Aligning labour disputes with institutional, cultural and rational approach: evidence from East Asian-invested enterprises in China

Abstract

This study examines the underlying critical factors, such as the institutional arrangements, working conditions, workforce composition, expatriate managers, and managerial style which influence the labour disputes in the East Asian-invested enterprises (EAIEs) in China. Throughout the process, we can determine which factors should be changed for better human resource management (HRM) practices. This research incorporates the survey data collected from the managers and factory workers working at 30 different firms invested from Taiwan, Korea, Hong Kong and Japan in the coastal cities from 2000 to 2001.

The results or findings demonstrate that the long work hours and less regulative managerial styles have significant and positive effects on the number of the labour disputes in the Hong Kong owned firms. Among the firms owned by Taiwan, the long work hours and their authoritarian managerial style have significant effects on the frequency of the labour disputes, while the lack of unionization has a diminishing effect on the labour disputes. The firms owned by Korea, on the other hand, often encounter frequent collective actions, organized by homogeneous local workforces and supported by the relatively high numbers of trade unions. Responding to the relatively strict enforcement of the labour laws and the institutional arrangements of the local governments in northern China, the firms owned by Korea tend to adopt the less regulative and less authoritarian managerial styles. Lastly, the firms owned by Japan experience the lowest number of the labour disputes when compared to their counterparts. The observance of the legal work hours and the regulative managerial style displays a significantly diminishing effect on the number of the labour disputes, although the higher level of institutionalization of the labour relations such as higher setting-up of trade unions somewhat positively contributes to the frequency of the labour disputes.

From the theoretical perspective, our exploratory model seems to exhibit the stronger explanatory ability when the institutional, cultural, and rational factors are taken into consideration. From the institutional perspective, it is imperative for local governments to reinforce the institutional arrangements through effective supervision and enforcement of the labour regulations and legislation. From the cultural perspective, foreign investors should enhance their inter-cultural understanding and localization to diminish the industrial conflicts in the workplaces in China. From the rational perspective, foreign-investors will face more labour disputes than they had before, if harsh working conditions, such as extension of the working hours, are enforced. It is also imperative for the workers to understand their rights and empower themselves to improve their working conditions.

Keywords:

• East Asian-invested enterprises in China
• human resource management
• institutional arrangements
• labour disputes
• managerial style
• rational factors

Acknowledgements

I deeply appreciate the valuable and constructive comments from the editor, Ronald Heck, Hagen Koo, Yeanju Lee, Malcolm Warner, Guobin Yang, Stephen Chiu and Yusheng Peng.

Notes

 1. Of foreign direct investment in China, more than 50% is in the manufacturing industry, and over 30% is in the real estate sector. Other sectors share only a small proportion of total investment (China Yearbook 1998).

 2. Zhang (1997) conducted research on the Qingdao General Trade Union.

 3. The frequency of labour disputes in foreign-invested enterprises and private firms in 2000 was 20,930 and 20,128 (China Labour Statistical Yearbook 2001).

 4. The managerial style may be affected by the location of industry and the size. Most Korean-owned firms in China are small and labour intensive and provide inferior working conditions while Japanese firms are capital and technology intensive.

 5. Interview with a Korean manager in Qingdao (May 2000).

 6. Interview with a Korean manager in Qingdao (May 2000).

 7. Interview with a Korean manager in Qingdao (May 2000).

 8. Interview with a Korean manager in Qingdao (May 2000).

 9. Interview with a Korean-Chinese manager in Shenzhen (March 2000).

10. Quoted from the worker's handbook at a Japanese bag factory in Shanghai.

11. Quoted from the worker's handbook at a Japanese electronics factory in Dongguan.

12. Quoted from the worker's handbook at a Taiwanese electronics factory in Dongguan.

13. Watching this scene in Dongguan (February 2000).

14. When I was looking for a Korean-owned firm in the development zone (Kaifaqu) in Tianjin, workers who were off-duty due to a delay in delivering raw materials guided me to the factory. Interview with a Korean Manager in Tianjin (June 2001).

15. Interview with two workers in Dongguan (May 2001).

16. Interview with a Korean manager in Kunshan (March 2000).

17. Interview with a Korean manager in Kunshan (March 2000).

18. In this sense, the payment for workers in Hong Kong and Taiwanese-owned firms is actually meagre, since overtime rates are not applied in the piece-rate payment system.

19. Interview with a Korean manager in Kunshan (March 2000).

20. Based on accounting data and an interview with a Hong Kong accountant at Dongguan (February 2000).

21. On the contrary, the local government charges workers even for using bicycles on the factory site in Kunshan. Interview with Korean managers in Kunshan (March 2000) and Tianjin (June 2001).

22. The Chinese Labour Law stipulates a maximum overtime of 36 hours a month.

23. Observed in a Korean album factory and an interview from a Korean manager in a Korean bag factory in Shenzhen.

24. They are sensitive to the differences in dialects and accents from district to district.

25. Interview with a Korean-Chinese manager in Qingdao (April 2000).

26. Interview with a Korean-Chinese manager in Qingdao (April 2000).

27. For instance, in a Korean firm in Shenzhen, 36% of the workers are from Sichuan, 27% from Jiangxi, 22% from Hubei, 8% from Henan, and 7% from other provinces. Based on an interview with a Korean-Chinese manager in Shenzhen, February 2000.

28. This shows a strikingly similar pattern to our data, although outsiders have increased since the survey was first conducted in Dongguan in 1995, when they were 29% from Sichuan, 24% from Jiangxi, 17% from Hunan, 10% from Guangxi, and 20% from Guangdong (Meng 2000).

29. Interview with a Korean-Chinese manager in Qingdao (April 2000).