Postcards From Tomorrow Square (10 page)

This man has lived in an apartment at the Four Points for the last two years, and in other hotels around Shenzhen for the previous eight. He makes a point of telling people that he does not speak Chinese—most business visitors who try, he says, have to work so hard to cope with the language that they forget what they’re negotiating about. But at useful points in meetings he drops in Chinese colloquialisms so that people must wonder whether in fact he has understood everything that has been said. (He tells me he hasn’t.) His name is Liam Casey, and I have come to think of him as “Mr. China.”

“Mr. China” is an established jokey honorific, like
People
magazine’s “Sexiest Man Alive—2003.” Since the days of Marco Polo, successive foreigners have competed informally for recognition as the person who
really
understands the country and can make things happen here. The hilarious 2005 memoir
Mr. China
, by Tim Clissold, describes the heartbreak and frustration of a young British financier who thought he could figure out the secrets of success in China when it was first opening up to Western commerce.

Liam Casey has succeeded where Tim Clissold was frustrated, but he is careful not to sound overconfident. “Just when you think you know what’s happening here, that’s when you’re in danger,” he says. “You see some new product on the market, and you wonder where it was made—and it turns out to be a factory you drove by every day for five years and never knew what was going on inside! You can be here so long and know so little.” But for my purposes he is Mr. China, because he is at the center of the overlapping flows of humanity bringing the world’s work to China.

When not dining or sleeping at the Four Points, Casey runs a company he owns outright, with 800 employees (50 of them are from Ireland, America, or one of a dozen other nations; the rest are Chinese) and sales in 2006 of about $125 million. He is of medium height and fit-seeming in a compact way, with thick dark hair and a long face that generally has an impish expression. He has a strong Irish accent and dresses informally. He walks, talks, and moves so fast that I am generally scrambling to keep up.

Casey grew up on a farm outside Cork, had no formal education after high school, and first worked as a salesman in garment shops in Cork and then Dublin. He got involved in buying garments from Europe, with a friend set up a Crate & Barrel–style store in Ireland, and then decided to travel. At age 29 he arrived in Southern California and worked briefly for a trading company. He says he would be in America still—“Laguna, Newport Beach, ah, I luvved it”—but he could not get a green card or long-term work permit and didn’t want to try to stay there under the radar.

(I might as well say this in every article I write from overseas: The easier America makes it for talented foreigners to work and study there, the richer, more powerful, and more respected America will be. America’s ability to absorb the world’s talent is the crucial advantage no other culture can match—as long as America doesn’t forfeit this advantage with visa rules written mainly out of fear.)

So in 1996, just after he turned 30, Casey went to Taipei for an electronics trade show. It was his first trip to Asia, and he says, “I could see this is where the opportunity was.” Within a year, he had set up operations in the Shenzhen area and started the company now known as PCH China Solutions. The initials stand for Pacific Coast Highway, in honor of his happy Southern California days.

What does this company do? The short answer is outsourcing, which in effect means matching foreign companies that want to sell products with Chinese suppliers who can make those products for them. Casey describes his mission as “helping innovators leverage the manufacturing supply chain here in China.” To see how this works, consider the great human flows that now converge in southern China, which companies like Casey’s help mediate.

One is the enormous flow of people, mainly young and unschooled, from China’s farms and villages to Shenzhen and similar cities. Some arrive with a factory job already arranged by relatives or fixers; some come to the cities and then look for work. In the movie version of
Balzac and the Little Chinese Seamstress
, two teenage men from the city befriend a young woman in the mountain village where they have been sent for rustication during the Cultural Revolution. One day the young woman unexpectedly leaves. She has gone to “try her luck in a big city,” her grandfather tells them. “She said she wanted a new life.” The new life is in Shenzhen.

Multiplied millions of times, and perhaps lacking the specific drama of the
Balzac
tale, this is the story of the factory towns. As in the novel, many of the migrants are young women. In the light-manufacturing operations I have seen in the Pearl River Delta and around Shanghai, the workforce is predominantly female. Signing on with a factory essentially means making your job your life. Workers who come to the big coastal factory centers either arrive, like the little seamstress, before they have a spouse or children, or leave their dependents at home with grandparents, aunts, or uncles. At the electronics and household-goods factories, including many I’ve seen, the pay is between 900 and 1,200 RMB per month [about $130–$175 in late 2008]. In the villages the workers left, a farm family’s cash earnings might be a few thousand RMB per year. Pay is generally lowest, and discipline toughest, at factories owned and managed by Taiwanese or mainland Chinese companies. The gigantic Foxconn (run by its founder, Terry Gou of Taiwan) is known for a militaristic organization and approach. Jobs with Western firms are the cushiest but are also rare, since the big European and American companies buy mainly from local subcontractors. Casey says that monthly pay in some factories he owns is several hundred RMB more than the local average. His goal is to retain workers for longer than the standard few-year stint, allowing them to develop greater skills and a sense of company spirit.

A factory work shift is typically 12 hours, usually with two breaks for meals (subsidized or free), six or seven days per week. Whenever the action lets up—if the assembly line is down for some reason, if workers have spare time at a meal break—many people place their heads down on the table in front of them and appear to fall asleep instantly. Chinese law says that the standard workweek is 40 hours, so this means a lot of overtime, which is included in the pay rates above. Since their home villages may be several days’ travel by train and bus, workers from the hinterland usually go back only once a year. They all go at the same time—during the “Spring Festival,” or Chinese New Year, when ports and factories effectively close for a week or so and the nation’s transport system is choked. “The people here work hard,” an American manager in a U.S.-owned plant told me. “They’re young. They’re quick. There’s none of this ‘I have to go pick up the kids’ nonsense you get in the States.”

At every electronics factory I’ve seen, each person on an assembly line has a bunch of documents posted by her work-station: her photo, name, and employee number, often the instructions she is to follow in both English and Chinese. Often too there’s a visible sign of how well she’s doing. For the production line as a whole there are hourly totals of target and actual production, plus allowable and actual defect levels. At several Taiwanese-owned factories I’ve seen, the indicator of individual performance is a childish outline drawing of a tree with leaves. After each day’s shift, one of the tree’s leaves is filled in with a colored marker, either red or green. If the leaf is green, the worker has met her quota and caused no problems. If it’s red, a defect has been traced back to her workstation. One red leaf per month is within tolerance; two is a problem.

As in all previous great waves of industrialization, many people end up staying in town; that’s why Shenzhen has grown so large. But more often than was the case during

America’s or England’s booms in factory work, many rural people, especially the young women, work for two or three years and then go back to the country with their savings. In their village they open a shop, marry a local man and start a family, buy land, or use their earnings to help the relatives still at home.

Life in the factories is obviously hard, and in the heavy-industry works it is very dangerous. In the same week that 32 people were murdered at Virginia Tech, 32 Chinese workers at a steel plant in the north were scalded to death when a ladleful of molten steel was accidentally dumped on them. Even in Chinese papers, that story got less play than the U.S.shooting—and fatal coal-mine disasters are so common that they are reported as if they were traffic deaths. By comparison, the light industries that typify southern China are tedious but less overtly hazardous. As the foreman of a Taiwanese electronics factory put it to me when I asked him about rough working conditions, “Have you ever seen a Chinese farm?” An American industrial designer who works in China told me about a U.S. academic who toured his factory and was horrified to see young female workers chained to their stations. What she saw was actually the grounding wire that is mandatory in most electronics plants. Each person on the assembly line has a Velcro band around her wrist, which is connected to the worktable to avoid a static-electricity buildup that could destroy computer chips.

That so many people are in motion gives Shenzhen and surrounding areas a rootless, transient quality. The natural language of southern China is Cantonese, but in the factory cities the lingua franca is Mandarin, the language that people from different parts of China are likeliest to share. “I don’t like it here,” a Chinese manager originally from Beijing told me, three years into a work assignment to Shenzhen. “There are no roots or culture.”

“For the first few weeks I was here, I thought it was soulless,” Liam Casey says of the town that has been his home for 10 years. “But like any fast-moving place, the activity
is
the character. It’s like New York. You arrive at the airport and go downtown, and when you get out of that cab, no one knows where you came from. You could have been there one hour, you could have been there ten years—no one can tell. It’s similar here, which makes it exciting.” Casey told me that, to him, Shanghai felt slow “and made for tourists.” Indeed, I am regularly surprised to find that people stroll rather than stride along the sidewalks of Shanghai: It’s a busy city with slow pedestrians. Or maybe Casey’s outlook is contagious.

A
nother great flow into Shenzhen and similar cities is of entrepreneurs who have come and set up factories. The point of the Shenzhen liberalizations was less to foster any one industry than to make it easy for businesses in general to get a start.

Many entrepreneurs attracted by the offer came from Taiwan, whose economy is characterized by small, mainly family-owned firms like those that now abound in southern China. Overall, mainland China’s development model is closer to Taiwan’s than to Japan’s or Korea’s. In all these countries and throughout East Asia, governments have used many tools to maximize industrial output: tax policy, trading rules, currency values, and so on. But Japanese and Korean policy has tended to emphasize the welfare of large, national-champion firms—Mitsubishi and Toyota, Lucky Goldstar (or LG Corp.)and Samsung—whereas Taiwan’s exporters have been thousands of small firms, a few of which grew large. China is, of course, vaster than the other countries combined, but its export-oriented companies are small. One reason for the atomization is pervasive mistrust and corruption, plus a shaky rule of law. Even Foxconn, China’s largest exporter, was only No. 206 on 2006’s
Fortune
Global 500 list of the biggest companies in the world. When foreigners have trouble entering the Japanese or Korean markets, it is often because they run up against barriers protecting big, well-known local interests. The problem in China is typically the opposite: Foreigners don’t know where to start or whom to deal with in the chaos of small, indistinguishable firms.

For me, the fragmented nature of the Chinese system is symbolized by yet another of the stunning sights in Shenzhen: the SEG Electronics Market, a seven-story downtown structure whose every inch is crammed with the sales booths of hundreds of mom-and-pop electronics dealers. “Chips that I couldn’t dream of buying in the U.S., reels of rare ceramic capacitors that I only dream about at night!” Andrew “bunnie” Huang, a Chinese American electronics Ph.D. from MIT, wrote in his blog after a visit. “My senses tingle, my head spins. I can’t suppress a smirk of anticipation as I walk around the next corner, to see shops stacked floor to ceiling with probably a hundred million resistors and capacitors.” As he noted, “within an hour’s drive north” are hundreds of factories that can “take any electronics idea and pump them out by the literal boatload.” The market is part permanent trade show, part supply stop for people who suddenly need some capacitors or connectors for a prototype or last-minute project, part swap meet where traders unload surplus components.

O
ne last flow coming into Shenzhen, which makes the other flows possible, is represented by the people at the Four Points: buyers from high-wage countries who have decided that they want to take advantage of, rather than compete with, low-cost Chinese manufacturers. This is where our Mr. China, and others like him, fit in.

This is also where a veil falls. In decades of reporting on military matters, I have rarely encountered people as concerned about keeping secrets as the buyers and suppliers who meet in Shenzhen and similar cities. What information are they committed to protect? Names, places, and product numbers that would reveal which Western companies obtain which exact products from which Chinese suppliers. There are high-and low-road reasons for their concern.