Factory Regimes in the Global Production

“Factory regime,” according to Michael Burawoy, refers to “the overall political form of production, including both the political effects of the labor process and the political apparatuses of production.”Footnote ⁶ He divides capitalist factory regimes into two generic types: the despotic regime, which is based on coercive work, and the hegemonic regime, which is based on consenting work.Footnote ⁷ Burawoy thinks that relations in production, market structure, labor power reproduction, and state intervention affect changes in factory regimes. He emphasizes the role of state intervention in the formation of different production politics because workers' social welfare and other benefits from state regulations influence their relationship with employers.Footnote ⁸ With the mobility of global capital from advanced countries, Burawoy also postulates that despotic factory regimes could be imposed in peripheral states, particularly in export processing zones, where there is the interplay between world capital and cheap labor.Footnote ⁹

Further globalization has made Burawoy's postulate more prevalent in “peripheral” manufacturing. Globalization contributes to a buyer-driven commodity chain and encourages outsourcing and subcontracting to lower production costs.Footnote ¹⁰ Such a new international division of labor with global manufacturing networks generates flexible production regimes and deteriorates the working conditions and labor standards in manufacturing-based countries.Footnote ¹¹ However, in global production, both states and firms have developed new strategies and interventions which are constructing more complex work organizations and labor control than Burawoy imagined. On the one hand, state intervention does not always or to the same degree influence the labor process, for the capacity of the state to regulate enterprises differs according to the local structures of politics, economics, and cultures. Steven McKay shows that local conditions influence production politics in his research on high-tech industry in the Philippines. He argues that the national and local states play crucial roles in strategic localization by attempting to attract foreign capital to export processing zones.Footnote ¹² Ching Kwan Lee questions the role of state intervention in her research at South China, and she found that the state was either noninterventionist or lacking the political capacity to regulate enterprises.Footnote ¹³ Lee also points out that the collusion of local governments with foreign firms is one of the institutional preconditions for low labor standards and oppressive production regimes in South China.Footnote ¹⁴ On the other hand, in the new era of globalization, labor regulation in transnational production is becoming not only a responsibility of a nation-state but also of international solidarity.Footnote ¹⁵ Manufacturing suppliers and partners with export-oriented production in developing countries are required to conform to the codes of conduct of the brand-name companies of their western buyers.Footnote ¹⁶ The new external labor regulations from international challenges have pressed the global manufacturers to improve their working conditions and labor rights.

In global production, employers have also further broadened the scope of labor control and workers' consent outside the workplace.Footnote ¹⁷ This situation extends Burawoy's analysis, which focuses on the core of labor process on the shop floor. McKay argues that myriad elements such as gender, age, culture, and other experiences beyond the issue of class and beyond the shop floor influence workers' interests, identities, and subjectivities and help construct worker commitment.Footnote ¹⁸ Gendered production has become an aspect of globalization.Footnote ¹⁹ In the studies of China's global production, gender and native place network are usually taken as strategies to control migrant workers in the workplace. Ching Kwan Lee and Ngai Pun have highlighted gendered factory regimes in China's manufacturing industries where young single women dominate the labor force on assembly lines. They also point out that social networks, such as native place networks and familial ties, are not only used to identify and group migrant workers but are also reconfigured by management to recruit and control workers.Footnote ²⁰ At the same time, native place networks can also be a basis of solidarity for workers' collective actions.Footnote ²¹ Employers are worried that these networks can do harm to their management and control of workers. In some situations, they put migrant workers from different provinces on the same team so as to prevent a sense of solidarity among them.

In my study, I focus on local strategies of labor control in global production. I reveal the local conditions of my research site, where most of the factories violate China's national labor laws and local labor regulations to different extents, and the labor offices of local government take no effective and practical measures to protect the rights of workers. With case studies of three electronics factories, I examine how employers apply different strategies to reproduce labor power and control workers within and beyond the shop floor. I argue that the character of workers and firms, the dynamics of the labor market, and external labor regulations impact production politics.

The Local Clustering and Labor Standards in the Electronics Industry

China has been a leading global electronics manufacturing country since the late 1990s. In 2006, the total export value from electronics and information products was US$364 billion, which accounted for 35.7 percent of China's total exports. In the electronics industry, eighty percent of the investment is from foreign capital.Footnote ²² The Pearl River Delta and Yangtze River Delta have become two major regions for agglomerating foreign investment in the electronics industry. These two regions have developed intricate local production networks from component electronics, computer products, digital commodities, and semiconductors. Dongguan City in the Pearl River Delta, with a close proximity to Hong Kong,Footnote ²³ famous for its export-oriented industrialization, is now crucial for the world's electronics manufacturing industry. In 2006, seventy percent of the city's total exports were electromechanical components and systems. The exports of electromechanical products, valued at US$33.2 billion, were larger in absolute terms than the sum of the two traditional exports of Dongguan, apparel and toys.Footnote ²⁴

In the electronics manufacturing industry in Dongguan, Stone Town, my research site, plays a very important role. Since the first export processing electronics factory, built with Taiwanese capital, was established in Stone Town in 1989, more than 450 electronics firms have clustered within a thirty-six square kilometer zone. Roughly 190 of them have foreign investment.Footnote ²⁵ Nowadays, Stone Town is one of the most important manufacturing centers of the global electronics industry, especially for component electronics. More than one hundred kinds of electronics products are manufactured there, nine of which (including power supplies, transformers, keyboards, scanners, and inductors) take the first place of annual output in the global market. The total annual export value of Stone Town in 2005 reached US$3.73 billion, of which eighty-three percent was from electronics products. In August 2005, Stone Town was honored as Distinguished Town for Chinese Electronics and Information Industry by the China Electronics Business Association.Footnote ²⁶

Stone Town depends on foreign investment to develop its local economy. In the electronics manufacturing industry, foreign capital accounts for seventy percent of the total investment. Capital from Taiwan plays the leading role. Among 190 foreign electronics factories, the Taiwanese ones manufacture about seventy to eighty percent of all their electronics products. There exist huge differentials and a marked division of labor among all the electronics factories in the town. Some large firms are manufacturing centers of TNCs, and their buyers are usually the brand-name computer or telecommunication companies in the United States and the western European countries, such as Dell, HP, IBM, and Microsoft. These TNCs have remarkable positions in the global electronics industry and are usually regarded as strategic manufacturing suppliers or business partners for their buyers.Footnote ²⁷ However, fewer than twenty of the 450 factories fall into this category. Most of the electronics factories are subcontractors or suppliers for large local factories. A large company usually helps their vendors, which are usually invested in with capital from the same country or region, to set up factories nearby and form a local supplier and production network. In Stone Town, some large electronics manufacturers often need ten to twenty supplier factories to help them manufacture low-tech products and semi-products. For example, among the three cases in my study, Power Ltd. is the largest firm in Stone Town while Express Production and Victory Cable are two of its suppliers. The competition between supplier factories is extremely high because of their low-tech and easy manufacturing process. In order to get more production orders for their products, these supplier factories usually use a low price strategy by minimizing costs.

As the manufacturing of electronics products is extremely labor-intensive, the development of the industry attracts a great number of migrant workers from hinterland provinces to Stone Town. Migrant workers form the majority of the labor force on the assembly lines and have even become the dominant group in the town. There are 200,000 migrant workers in Stone Town while the number of local residents is 40,000. Many workers are concentrated in large factories. For example, the number of workers in the six largest factories ranges from 6,000 to 20,000, which accounts for thirty percent of the entire migrant population in the town. A lot of small factories have only around 200 to 500 workers, and some workshops have fewer than 100.

Working conditions are rather terrible in most of the electronics factories in Stone Town, especially in small ones. The local government fails to enforce labor standards effectively and even turns a blind eye to the exploitation of migrant workers. In 2005–2006, the local legal minimum wage was RMB 574 (about US$73) for 168 hours per month (eight hours a day, five days a week). Overtime compensation was RMB 5.14 per hour on weekdays and RMB 6.9 on weekends. In Stone Town, except for a few relatively large firms that can pay workers close to or a little bit above the legal standard, most electronics factories have a very low standard: the monthly basic wage is usually around RMB 300 to 450, the overtime rate is only RMB 2–3, and the total net payment is about RMB 600–800. At the same time, workers usually have to work 80–150 hours of overtime per month, and they cannot be assured of one day off a week.Footnote ²⁸ During my fieldwork in Stone Town, a girl told me that she had a monthly overtime record with 196 hours, which means she worked more than twelve hours per day for thirty days in a row. In that month, the girl got only RMB 967. Even these egregious working hours failed to bring her a satisfying economic return.

With more and more new assembly lines opening in Stone Town, there is stiff competition for qualified migrant workers among the electronics factories in the town. The local clustering of electronics manufacturing has created many job opportunities for workers and made them more mobile. Workers are more likely to quit jobs when they are not satisfied with conditions in the workplace; young girls go to factories with higher pay and better benefits; some experienced workers find clerical and administrative positions instead of assembly jobs; some girls, bored with assembly work, try to get jobs in the service industry.Footnote ²⁹ As a result, many firms find it is becoming harder and harder to recruit and retain workers. The large firms have to offer better pay and benefits to attract good workers and reduce workers' turnover rate in order to meet the production requirements of their buyers.

Smaller factories have greater difficulty in securing a labor supply. However, these factories rely more on changing their hiring policy than on improving working conditions to recruit enough workers. This is because they are at the bottom of the production chain, and, as a result, their profits mainly come from minimizing production costs, especially labor costs. The smaller factories recruit less-educated girls, middle-aged women, and men who have fewer labor market options and are thus cheaper to pay. In Stone Town, if a company has stricter requirements in recruitment, it usually has better working conditions. For example, one large company in the town usually only hires young girls between seventeen and twenty-two who have a high school education. This company has the highest pay rate in the town, and it is the only one that has air conditioning in workers' dormitories.

The Working Conditions and Labor Controls in Three Electronics Factories

Power Ltd., Express Production, and Victory Cable are three component electronics factories in the same supplier chain. They represent the differences and variations of the electronics manufacturers in Stone Town: they have different target customers; they implement different requirements in the labor process and face different external labor regulations; they have different working conditions and labor standards; and they also apply different strategies of labor control on and beyond the shop floor.

Power Ltd. is a manufacturing center for a Taiwanese global electronics corporation that was established in 1971 and also has manufacturing centers in Taiwan, Thailand, China, and Mexico. The corporation is the world's largest provider of switching power supplyFootnote ³⁰ and is also a major source for power management solutions,Footnote ³¹ electronics components, computer fans, visual displays, industrial automation, and networking production in the global electronics market. Power Ltd.'s main global customers are world-famous big-brand companies in the information technology industry, such as Microsoft, Cisco, Intel, Dell, HP, IBM, GE, Nokia, SONY, and Siemens. Since Power Ltd. was set up in Stone Town in 1994, it has gradually cumulated an investment of US$200 million and become the largest factory complex in the town. It employs 20,000 workers and covers 180,000 square meters. The firm has five plants and a power research center to serve buyers with manufacturing and new product development. After more than one decade's development, Power Ltd. also built a local supplier network in Stone Town. Currently, more than twenty electronics factories are producing low-tech electronics components or semimanufactured goods for Power Ltd.

Among the factories in Power Ltd.'s local supplier network, Express Production and Victory Cable are two representative ones. Express Production has been the processing partner of Power Ltd. since the 1980s in Taiwan. After Power Ltd. settled in Stone Town in 1994, Express Production also established assembly lines nearby in the same year. Now the factory has two manufacturing plants with 2,000 workers. In recent years, besides Power Ltd., Express Production also receives orders from other large Taiwanese companies.

Victory Cable is a factory with domestic private capital. Its employer, Mr. Zhang, who was a former engineer at Power Ltd. for seven years during the 1990s, established the factory in 2004. Victory Cable relies on production orders from Power Ltd. and is much smaller than Express Production. Victory Cable only has about 320 workers. Both of the factories provide the same products for Power Ltd.: wire harnesses and cable assemblies.

Power Ltd.

Power Ltd. employs more than 20,000 workers, ninety percent of which are shop-floor operators. The work force is gendered in the ways depicted in earlier studies of transnational assembly lines. Power Ltd. prefers to hire dexterous and docile young single women between sixteen and twenty-five years of age at least a junior high school education. Of the 20,000 workers, more than ninety percent are young women, and, of those, seventy-five percent range from seventeen to twenty-two years of age. And all the operators on assembly lines are female. Power Ltd. only recruits a small number of young male workers with higher qualifications and who meet more demanding criteria. The positions for male workers are limited to service and logistics in the workplace. Male workers need to have a senior high school diploma or vocational training and be at least 168 cm tall. The recruiters in the firm also prefer to hire male workers without any work experience because they think such workers are more easily managed. The male workers have the same pay rate as female operators.

As a global leader in electronics components, Power Ltd. has to meet the high demands for quality and productivity from its western buyers. Therefore, like many transnational electronics manufacturers, it applies “disciplinary management” combining high-tech strategies and strict enforcement of company rules on the shop floor.Footnote ³² All operators perform in accordance with the high speed of automated machinery and computerized assembly lines. Industrial engineers have accurately calculated how many seconds are required for each action on assembly lines and have recorded the data in computers beforehand. On each assembly line, the computers not only record the yield and failure rate for products but also trace mistakes down to a certain work station and the individual operator by the barcodes. All workers have to wear static bracelets, hide their hair under kerchiefs, and work according to standard operating procedures. They are not allowed to talk to one another on the assembly line. If they violate any rule, they are fined and cannot get the quality incentive. In order to improve efficiency and keep the workers from napping on the job, the firm has embarked upon a new system that requires standing work. Workers only get a ten minute break after two hours of continuous work. Although the regular work time is eight hours for day and night shifts, workers often have to suffer three to four hours of daily overtime. In peak seasons, workers are denied their weekly day off, and they usually work 100–120 hours overtime per month. Some workers complain about the high-pressure workload and the intense work pace. A girl named Fan said:

Besides the strict discipline on the shop floor, Power Ltd. also actively involves itself in workers' daily lives in order to better manage them. On the one hand, the factory has created an enclosed small community with convenient living and recreational facilities. Besides manufacturing and dormitory buildings, there are spacious green lawns, trees and flowers, pavilions, and basketball and soccer grounds. Also various other facilities can be found in the factory: large canteens, snack bars, clinics, bookstores, reading rooms, a library, Internet bars, ATM machines, servicing sites for the post office, and even hotlines for psychological consultation. These facilities are convenient, for workers can easily reach their living quarters and entertainment facilities without going off the factory grounds. On the other hand, there are strict regulations for workers' lives after work. For example, during the one-and-a-half-hour lunch break, workers are forbidden to leave the factory grounds or go back to their dormitories to rest. All the young single women have to live in dormitories and are not permitted to rent a room off the grounds; if workers return to their dormitories after the given curfew, they are fined or possibly even dismissed. The management and control of the workers' time and space beyond the shop floor is helpful in maintaining flexible production and labor power. If there is an urgent production task, the firm can force workers to do overtime during their official rest time. The rules on accommodations try to optimize workers' rest under conditions of excessive overtime.

The wages and welfare benefits in Power Ltd. are above the average level in Stone Town. The basic monthly wage and overtime compensation are paid at the legal rate. Workers can get about RMB 1,000–1,300 of net payment per month. The factory also provides free uniforms, free lodging, meal allowances, an annual bonus, sick leave, and maternity leave. Social activities, such as birthday parties and sport meetings, are held for workers. Such labor standards are better than most factories in Stone Town that pay workers much below legal standards. However, the turnover rate is still three to five percent per month, which means 600–800 workers leave the factory every month. Why does such high turnover happen in a factory with relatively high payment?Footnote ³³ First, workers are not satisfied with their wages. Some workers complain that their basic wages are too low and that their monthly net incomes depend too much on their overtime work.Footnote ³⁴ Some compare their wages to the best pay in two large electronics factories in Stone Town and believe that Power Ltd. pays RMB 300–400 per month less than the other two. Second, young girls with the better educational background required by Power Ltd., have more work opportunities in the labor market and, as a result, are more likely to quit their jobs if they feel uncomfortable in the workplace. The high-pressure workload, intense work pace, strict disciplines, few chances for promotion, and bad-tempered line leaders on the shop floor can also be reasons for workers to leave the factory.

In order to deal with the high turnover, Power Ltd. has developed recruiting networks with labor bureaus, vocational schools, and labor agencies to meet the demand for a high volume of workers.Footnote ³⁵ Through labor agencies the firm can ensure enough workers as well as arrange the workforce more flexibly and efficiently. When the firm is in need of workers, it will contact their recruiting partners in advance and ask them to find new workers. Most new workers are recruited from their hometowns in hinterland provinces. However, Power Ltd. does not pay the labor agencies for the labor supply; rather, it is the workers who pay the labor agencies. The new workers pay the introduction feeFootnote ³⁶ to their vocational schools or labor agencies. If they are recruited in Stone Town, the introduction fee is about RMB 150–200 for women and RMB 500–600 for men. If they are recruited from their hometowns, the amount is increased to RMB 600–1,000, including the transportation fee. The high income from introduction fees motivates labor agencies to help Power Ltd. seek more and more young girls. Now almost all new workers to Power Ltd. are recruited through labor agencies or vocational schools.

All workers at Power Ltd. are migrants from impoverished areas, e.g. Shaanxi, Henan, Sichuan, Hunan, Hubei, and Jiangxi. For migrant workers, native place networks and connections are crucial for their social activities. The workers in Power Ltd. also have much closer relationships with their local peers. The factory, however, thinks such social networks endanger the firm's everyday management and may lead to collective action. Therefore, it takes the following series of measures to prevent a sense of solidarity among workers through their native place networks: 1) The workers in any assembly line must come from different provinces. 2) Assembly line leaders are punished if they evaluate their operators according to their native places rather than their performance. 3) The workers in the same dormitory should come from different provinces. 4) There is place discrimination in the hiring of male workers. Male workers from Shannxi Province and Henan Province are not welcome and even refused employment, as it is believed that these male workers violate discipline and might be troublemakers in the workplace.Footnote ³⁷ The management is also afraid of male workers organizing female workers (who account for more than half of the labor force in the factory) from their native place networks for the purpose of collective actions against the management.Footnote ³⁸

In recent years, Power Ltd. has been under pressure from their western buyers to improve working conditions. Before 2005, such conditions in the firm had been much below the legal standard for more than ten years. As a manufacturing supplier of many world brand-name computer companies, however, Power Ltd. was noticed by some independent nongovernmental organizations (NGOs), and its inhuman working conditions were disclosed in labor campaigns of the global computer industry in 2004.Footnote ³⁹ Since then, Power Ltd.'s buyers, such as Dell, HP, IBM, or other computer companies, have forced the factory to pay legal wages to workers and improve labor rights. The auditors from these companies also frequently appear at Power Ltd. to assess not only the quality and environmental issues of their products, but also the working conditions in the factory.

In order not to lose production orders from its western buyer, Power Ltd. has implemented a series of measures to enhance labor standards to please its buyers. In April 2005, Power Ltd. increased the overtime compensation to the legal pay rate. It was the first time the factory paid workers the legal standard since it was built in 1994. At the end of 2005, the company released the first report on corporate social responsibility in which it emphasized that it complied with national and local labor laws and respected workers' rights. Power Ltd. has also gradually reduced workers' overtime. In July 2006, workers were informed that the factory would limit monthly overtime to eighty hours in the following months and then to sixty hours in the next year.

There were also some protective measures for workers younger than eighteen years old. These workers are required to wear a label indicating that they are young workers; a list of young workers and a list of dangerous working stations that are forbidden for young workers are posted on the notice boards; young workers could not be forced to do night work or overtime work. The general manager told me that Power Ltd. would limit overtime work to the legal amount and would not recruit workers younger than eighteen years old in the future. Although sometimes Power Ltd. fails to implement all measures,Footnote ⁴⁰ the external labor regulations of its buyers do influence the labor relationships in the electronics factory.

Express Production

Express Production has been a supplier factory of Power Ltd. for more than twenty years. It also provides its products to other large Taiwanese electronics components companies in Stone Town and other towns in Dongguan. The production process for wire harnesses and cable assemblies is relatively low-tech and easily learned. In the firm, new workers have neither recruitment exams nor formal training. They usually need only to attend a one-hour class about the history of the factory and discipline on the shop floor. Then they immediately work on assembly lines under the guidance of experienced workers in the firm.

The easy manufacturing process also makes the industry more competitive. Even in Stone Town, there are quite a few factories manufacturing wire harnesses and cable assemblies. In order to attract buyers, Express Production utilizes a low-price strategy for its products. As a result, it continues to minimize its labor costs even though the pay rate is much below local legal standards. For new workers, the basic wage is only RMB 330 per month and overtime wage is RMB 2 per hour; after a three-month probation, they are increased to RMB 360 and RMB 3, respectively. The basic working week is six days instead of five, which means workers have no double wage on Saturday. Because Express Production cannot recruit enough workers at such low pay levels, most of the workers have to work long hours of overtime. They often work from 8:00 a.m. to 10:00 p.m. and have no days off. In the busiest season, workers have to work until midnight and sometimes even until the early morning of the next day. Only a few workers in technical positions have day shifts and night shifts. The legal benefits of workers on assembly lines, such as social insurance, medical insurance, sick leave, and maternity leave, are usually denied.

With such low pay rates, Express Production has no advantage in recruiting young girls from the labor market. To secure an adequate labor supply, it adopts its own particular recruitment policies. There are no strict requirements regarding age, gender, and education in its hiring practices. The firm takes advantage of the segmentation of the local labor market and hires three kinds of workers: young and less-educated girls, middle-aged women, and male workers who have difficulties in finding a job in the large factories with better working conditions (e.g., Power Ltd.). Among the 2,000 workers at Express Production, sixty percent are female and forty percent male. The percentage of male workers is extraordinarily high in a labor-intensive manufacturing electronics factory where the dominant labor forces are usually female. The workers in Express Production also have much less education than those in Power Ltd. Most of them have not completed junior middle school, and some of them have no formal education. The age gap of the workers at Express Production is much larger than that at Power Ltd.: there are quite a few girls younger than the legal working age of sixteen who enter the firm using others' ID cards or even fake ID cards, as well as many female workers over thirty years of age, or even over forty-five. Many workers often complain about the low labor standards at Express Production, but they still stay at the factory. Lin, a thirty-seven-year-old male production operator said:

Express Production also relies on familial relationships and social networks in recruitment and labor control. Most workers were introduced to the firm through their relatives who worked there. Hunan, Jiangxi, and Sichuan Provinces are three major regions of recruitment. Every year, when the current workers go back home, they return to the factory accompanied by young girls they brought from their hometown. In order to overcome the difficulties of recruitment, the factory has an incentive bonus to encourage its workers to help the firm find more workers from their social networks. A worker can get RMB 50 as a reward if he or she can bring a new female worker younger than thirty years old who will stay in the firm for more than three months. Because of social networks among workers, many workers at Express Production feel that they are not alone since they can take care of each other. For example, Feng, a seventeen-year-old girl, was introduced by her aunt one year ago to the firm, and now two of her young cousins are also working at the factory. She is willing to stay at Express Production because her relatives are there.

Besides the strategic reconstruction of native place networks within the factory to reduce the cost of labor reproduction (e.g., recruitment and retaining workers at a low pay rate), management also uses such social relations to control their workers, especially male workers. For example, when male workers are recruited into the firm, they are vouched for by current workers.Footnote ⁴¹ Usually their native acquaintances or relatives guarantee the new workers will obey the rules and not be troublemakers. If some male workers are disobedient to management, their guarantors will also be punished.

Although many young girls with a junior high school education leave Express Production quickly and transfer to a better factory as soon as they are familiar with Stone Town, the turnover rate at Express Production is not as high as that at Power Ltd. The major reason is that the majority of workers have no advantage in the labor market while the young girls are less than twenty percent of all workers. Sometimes, a few young girls choose to stay at the firm for personal reasons: Some of them have relatives and friends who work there. Some hope they can get a promotion to line leader or clerical positions because of their age and educational advantages. Some are afraid of the strict discipline and high work pressure at large firms. Furthermore, Express Production exercises a detestable measure to reduce the turnover rate: It withholds the workers' wages for one month. For example, a worker's May salary will be paid at the end of June or even in early July. If workers quit the job without official permission from their line leader and the director of the shop floor, they cannot obtain the salary of the previous month. In fact, it is almost certain that workers cannot get such official approval.

Express Production also has canteens and dormitories in the factory. Unlike Power Ltd., the firm has no strict accommodation regulations. All the workers can choose to live in the dormitories or rent rooms in other places. If they have good relationships with line leaders, they also can ask to live with their relatives and local acquaintances in the same dorm. Except for two rusty basketball posts on the grounds, there are no entertainment facilities for workers. However, whether the factory has many entertainment facilities or not, is a matter of indifference to workers because what they want is more sleep rather than entertainment.

Victory Cable

Victory Cable is also a supplier factory of Power Ltd. and has a competitive relationship with Express Production, but its production capacity is much lower than Express Production. There are only about 320 workers in the factory. Victory Cable is a workshop rather than a factory because, as it only has a warehouse-like shop on the third floor of a cramped building. The firm cannot get steady production orders because of low productivity and poor quality.

At Victory Cable, almost the entire production process is done by manually. The workers are divided into six teams according to different working procedures. While working, the workers in each team sit around a long table and work under the monitoring of a line leader. Unlike Power Ltd. and Express Production, which use the time-rate-pay system, Victory Cable pays its workers by piece rates without a basic wage. Their wages are totally determined by their individual output, and they are not paid overtime compensation. There is also only one shift at the workshop. In the high seasons, the workers usually work from 8:00 a.m. to 11:00 p.m. The most skilled workers can get a monthly payment of around RMB 1,000 while the rest can earn around RMB 800. In low seasons, due to insufficient production orders, workers' monthly net wage is cut back to RMB 400–500.

In the first year after Victory Cable's establishment, the firm recruited migrant workers from Stone Town through open recruiting advertisements. It had difficulty in retaining its workers and sometimes even lacked enough workers for production because of the harsh working conditions and irregular pay. At the end of 2004, Victory Cable was also found guilty in a labor dispute because it paid no overtime compensation. Mr. Zhang, the firm's founder, thought the charge was brought by some troublemakers hired from the labor market in Stone Town. Since then, Victory Cable has not recruited any male migrant workers from the local market and has gradually changed its hiring policies. It only recruits new workers from Mr. Zhang's hometown, a small impoverished village in Guizhou Province in southwest China. As a result, except for some skilled female workers, more than ninety percent of the workers in the firm are from the same village. Their ages range from twenty-five to forty-five, and seventy percent are over thirty. Half of the workers are male and have little or no formal education. Most of them did agricultural work in their hometown and had no work experience in manufacturing before they came to Victory Cable. Mr. Zhang said that although sometimes he was really annoyed by the poor adaptability and slow learning process of his workers, he was very satisfied that his workers were docile and obedient. The firm's recruitment policies make it possible to arrange workforce flexibly according to its production orders and to control the turnover rate as management requires. In the high seasons the factory usually hires more workers from the village while in the low seasons it dismisses some workers and even sends them home by bus. Line leaders decide who can stay in the factory during low seasons based on workers' performance.

Victory Cable is more like a family workshop than a modern firm. Mr. Zhang is in charge of all the public affairs, such as getting production orders and keeping good relationships with Power Ltd. and local officials. He has arranged for family members to take important management positions in the factory. His elder brother is in charge of production and daily management on the shop floor; his wife is the treasurer of the firm; and all the six line leaders are his relatives or acquaintances from his hometown. Victory Cable also controls and exploits the workers through their native place network and kinship relationships. The management emphasizes that all of them are relatives and neighbors. The foreman and line leaders tell the workers again and again that if they were not born in the same village as the employer, the firm would not have employed them. For people coming from a poor small village, working in Victory Cable is a good opportunity to earn money because the monthly wage in the factory exceeds their whole annual income from agricultural work in their impoverished inland village. The foreman often stresses that the firm is taking good care of the workers' lives because of their native place relationship. The firm rents some units in another building nearby as dormitories and canteens, which are free to its workers. The firm even arranges the transportation for workers between Stone Town and their hometowns. The workers at Victory Cable are pleased with their job and make great efforts to work harder because they hope the employer will hire them for a longer period of time so they can earn more money. The huge income difference between their agricultural work and industrial work makes them ignore the terrible working and living conditions. A female worker about thirty years old confirmed to me that she was satisfied with the income at Victory Cable, as the more products she finishes, the more money she can earn.