to take collective action at any time, which is the main problem faced by many enterprise managers. According to a World Bank survey, the number of strikes in Vietnam increased year by year from 2005 to 2011. In 2011, the number of strikes reached the highest point of 857, of which the clothing and textile industries had the most strikes in the manufacturing industry.

In addition to Vietnam, Myanmar is the second hot spot for Chinese textile and garment enterprises to invest in Southeast Asia. A SMART Myanmar project, funded by European trade unions and launched in 2013, aims to improve the working conditions and operational efficiency of Myanmar garment manufacturers through training. According to the information provided by the project, of the more than 1000 labor disputes accepted by Myanmar's garment industry, 60% occurred in foreign-funded enterprises (most of them were Chinese-funded enterprises).

Similarly, how to deal with the strike of workers in the textile and garment industry in Cambodia is also a major challenge for Chinese enterprises.

Labor standards for the textile and garment industry

Agreement on Global Governance and Working Conditions

With the extension of the global industrial chain of the textile and garment industry, manufacturing enterprises in the host country continue to lower labor costs in order to obtain orders, coupled with the weak labor supervision capacity of the local government, resulting in serious damage to the rights and interests of workers. In the early 1990 s, some of the world's leading brands were exposed to the harsh working conditions of order production in developing countries, which caused a strong response in the society. Under pressure from consumers, labor activists and labor rights NGOs, brand companies believe that they are responsible for the labor standards and working conditions of suppliers in developing countries. More and more Western brands and retailers are adopting voluntary and corporate behavior to regulate the labor standards and working conditions of manufacturers in developing countries. However, the effect of these regulations is limited after all, whether it is the audit arranged by the manufacturer or the third-party audit arranged by the brand company, the manufacturer will symbolically meet the legal requirements, so that the conditions and labor standards of the work site appear to be in compliance.

To this end, the governments of developed countries and the International Labor Organization (ILO) are actively involved in the regulation of labor relations in developing countries, and a mixed regulatory project consisting of the intervention of major stakeholders and independent institutions in the global industrial chain has emerged. The first project appeared in Cambodia, where Southeast Asian textile and garment producers are concentrated. In 1999, the United States and Cambodia re-drafted the Multilateral Fiber Agreement (MFA) of the U. S.-Cambodia bilateral textile trade agreement, with labor standards and working conditions in exchange for more export quotas. After that, at the invitation of the US government, ILO set up the "better producers in Cambodia" (BFC) project in January 2001 to improve the labor standards and working conditions of Cambodian garment export manufacturers, provide credible compliance information on labor standards and working conditions through supervision, training, advice and information disclosure, and help the United States implement trade agreements. This exchange of labor standards and working conditions compliance for export quotas, coupled with BFC's supervision and improvement of manufacturers, has increased the labor standards and working conditions compliance rate of Cambodian export-oriented garment manufacturers from 52% in 2001 to 95% in 2008. In 2007, the BFC project was upgraded to the entire ILO project, and the name was changed to "Better Work" (BW), which aims to provide independent supervision of the textile and garment industry on a global scale.

From Cambodia's BW practice, it can be seen that the government of the importing country and the International Labor Organization have intervened in the labor relations management of the production bases of the exporting country, I .e. the front end of the global industrial chain extends backward. "If labor standards and working conditions comply, there will be orders, and tariff concessions will be obtained", breaking through the local government's supervision mode of the game between producer and labor, and introducing more stakeholders. In this context, the second Southeast Asian country to join is Vietnam. Since the economic reform in 1989, Vietnam has given workers more rights to association and strike, which has led to a growing number of strikes by workers in the clothing and footwear industries. In order to ensure the development of the clothing and footwear industry and continue to attract foreign investment, the Vietnamese government negotiated with ILO in 2009 and actively requested to carry out BW projects in Vietnam.

After Vietnam, two other countries in Southeast Asia have volunteered to join the BW program, including Indonesia, which joined in 2011, and Bangladesh, which joined in 2014. While Bangladesh has joined the BW program, there are also two five-year regulatory programs in operation that are similar in nature to BW. As of 2015, BW projects are operating in Cambodia, Bangladesh, Haiti, Indonesia, Jordan, Lesotho, Nicaragua and Vietnam, covering 1057 manufacturers and 1.19 million workers.

Overseas investment of textile and garment enterprises in mainland China

Countermeasures to avoid the risk of labor relations

With the continuous advancement of the "Belt and Road" construction, it can be expected that Southeast Asian and African countries will make full use of the opportunity of the transfer of the textile and apparel industry in mainland China to formulate a series of policies to attract more direct investment, expand exports, and improve the industrial chain. Accordingly, Chinese mainland enterprises will also encounter more and more labor relations risks. To this end, the countermeasures to avoid the risk of labor relations need to pay attention to two points: first, strictly abide by the various labor laws and regulations of the host country of investment, and fulfill corporate social responsibility. Second, join the various co-regulatory projects on labor standards and working conditions that are in operation in the host country. In the global textile and apparel industry, compliance with labor standards and working conditions means having the necessary conditions for market access and order acquisition.

As a "going out" Chinese mainland enterprises, especially textile and garment enterprises, should actively abide by the core labor standards and working conditions of ILO. BW's practice has proved that compliant enterprises are conducive to the improvement of the company's overall profit margin, employee retention rate, output and efficiency, as well as improving the enterprise's labor relations management ability and building a harmonious labor relations atmosphere.

(This article is the phased achievement of the Ministry of Education's major research project "Research on National Labor Policies along the Belt and Road and my country's Industrial Structure Adjustment", and the National Social Science Fund Project "Research on Enterprise Labor System Changes and Workers' Rights Protection under the Background of Industrial Transfer")

(Author: South China University of Technology, School of Business Administration)

(Source: Academy of Social Sciences website)