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Domestic Labor Regulation and Foreign Business Influence: The Case of the Guangdong “Transnational Capitalism”

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Abstract

The interplay between transnational business dynamics and Chinese labor politics has given rise to lively debate and a stimulating literature in the past decade. It echoes the broader “hot button” issue of international and foreign influence on Chinese domestic politics that has punctuated China’s gradual integration into the world economy since the inception of the 1978 Chinese Open Door policy. Somewhat tainted by nationalism, the debate among economists and policy analysts became more animated after China joined the World Trade Organization (WTO) in 2001 and later, when China was called on to comply with international standards and rules.

The empirical part of this article, presented in Sect. 14.4, is based on a research project the author joined in 2011, led by Dr. Chris King-Chi Chan at City University of Hong Kong and with Elaine Sio-ieng Hui. The outcomes of the interviews have been firstly analysed in a report submitted to the project funder (Hui and Chan 2012). The author thanks both researchers for sharing with her the outcomes of the interviews made by them with Asian organizations.

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Notes

  1. 1.

    A total of two million workers were needed in the Pearl River Delta in early 2010, and some factories were forced to halt production due to a labor shortage (Hui and Chan 2012).

  2. 2.

    According to official targets for 2012, R&D expenses will account for 2.5 % of regional GDP, the number of researchers will reach 280,000, some 100 state laboratories for engineering innovation and research and development will established and 3–5 industrial clusters powered by high-tech industries will enter into operation. Social targets such as pension and health-care systems are also considered.

  3. 3.

    For the period 1980–2006, average FDI/GDP share was only 0.43 % for India, and 1.07 % for the United States (Sheng 2009).

  4. 4.

    Source: Guangdong Statistical Yearbook 2011, p. 498.

  5. 5.

    The selectiveness of FDI has been supported by a gradual reduction in tax-related preferential policies. For example, foreign invested export- and tech-oriented companies’ income taxes increased from 15 % to 25 % under the 2008 Enterprise Income Tax Law.

  6. 6.

    As defined by Nolke (2011), IPE “may be understood as the study of the interplay of policies/politics/polities and economic patterns in a cross-border perspective” (p. 2).

  7. 7.

    As noted by Nolke (2011), this approach can correct two of the major shortcomings of Varieties of Capitalism (VoC) approach : its focus on the national dimensions of the globalization and treatment of national economic systems “as closed containers and does not reflect their embeddedness within transnational economic regulations or within the institutions of global value chains” (p. 2); its exclusion of the role of labor forces in influencing institutional changes, considered as driven exclusively by business interests.

  8. 8.

    Explicitly for Wilson, and implicitly for Gallagher’s contribution, the “path dependency” approach is mobilized as offering an endogenous explanation of institutional changes, shedding light on the resistance of domestic institutions to external influences, the inheritance of economic models and routes experimented.

  9. 9.

    It echoes the more general Guthrie’s (1999) view that the slogan “getting on track with international practices (jiegui guoji)” added force and legitimacy to socially difficult reforms.

  10. 10.

    Given to the competition pressure a key role for introducing institutional changes, Gallagher’s thesis differs from Guthrie’s one (1999) who emphasizes on the organizational learning role of JV to diffuse international and foreign models into domestic firms.

  11. 11.

    Since 1994, preferential local policies were extended to all provinces. As noted by the author “thousand of local governments set up development zones in a mad dash to court foreign investors, announced tax and land-use fee breaks, and offered foreign investors access to low-cost labor” (Gallagher 2005, p. 42).

  12. 12.

    Interesting enough, as stressed by the president of the AmCham, the White paper was distributed to large segments of the society, whereas it was reserved for the government 10 years ago.

  13. 13.

    The Dongguan City Association of Enterprises with Foreign Investment is a local non-profit social group approved by State authorities and registered with the industry and commerce administration departments. Similar associations exist in other cities in Guangdong Province (Hui and Chan 2012).

  14. 14.

    Our interlocutor is also vice-chair of the Guangdong China Council for the Promotion of International Trade (CCPIT), and a board member of the Shenzhen International Chamber of Commerce (Hui and Chan 2012).

  15. 15.

    An example was provided by the interviewee: he tried to convince Chinese public officials to pursue the issue of Intellectual Property Rights by pointing out that most IPR cases in the courts are actually filed by a Chinese firm against another Chinese firm.

  16. 16.

    Bilateral cooperation on social issues is not the monopoly of Sweden. French and German governments in particular have been cooperating with Chinese public authorities at national and local levels, in the topic of the redesign of pension systems in Beijing, Shanghai, while the EU has more recently been involved in helping China manage the transferability of pension rights between provinces.

  17. 17.

    It is estimated that 10 % of the 60,000–70,000 Hong Kong-run factories in the Pearl River Delta have closed their plants in 2008 due to increased labor costs.

  18. 18.

    The interview conducted with one representative from the Bauhinia Foundation (an influential “free trade” HK think-tank) revealed the attempt of HK for exporting its commercial law inherited from the commonwealth law (arbitration process, commercial dispute, etc.) in a Mainland China more attracted by the “Continental Law”.

  19. 19.

    Informants noted that Taiwanese investment altogether contributes over 51 % of GDP in Dongguan and 15 % of GDP in Guangzhou.

  20. 20.

    Interviewees were representatives of the Shanghai and Guangzhou office of the Taiwan World Trade Center, a Taiwanese government-supported agency focusing on economic affairs in China, and the Taiwan Merchant Association Dongguan.

  21. 21.

    For discussions of the identity of Chinese trade unions, see in particular Feng (2003), Taylor and Liqi (2007).

  22. 22.

    See, China Labor Bulletin, “The development of collective bargaining in China – two case studies”, 26 January 2012, http://www.clb.org.hk/en/node/101233.

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Correspondence to Violaine Delteil .

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Delteil, V. (2014). Domestic Labor Regulation and Foreign Business Influence: The Case of the Guangdong “Transnational Capitalism”. In: Richet, X., Delteil, V., Dieuaide, P. (eds) Strategies of Multinational Corporations and Social Regulations. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-41369-8_14

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