The day China's sweatshop workers rose up in mutiny and looted the plant

The wrecked Dingfu factory after it was destroyed by workers

Fewer and fewer young women are willing to work in China's factories

9th February 2008
By SIMON PARRY
Daily Mail (UK)

For years they toiled in appalling conditions, making cheap shoes for Western shoppers. Then the workers at the Dingfu factory rose up in an unprecedented mutiny and looted the plant. It was the moment that China's economic miracle finally imploded...

The lone security guard could only stand aside helplessly, cowering as an angry crowd of 400 surged forward, smashing down the steel barricades outside the factory in southern China and forcing their way inside.

Some yelling, some crying tears of frustration, they fanned out across the deserted concrete complex, aiming kicks at their boss's abandoned 4x4. Then they ran through the workshops, offices and dormitories seeking some kind of retribution.

Thirty minutes later, their fury spent, they drifted back out across the trampled barricades, leaving for the last time the place where many of them had spent years of their working lives, carrying the only thing they could plunder: armfuls of shoes.

"What could I do? I was just one old man against a mob," recalls 66-year-old security guard Can Don Yi. "Of course I didn't try to stop them. In any case, they had a right to be angry. I felt sorry for them."

Two days before, the workers had been busy on the production lines of Dingfu factory in the town of Houjie, making brand-name shoes for British High Street shops such as Zara, Nine West and Sam & Libby. Then local government officials marched in and announced that the company was bankrupt.

Penniless and cut off from their homes and families, the migrant workers – owed an average of four months' wages – found themselves shut out as the factory doors were sealed and court notices put up saying the Taiwanese owners were hundreds of thousands of pounds in debt.

At first they waited patiently at the factory gates. Then, when it was clear there would be no jobs to return to and no one to help them get back the money they were owed, they took matters into their own hands.

Minutes after storming the factory gates, it became clear that anything of value at Dingfu had gone. The boss had fled China on the day the factory was forced to close, leaving his 4x4 on the factory forecourt. On the front seat were a staff roster, a pile of lunch receipts and a business magazine.

But the factory closure is a scenario that has been repeated across southern China, where more than 1,000 shoe factories, around a fifth of the total, have closed down in the past year. Half of them have shut in the past three months and the majority of these were in Houjie, a concrete sprawl known as China's "Shoe Town". Suddenly the nation's astonishing growth, which over the past decade and a half has been based on its ability to provide the world with cheap labour, is under threat and experts are questioning whether China will become the 21st Century superpower everyone predicted.

"Peer beneath the surface, and there is a weak China; one that is in long-term decline and even on the verge of collapse," says Gordon Chang, an economic analyst and author of The Coming Collapse Of China. "The symptoms of decay are to be seen everywhere."

The principal reason for the decline is a simple refusal by migrant workers to put up with China's notorious sweatshop conditions any longer.

Jenny Chan is chief co-ordinator of the pressure group Students and Scholars against Corporate Misbehaviour, which investigates factory conditions in southern China.

She says: "In the past, workers would just swallow all the insults and humiliation they suffered. Now they resist and there are a lot of innovative ways for them to fight back.

"They collect money and they gather signatures. They use the shop floors and the dormitories to gather the collective forces to put themselves in better negotiating positions with factory owners and managers.

"They're also more mobile today. They have a network of contacts and they tend to hop from one job to another. They may not have high education levels but they have more knowledge. They have new horizons and far more possibilities in life than their parents had."

She adds: "They are able to use their mobile phones to receive news and send messages. Internet cafes are very important, too. They exchange news about which cities or which factories are recruiting and what they are offering, and that news spreads very quickly."

As a result, Ms Chan says, factories are seeing huge turnover rates.

"One electronics factory I visited had 36,000 workers and was experiencing a six per cent monthly turnover rate. That means about 2,000 workers leaving every month."

The contrast to the meek, submissive migrant worker of the Nineties could not be more pronounced.

In Houjie, scene of the uprising last November, some factories have tripled workers' salaries but there are still more than 100,000 vacancies.

At one factory a woman sits alone at a small wooden table on the pavement. Behind her is a large red banner announcing: "Workers wanted. Good rates of pay. Generous overtime allowances." It's already 2pm and she admits: "It's been a slow day. No one has stopped by so far."

The factory makes baby shoes for export to Europe. General manager Todd Cseng admits that the shortage of labour has become so acute and the cost of operating so high, due to a strengthened Chinese currency and EU tariffs on Chinese shoe imports, that his company is facing closure.

"They used to queue up outside for jobs but now we have to advertise in the street for employees," says Cseng.

"We have 500 workers here and we have vacancies for 700 more, but I don't see any way we are going to be able to fill them. The migrant workers simply aren't here any more."

As he leads us around the half-empty factory floor, it is clear that even when they do find workers, they are not the ones who would have been recruited five years ago. Then, young women were preferred because they would work harder, learn faster and cause less trouble than older workers.

Now, the production lines are staffed by men in their 30s and 40s.

"My daughter used to come here to work and leave her baby son with me and my wife," one 43-year-old male worker from Hunan province tells us. "Now I have a job here and she has been able to return home."

Other factories in southern China are offering workers family rooms to allow them to bring their spouses and children from rural provinces to live with them. But it has failed to stop the rot as workers vote with their feet against the prospect of life in a sweatshop.

At last year's Chinese New Year holiday, an estimated 1.7million people went home from southern China to their families and never returned. Shoe factory owners expect the numbers to be even higher after this New Year, which was last week.

"Our workforce is getting older and production costs are getting higher," says Cseng with a shrug. "We used to pay 500 yuan a month [£34.50]. Now even if we offer three times that, with guaranteed overtime, we can't get the people we need to fill the vacancies."

He says the solution will be for his company to leave the increasingly expensive factory belt in southern China, where the first phase of the country's extraordinary industrial revolution was forged.

"We will have to move either inland or out of China altogether," he says. "It's not political, it's economic. A lot of Taiwanese companies are moving to inner provinces because the land is cheap, the labour is cheap and the local governments don't insist on expensive anti-pollution measures as they do here. It's just too expensive to operate in southern China today."

The impact of the exodus has already been devastating for Houjie. The town is littered with empty factories, and shop owners whose livelihoods used to depend on customers from the factories are now struggling to survive.

"It's frightening how quiet it's suddenly become," says Li Xiao, who runs a small shop opposite one deserted plant. "We used to have so many customers from the factory. They would come out and buy cigarettes and food and drinks, especially in the evenings.

"Now there are no customers. They've all gone away. We're waiting for another factory to move in and for workers to come back so we can get some business back. But it's been two months now and no one has even come to look at the place."

Until October last year, the factory turned out sports shoes at the rate of almost one million pairs a month. Today, the four-storey complex looks as if a bomb has been detonated inside it. Most of the windows are smashed and the old factory floors are covered in rubble, broken glass, shoe soles and empty boxes.

"When it closed, the owner sold everything inside and then rubbish collectors plundered the place," explains Li Xiao. "Anything they didn't take, they smashed. That's why it looks the way it does."

Houjie and other towns like it across southern China face becoming vast wastelands of concrete where no one lives. At the same time, Western firms, including companies such as Marks & Spencer and Primark, must consider relocating production to countries such as Vietnam, Thailand, Cambodia, India and Bangladesh, where labour costs are in some cases lower.

And with the foundation of its economic success in decline, China's future as a global superpower is in question. The country's leaders have acknowledged the looming crisis and are belatedly trying to encourage high-tech industries.

But unlike Japan and India, which have built their success largely on technology industries, China lacks both the skilled workers to step up to the challenge and the captains of industry to oversee the necessary change.

Its factory owners are mostly privileged children of party officials – 90 per cent of China's billionaires are the children of senior cadres – who have a reputation for spending more time in karaoke lounges than boardrooms. They are ill-equipped to act as innovators and entrepreneurs.

Experts fear this lack of imagination and flair, combined with the country's widespread corruption and abuse of power, could soon bring about a calamity in the world's fastest-growing economy.

Of course, the end of China's sweatshop conditions is to be welcomed, and many observers are looking forward to the emergence of a politically influential labour movement similar to the ones that shaped so much of post-war politics in the United States and Britain.

"The working class in China will get stronger and bring about some major changes," says Ms Chan. "These forces from the bottom up are very important in making a better China; a China that is more democratic and participatory."

Meanwhile, time stands stubbornly still at the Dingfu factory complex in Houjie. Behind the sealed iron doors, shoe boxes lie in untidy piles, dusty racks of unwanted clothes hang outside deserted dormitories and half-finished shoes sit on the production line waiting for an army of workers who will never return.

Fearing more unrest, the local government paid token compensation out of its own funds to the workers who were shut out of the factory, and all but a handful have taken jobs at other firms or returned home.

Some of those left behind continue to stop by every day, however, to watch for the return of their runaway boss, whose 4x4 stands, coated in dust, on deflating tyres in the factory forecourt.

"Is he here? Have you seen him?" a 40-year-old man asks in hope rather than expectation as he watches us emerge from the factory. "I just want the money he owes me and I'll keep coming back.

"I'm not frightened of him any more. None of us is."