Ignited by the Honda workers’ strike, waves of labour protests surged throughout China in 2010. That same year, in an attempt to stabilize volatile labour relations, both the Shenzhen Collective Consultation Ordinance (hereafter, the Shenzhen Ordinance) and the Guangdong Regulations on the Democratic Management of Enterprises (hereafter, the Guangdong Regulations) were put forward for discussion by the Shenzhen 深圳 and Guangdong governments following a two-year suspension. Yet again, owing to strong opposition from some overseas business associations, these two pieces of legislation were mothballed. This article seeks to examine the role of overseas business associations in shaping labour legislation in China by focusing on the Shenzhen Ordinance and the Guangdong Regulations. The authors will elucidate how transnational capital influences labour legislation through its class agencies – the chambers of commerce. We contend that although Chinese workers’ demands for wage negotiations have recently risen to new heights, overseas businesses have tried to preserve their control of the workplace by deploying their associational power and structural economic power.
This article is based upon qualitative data collected between April and July 2011. The authors interviewed 27 representatives from 25 business chambers, foreign embassies and consulates, and government agencies of various countries, based in Hong Kong and several cities in mainland China (see Appendix). Foreign embassies and government agencies were interviewed in addition to the chambers of commerce as, arguably, they form part of the transnational capitalist classes.Footnote 1 Furthermore, in order to ensure the reliability of the information obtained from interviewees from various business associations and to gain a better understanding of the legislative progress of the Shenzhen Ordinance and Guangdong Regulations, we interviewed an industrial relations expert from the International Labour Organization in Beijing, nine labour and legal scholars, two trade unionists and government officials, and a lawyer. In addition, a systematic review of documents produced by the business chambers, trade unions and governments has been conducted.
In the next section, we draw on global labour studies to expound our conceptualization of the power of transnational capital. Our framework provides a critical perspective from which to analyse the lobbying activities of overseas business organizations aimed at influencing Chinese labour legislation. Next, we highlight the socio-economic and political background against which the Shenzhen Ordinance and Guangdong Regulations were proposed. The third section highlights the two determining factors behind the overseas businesses associations’ stance against the two pieces of legislation. It also explicates how different chambers of commerce, representing the interests of various types of transnational capital, exercised their associational power to lobby against both pieces of legislation. The last section concludes.
Transnational Capital in China: Structural and Associational Power
Interest group theories have been commonly used, especially in the US, to account for lobbying activities. Interest group theorists believe in “countervailing power” and “balance of power.”Footnote 2 They assume that plural interests exist in society and that citizens can readily form different interest groups to use resources to pursue their interests and to influence policy and law-making.Footnote 3 However, this paper has not adopted the interest group approach; rather, it seeks to engage with global labour studies and to adopt a class perspective.Footnote 4 Instead of viewing business associations or worker organizations simply as one of the many interest groups existing in societies (as assumed by interest group theories), for the purposes of this study we give weight to capital–labour relations and view the conflicts between the capitalist class and working class as primarily shaping the capitalist social formation. Moreover, we do not consider that the antagonistic classes (or “interest groups” if using the terminology of the interest group theories) have equal access to economic and political resources for the pursuit of their interests (as some of the interest group theorists assume); instead, we maintain that the dominant and dominated classes hold different degrees and forms of power. As we have different theoretical assumptions about capitalist societies and class agents from the interest group theorists, we have engaged with global labour studies to examine how the capitalist class deploys its associational power alongside its structural power to advance its class interests in the face of the Chinese state's attempt to give workers collective bargaining rights.
Studying labour struggles from a global and historical framework, Beverly Silver contends that Western capital used a “spatial fix,” “technological fix,” “product fix” and “financial fix” to solve the crisis of overproduction and falling profitability in the 1970s.Footnote 5 Spatial fix refers to the relocation of production from countries with higher labour costs to those with lower costs, while technological fix is the introduction of new technologies to production in order to reduce production costs and boost productivity. Product fix refers to the shift from industrial production to service provision, and financial fix is the significant movement of capital investment from production to the financial market. While some suggest that these developments of global capitalism have had an adverse impact on the labour movement, Silver contests this by showing that worker power has been enhanced in certain respects. Drawing upon the work of Erin Wright,Footnote 6 Silver distinguishes between three types of labour power. The first type is marketplace bargaining power, which is rooted in tight labour markets. When the country's general unemployment level is low and market demand for labour supply is high, workers have stronger marketplace bargaining power. The second type is workplace bargaining power resulting from workers’ strategic positions in a particular industry which is embedded in global capitalism. The third type of labour power is associational power, which refers to “the various forms of power that result from the formation of collective organization of workers.”Footnote 7 Silver argues that labour workplace bargaining power has been strengthened since capitalism adopted a more complex production system and introduced division of labour on a global level. Taking the automobile industry as an illustration, she expounds that the just-in-time and lean production model has heightened workers’ disruptive power; labour strikes at any node of the global production chain can easily lead to its partial, if not complete, breakdown. Moreover, Silver observes that wherever capital goes, labour–capital antagonism follows; the spatial fix of capitalism has thus fostered the conditions for the emergence of stronger working classes in the new sites of production. In other words, the associational power of labour at the new nodes has been enhanced.
The emerging pattern of strikes in China, especially the automobile workers’ strikes in 2010, seems to confirm Silver's optimism regarding the possibility of enhancing workers’ associational power in newly industrialized countries, including China.Footnote 8 However, as labour and capital are two antagonistic sides of the social relations of production in capitalist societies, the analysis of workers’ power would not be complete without paying attention to the power of capital. The importance of understanding the power of transnational corporations (TNCs) in the age of global capitalism is nicely captured by Stephen Gill and David Law: “Given the rise of transnational corporations (TNCs) and of international capital mobility, monetary and information flows, and communications links, a global analysis of the power of capital is essential.”Footnote 9 They divide the power of transnational capital into two categories: structural power and behavioural power. The structural power of TNCs, they maintain, is rooted in the increasing mobility of capital across the globe, which Silver conceptualizes as the “spatial fix.” This mobility has enabled TNCs to play one country off against another and turn the relocation of production into a threat to workers’ employment. Behavioural power refers to the authority or influence that the corporations exert over national or international institutions. Gill and Law place special emphasis on the role of international lobbying when TNCs exercise this type of power: “So far we have referred to transnational corporations lobbying their parent governments in order to obtain policies favorable to their operations overseas. Such lobbying also takes place with regard to host governments, as well as international organizations such as the World Bank.”Footnote 10
Gill and Law's understanding of transnational capital's behavioural power is insightful but so broad that almost every action of the TNCs that allows them to gain leverage in the global market and over their parent or host governments is considered to be an exercise of their behavioural power. A more precise concept, associational power, is propounded by Traxler, Blaschke and Kittel in their study of international comparative labour relations.Footnote 11 They see associational power as a concept that can be used to examine both capital and labour: “Since our concept of class logics of action captures the structural aspect, we can reserve the notion of associational power for agency.”Footnote 12 For them, the primary source of associational power is membership, and its secondary source derives from the engagement of capital or labour with third parties, such as the state. They contend that influencing industrial and labour policies at both the national and regional government levels are key examples of the exercise of the associational power of capital and labour: “Only through participation in state regulation can organized business and labour extract secondary power.”Footnote 13 While Wright and Silver apply the concept of associational power to analyse workers’ organizing capacity in the global economy as reviewed above, Traxler, Blaschke and Kittel demonstrate that this concept is also applicable when examining the power of capital, the rival of labour.
Drawing on the literature of global labour studies, we argue that the transnational capital in China possesses two forms of power: structural power and associational power. China's rapid economic growth has relied heavily on labour-intensive, export-oriented manufacturing, which has by supported by foreign direct investment (FDI) and the employment of mostly migrant workers. This has granted the TNCs great structural power to shape the labour regimes in China. Prominent research in Chinese labour studies has illuminated well the structural power of the TNCs and their influence on the workplace.Footnote 14
However, the associational power of the TNCs has been relatively underexplored in the field of China studies. Most scholars paying attention to capital's associational power in China are concerned with the domestic business associations. For instance, Jonathan Unger has elaborated the corporatist nature of local business associations by focusing on associations that target small, middle-sized and big businesses in Beijing; Chang Hee Lee has examined the role of the China Enterprise Confederation in representing businesses in the tripartite system in China and has found its representational capacity to be weak; Kenneth W. Foster concludes that local business associations are extensions of the local government's administration and can hardly contribute to the development of civil society in China.Footnote 15 Given the large number of foreign-invested enterprises (FIEs) in China and their increasing presence in policy advocacies, overseas business associations in China deserve more investigation.
Business lobbying has become increasingly common in China. Scott Kennedy has documented how lobbying takes place in the steel, consumer electronics and software industries.Footnote 16 He suggests that both domestic and foreign businesses have actively influenced the making of national policies in areas such as taxes, intellectual property rights and technical standards. However, he overlooks the role of business associations in lobbying. In view of these gaps in the literature, we seek to explore the associational power of transnational capital in China by studying the role of overseas business chambers in opposing the legislation of the Shenzhen Ordinance and the Guangdong Regulations, two important labour regulations in the province of Guangdong and the city of Shenzhen. While the new Chinese working class, including 230 million migrant workers, has been more coordinated than at any time before to influence labour policies through their collective actions in the new millennium, its rival, global capital, has also acted promptly to exercise its associational power through its class agencies – the chambers of commerce and relevant government agencies from home countries – to shape Chinese labour laws.
Ever since China's economic reform in 1978, labour unrest in both the FIEs and state-owned enterprises (SOEs) has been growing.Footnote 17 Responding to this, the Chinese party-state has been trying to channel labour discontent through the legal system, which places prime emphasis on individual rights (such as the legal entitlement to the minimum wage, social insurance, over-time premiums, and so forth), rather than on collective rights (which include the rights to organize, to strike and to collective bargaining).Footnote 18 The implementation of three new labour laws in recent years – the Labour Contract Law in 2008, the Labour Dispute Mediation and Arbitration Law, and the Employment Promotion Law in 2007 – was meant to be a legal response within the individual rights-based framework to pacify the increasingly disgruntled workers. However, collective disputes have not disappeared since the promulgation of these new laws. Strikes have continued to spread against the backdrop of recurring labour shortages and a widening income gap. The radicalization of workers’ actions in 2010, as exemplified by the Honda strike and other related strikes, has clearly exposed the incongruity between the individual rights-based legal framework and the collective interest-based nature of industrial disputes.Footnote 19 In these strikes, workers’ demands usually called for democratic trade union reform and wage increases higher than the minimum legal requirement, all of which could hardly be addressed through the existing legal framework.
Driven by workers’ pressing demands, the Chinese government and the All-China Federation of Trade Unions (CFTU) have attempted to add some elements of collective rights to the current labour regulatory framework. Shortly after the Honda strike in 2010, 13 provinces issued documents in the name of the Chinese Communist Party (CCP) committee or local government to promote collective wage consultation. Moreover, after a pause of a few years, the Shenzhen and Guangdong governments put the Shenzhen Ordinance and Guangdong Regulations back on the agenda for consideration in August 2010.
While migrant worker activism created huge pressure for the party-state to improve labour laws, global capital did not remain silent. This study finds that many global corporations reacted swiftly to the two proposed pieces of legislation and lobbied strongly against them through their class agencies. In the end, the Guangdong and Shenzhen governments once again put legislation of the two laws on hold. It is against this socio-political and legal development, and by focusing on the Shenzhen Ordinance and Guangdong Regulations, that we aim to investigate the role of overseas business chambers in shaping labour regulations in China. By doing so, we will shed light on how transnational capital deploys its associational power and structural economic power to protect its interests in China.
Varieties of Transnational Capital: Different Positions and Lobbying Strategies
The comparative capitalism literature maintains that capitalism comes in a number of varieties and is not monolithic. Hall and Soskice's classic (Reference Hall and Soskice2001) work theorizes that economic activities in the liberal market economy (LME) model, as in the United States, are principally coordinated through the competitive market, whereas the coordinated market economy (CME) model, as in Germany and other West European countries, is largely dependent on non-market coordination.Footnote 20 In an LME and CME, economic activities, including industrial relations, vocational training and education, corporate governance, inter-firm relations and firms’ relations with employees, are carried out in different manners. Extending Hall and Soskice's theorization of the varieties of capitalism, we contend that “varieties of transnational capital” have emerged in global capitalism. Transnational capital is not homogenous. As will be elaborated below, the logic, preferences, values and economic and political activities in the host countries are subjected to the path-dependent effects of the variety of capitalism rooted in the capital's home country.
Building upon our theorization of the varieties of transnational capital, the overseas business chambers under examination in this article are divided into three main types: the American, European and East Asian types.Footnote 21 The overseas business chambers, foreign embassies and consulates, and foreign government agencies we interviewed have different positions towards the Shenzhen Ordinance and Guangdong Regulations. The American Chamber of Commerce in South China has subtly and covertly lobbied against the legislation of both laws; the European Union Chamber of Commerce has manifested an ambiguous and ambivalent position; and the East Asian capital has shown explicit and overt opposition. Their differing positions can be accounted for by two determining factors concerning the characteristics of various varieties of transnational capital: 1) their positions in the global production chains, and 2) the industrial relations model in their home countries.
Regarding the first factor, the American and European transnational capital in China is more concentrated in the consumption and circulation end of the global value chain, while East Asian capital is more concentrated in the production end. This difference is key to explaining why the overseas business chambers have responded differently towards the two pieces of legislation. In global capitalism, most US and European corporations have outsourced their production to suppliers in developing countries. As a result, the direct business done by many Western brands in China focuses on marketing and sales in the consumer market or in the service and financial industry; however, most product suppliers to these Western brands are operated by East Asian capital (and in some cases by local Chinese domestic companies).
The East Asian capital-run supplying factories usually manufacture low-end products through labour-intensive production. They employ largely unskilled or semi-skilled workers. Because these workers do not possess much marketplace or workplace bargaining power, or associational power, their working conditions are usually in line with, if not lower than, the basic legal requirements. Thus, collective bargaining that aims at “regulating wages and other core conditions of employment by negotiation between unions and employers” would help boost rank-and-file workers’ associational power in these low-end factories and would drive their wages up.Footnote 22 In contrast, the American and European transnational corporations in China hire more skilled and managerial employees whose strong marketplace and workplace bargaining power has, to a large extent, guaranteed them good salaries that are well above the legal standards. Therefore, the Shenzhen Ordinance and Guangdong Regulations would have a greater impact on the East Asian suppliers than on American and European transnational capital.
The second determining factor that shapes the attitude of TNCs towards the two proposed laws is the industrial relations model in their home countries. Overseas chambers tend not to welcome labour regulations that are not based on the industrial relations model of their home countries, as will be shown below in the cases of American and East Asian capital. Moreover, they feel the moral pressure not to oppose openly those labour regulations that are in line with their home countries’ norms, as in the case of European capital. In addition, a strong trade union movement in the overseas chambers’ home countries has proven to have positive effects on labour legislation in China.
The United States: subtle and covert lobbying
We interviewed representatives of two US business chambers in China, the American Chamber of Commerce in the People's Republic of China (AmCham China), located in Beijing, and the American Chamber of Commerce in South China (AmCham South China), located in Guangzhou. These chambers are independent from each other, yet connected in terms of information exchange.
AmCham China
AmCham China does not have any official position towards the Shenzhen Ordinance and the Guangdong Regulations. During an interview, the president of AmCham China appeared to know a little about them, but showed greater concern about other issues such as the expansion of Chinese SOEs in the Western market and intellectual property rights in China.Footnote 23 This finding is supported by our informants from other business associations and scholar-interviewees, who pointed out that AmCham China did not lobby much against the two proposed regulations.Footnote 24 AmCham's lack of concern is owing to geographical-juridico politics in China. The major members of AmCham China are from the northern and central parts of China (such as Beijing, Dalian, Wuhan and Tianjin), which are not going to be affected by the proposed labour regulations in the south. As their members’ interests are not greatly affected, AmCham China does not have to be vocal on this issue. This is in stark contrast to its high-profile opposition to the Labour Contract law in 2008, which is a national law and affects firms all over China. Unlike AmCham China's membership, members of other overseas chambers of commerce under investigation in this article were all affected by the new legislation.
Moreover, many members of AmCham China are not engaged in the labour-intensive manufacturing industries. Its president revealed that its members usually have no manufacturing capacity in China, and each of them has around 25 suppliers in the country. Therefore, even if the two proposed regulations were to apply to its members, collective bargaining would not create too much pressure on them to increase wages.
AmCham South China
AmCham South China, which represents interests in the southern regions, has opposed the Shenzhen Ordinance and the Guangdong Regulations. This is largely related to the economic development of Guangdong province. Guangdong is an export-oriented manufacturing region that mainly serves the US and European markets (and increasingly the local market). It has attracted immense foreign investment and has made a substantial contribution to the country's economy.Footnote 25 In 2009, a total of US$355.9 billion processing trade volume was recorded in the Pearl River Delta (PRD) alone, which amounted to 40 per cent of China's full amount; the province's export and gross industrial production reached US$358.9 billion and 6.82 trillion yuan, respectively, in 2009.
The region's reliance on secondary industry means that many enterprises there are labour-intensive, and so labour issues are of great concern to them. This explains why AmCham South China, whose members are often engaged in the manufacturing industry, is more concerned with the two proposed regulations than AmCham China, whose members are more attached to the service and technology sectors. The president of AmCham South China noted that, “many of our members are investing in the manufacturing industry; laws on collective bargaining will add to their financial burden.”Footnote 26 Moreover, as Hall and Soskice suggest, US firms are used to the LME model in which collective bargaining is not compulsory for employers and industrial relations are tightly coordinated through the market institutions.Footnote 27 The US labour market is highly fluid and deregulated in ways that allow firms to hire and fire employees easily at low cost. Following the LME model, AmCham South China, which represents the American variety of transnational capital, opposes strict labour regulations in China. In an interview with one of the authors, its president stated that, “we are not looking for militant trade unions and unnecessary regulations.” Furthermore, since the Shenzhen Ordinance and Guangdong Regulations only concern south China, the geographical-juridico politics in the country has propelled AmCham South China to voice its opposition on its members’ behalf.
AmCham South China submitted a position paper on the proposed regulations to the government.Footnote 28 It also held some private discussions with the government and had a meeting with the mayor of Dongguan 东莞 city to express its reservations about the proposed regulations. The president of AmCham South China is concurrently the vice-chair of the Dongguan City Association of Enterprises with Foreign Investment (hereafter, the Association), and so AmCham South China made its opposition known via the Association, which has weekly meetings with the mayor's office as well as a monthly meeting with the mayor himself. Moreover, the Association has built up working relations with associations for enterprises with foreign investment in other cities in the Guangdong province, some of which also opposed the proposed legislation. The president of AmCham South China noted that:
The Chinese government is responsive if what you say is supported by facts and is in the government's interest … it is important to make suggestions that are of mutual benefit to the businesses and Chinese government … that is one of the keys to influencing the government … what is in our best interests should also be in their interests … it is important to educate the government officials, get them to understand your points and the issues, and understand that our advocacy is in their interest.Footnote 29
He also commented that the two proposed laws probably would not be passed because of the feedback of various associations, including AmCham South China and the Association. AmCham South China's lobbying against the proposed laws was not a one-off or piece-meal attempt; rather, it should be understood as one of the continuous efforts of the chamber to exercise its associational power to influence the government's policies and laws. Its president emphasized that, “lobbying is not about working on a single issue, it is an ongoing process.”Footnote 30 The chamber meets officials from the Ministry of Commerce from time to time. Every year it produces a white paper to highlight issues of concern to its members. It holds media conferences to publicize the white papers and sends copies to high-ranking government officials at both the local and national level in an attempt to influence policymaking. According to AmCham South China's president, the-then Guangdong province Party secretary had read the chamber's white paper and sent some of its chapters to the government leaders in the province. This shows that the associational power of overseas chambers has derived from a process and is accumulative in nature.
Europe: ambiguous and ambivalent position
In China, European firms can be represented at two levels: their national business chambers and the European Union Chamber of Commerce in China (EUCCC). The former usually deal with issues of individual firms (for example, when they have economic or labour disputes), while the latter puts more effort into policy advocacy, lobbying and networking among businesses. The EUCCC's headquarters are situated in Beijing and branches have also been set up in eight other cities, which are under the coordination of their Beijing headquarters. The EUCCC has not formulated any official position on the two proposed regulations.Footnote 31 However, quite perplexingly, the EUCCC in Guangzhou and Shenzhen has already taken the initiative to organize seminars for its members on how to deal with collective bargaining. For example, on 20 June 2011, the EUCCC in Guangzhou and Shenzhen organized a seminar entitled, “China HR strategies to gain advantage in a competitive environment.” Some parts of the seminar addressed issues such as “How best to manage strikes,” “How to go slow” and “What the law allows in handling collective bargaining.”Footnote 32 This is evidence that the EUCCC views the proposed legislation as an issue of concern for its members.
The EUCCC's ambivalent position towards the Shenzhen Ordinance and Guangdong Regulations can be accounted for by our two determining factors. First, 65 per cent of its members are big multinational corporations, while only 30 per cent are small and medium-sized enterprises. Because many members are in the service and high value-added industries, they would not be so impacted by the upward wage pressure created by collective bargaining.Footnote 33 Second, many West European countries follow the CME model. Their industrial relations and wage negotiations are largely coordinated through non-market institutions; firms often adopt a consensual decision-making structure in which employees’ representatives are included and through which their cooperation is secured. As collective bargaining is a long-established norm in European industrial relations, the EUCCC is under a moral pressure not to oppose the European norm openly, even if it does not help to promote the European model in China. The representative from the EUCCC in Beijing noted that, “labour is a difficult issue, but it affects businesses. It is a tricky thing to lobby on and it is difficult to criticize.”Footnote 34 In all our interviews with the EUCCC representatives, they emphasized strongly that European firms are used to social and labour regulations. The EUCCC's cautiousness is probably also owing to the lesson that it has learned from its opposition to the 2008 Labour Contract Law. During the law's period of public consultation, the EUCCC openly expressed its concern over the rising labour costs that might be created and implied that European businesses might invest elsewhere if the law were passed. Later, the European Trade Union Confederation put immense pressure on the EUCCC and it subsequently clarified that it supported the law.Footnote 35
Although the EUCCC did not lobby against the Shenzhen Ordinance and the Guangdong Regulations, its representative did share with the authors its broader strategies for lobbying the Chinese government. It meets different ministries on a regular basis. For instance, it meets the vice-mayor of Beijing every year and has developed good relations with the Foreign Investment Bureau. When it seeks to lobby on specific issues, the EUCCC will write to the government officials concerned, appeal to the EU commissioner and ambassador, and invite the government officials to meetings. The EUCCC in Beijing has a government affairs manager, who maintains working relations with Chinese government officials from the International Corporation Department. In addition, the EUCCC works closely with AmCham China on certain issues, believing that “two voices together means double effect.”Footnote 36
Our fieldwork found that the position of the national chambers of the major European countries, such as France and Germany, on the two proposed regulations was quite in line with that of the EUCCC. They did not officially oppose the two laws;Footnote 37 however, it should be noted that the Swedish embassy was in support of them. According to the counsellor for labour market affairs at the Swedish embassy in Beijing, “the labour market in China is strange and volatile; laws do not ensure a functional labour market. Therefore, collective bargaining is a means to stabilize the labour market.”Footnote 38 The embassy, working closely with Swedish trade unions, has tried to promote the Swedish industrial relations model in China through dialogue and cooperation with the Chinese government and the ACFTU. Together with the Ministry of Commerce in China, it has conducted workshops on corporate social responsibility for provincial government officials, which covered the issue of collective bargaining. In the future, the embassy plans to organize seminars on collective bargaining for trade union and government officials. The counsellor remarked that it is unusual for the embassies of European countries in China to delegate specific officers to work on issues related to labour rights or the labour market. The reason the Swedish embassy has done so is because trade unions in Sweden are powerful enough to assert significant institutional power within the government structure and to influence its policies. The case of the Swedish embassy demonstrates that transnational capital coming from countries with more coordinated forms of industrial relations tends to be less antagonistic, if not supportive, towards stronger labour regulations in China.
East Asia: explicit and overt opposition
Hong Kong
Many Hong Kong business associations oppose the promulgation of the Shenzhen Ordinance and Guangdong Regulations. Again, this could be owing to their positions within the global production chain. Most Hong Kong investments in China are concentrated in the export-oriented manufacturing industry and labour-intensive service industry.Footnote 39 Over 80 per cent of the Hong Kong businesses in Guangdong are in the labour-intensive manufacturing industries.Footnote 40 These businesses would be seriously impacted by the upward wage pressures created by collective bargaining. As such, they actively and vocally lobbied against the regulations. Hong Kong firms are not used to collective bargaining or workers’ participation in corporate governance, even in their home region where the industrial relations model leaves almost everything to the market; consequently, they strongly resist pro-labour regulations on the mainland. One of our informants from the Hong Kong General Chamber of Commerce (HKGCC) stated that, “wage bargaining between workers and enterprises will create huge pressure on wages … workers are not well educated; they get emotional easily. The previous draft of the Shenzhen Collective Consultation Ordinance made it possible for just one-fifth of the workforce in enterprises to initiate collective bargaining, it's just too easy, it's disturbing.”Footnote 41
The HKGCC, one of the four largest chambers in Hong Kong, submitted two position papers on the Shenzhen Ordinance and Guangdong Regulations to the Chinese government. In the first position paper, it claimed that allowing worker-directors to take part in companies’ supervisory activities and decision making would increase the risk that confidential business information would be leaked. It was also against the suggestion in the Shenzhen Ordinance that, if one-fifth of employees requested it, companies should start wage bargaining with workers' representatives. The HKGCC was afraid that workers would abuse the bargaining mechanism and too quickly and easily resort to striking and collective action if no agreement could be reached, and that wage bargaining would create high wage pressure on companies and increase their business costs. Applying our conceptualized framework of the power of transnational capital, we argue that the HKGCC was concerned that employers’ workplace power over companies’ operations, wage and profit distribution would be constrained by the increasing bargaining power given to the workers by the two proposed laws.
In its second position paper, the HKGCC claimed that the proposed legislation “will not only deepen labour–management conflict, but also create a difficult business environment for enterprises and obstruct their development; in the long run, it will also affect the country's economic development and people's living standards.”Footnote 42 Here, the HKGCC is hinting at its structural economic power over the Chinese governments. The governments are being reminded that they and the businesses are in the same boat: if businesses’ interests are harmed by the two regulations, then the country will suffer in the long run, too. As the patron–client relations between foreign investment and local governments are intricate in China, this indirect warning, backed by the economic power of transnational capital, seems to be an effective lobbying tactic, as will be elaborated below.
The Federation of Hong Kong Industries (FHKI), another large business association in Hong Kong, released two position papers which stated that the two proposed regulations would harm industrial harmony, give rise to labour–management conflicts, and might even lead to a return to the situation of everybody eating from the same “big pot of rice” (dahuofan 大镬饭), as it was in the state-socialist period. It also asserted that the proposed regulations would have a negative impact on the business environment and dampen entrepreneurship, and might even threaten social stability and economic growth.Footnote 43 The structural economic power of foreign businesses is once again stressed here. The FHKI is of the opinion that wages should be determined by the free market, rather than through collective bargaining. Its vice-president commented that, “If workers can join the board of directors, as proposed by the Guangdong Regulations, business costs will increase because workers' representatives will definitely fight for the maximum interests of workers. They may also oppose investment beneficial to the long-term development of enterprises, such as buying more machinery for production, as they want higher wages.”Footnote 44
Deploying their associational and structural economic power, the lobbying strategies of HKGCC, FHKI and other Hong Kong business chambers targeted four levels: their corporate members, the Hong Kong government, the Guangdong provincial government and the Chinese central government. In order to solicit the support of their members to bolster their associational power, individual chambers held members’ consultations from time to time, and the four biggest chambers held a joint consultation to collect enterprises’ opinions.Footnote 45 These consultations paved the way for further mobilization of businesses to oppose the two regulations.
At the Hong Kong level, the chambers each released their own position papers as well as a joint position paper, which they submitted to the Hong Kong (and Guangdong) government. The FHKI vice-president revealed that, after taking the chambers’ comments into consideration, the Hong Kong government submitted its own position paper, which largely reflected the views of Hong Kong businesses, to the Ministry of Commerce in China. In addition, the Hong Kong Business Community Joint Conference, which consists of over 40 business associations, published a petition in two Hong Kong newspapers.Footnote 46 The chambers also used their political connections to appeal for the support of some key Hong Kong politicians who hold symbolic, if not important, positions within the Chinese government, and invited them to help lobby the Chinese governments. These politicians included Elsie Leung Oi-sie 梁爱丝, who is the former secretary for justice of Hong Kong and currently the deputy director of the Hong Kong SAR Basic Law Committee under the Standing Committee of the National People's Congress of the PRC, and Rita Fan Hsu Lai-tai 范徐丽泰, currently a standing committee member of the National People's Congress of the PRC.Footnote 47
A four-pronged attack was used to lobby the Guangdong government. First, the Hong Kong chambers exercised their structural economic power. They emphasized the importance of the economic contribution made by the Hong Kong businesses to the region, and how the two proposed regulations would negatively impact on these businesses.Footnote 48 The chairperson of the China Affairs Committee of the Chinese General Chamber of Commerce remarked that the new legislation would lead to large-scale investment withdrawal and enterprise closure, which would ultimately weaken the competitiveness of the region.Footnote 49 In other words, the Chinese local governments were threatened with an “investment strike.”Footnote 50 Chinese local governments are highly motivated to maintain high economic growth because they are fiscally independent from the central government and also because of the strong patron–client relations between local government officials and investors. By stressing their economic significance to the province, the Hong Kong businesses were giving signals to the Guangdong government that its interests would also possibly be harmed by the proposed legislation.
Second, the four biggest chambers, along with the Hong Kong Business Community Joint Conference and several Hong Kong politicians, sent lobbying letters to Huang Huahua 黄华华, mayor of Guangdong province at that time, Wang Yang 汪洋, the-then secretary of the Guangdong Committee of the Communist Party of China, and the Legality Committee of the Guangdong Provincial People's Congress.Footnote 51
Third, the four major chambers sought to lobby the provincial government face-to-face – for example, by having meetings with officials from the Ministry of Human Resources and Social Security of Guangdong province.Footnote 52 The FHKI and its affiliated Chinese association, the PRD Council, meets the vice-mayors of Pearl River Delta cities, such as Dongguan, Huizhou 惠州, Shenzhen and Zhongshan 中山, every month to discuss issues of concern, including the Shenzhen Ordinance and Guangdong Regulations.Footnote 53 An informant from the HKGCC revealed that when new drafts of the Guangdong Regulations were issued, the HKGCC would email or fax comments to the Guangdong government directly and representatives would visit local government officials more frequently, once or twice a month.
Finally, the Hong Kong business associations also lobbied the central government, even though the Shenzhen Ordinance and Guangdong Regulations were local regulations. The Hong Kong General Chamber of Textiles Limited met with Minister Chen Deming 陈德铭 from the Ministry of Commerce in November 2010.Footnote 54 Also, a delegate from the HKGCC was sent to Beijing to express its concerns over the proposed legislation to the Ministry of Commerce, Ministry of Finance, and the National Development and Reform Commission (NDRC). In addition, members of the general council of the HKGCC, two of which are Hong Kong legislative councillors, met the vice-premier of the PRC to discuss the legislation.Footnote 55 As a result of the lobbying strategies adopted by the Hong Kong business associations, the proposed pieces of legislation have been put on hold.
Interviewees from the HKGCC and FHKI believed that their lobbying campaigns against the two regulations were quite successful, as the Guangdong government has taken on board some of their suggestions. One of the informants said, “It is useful to lobby the government … the central government gave us a very good response and it tried to be friendly. And, the Guangdong government officials are more open compared to those in other parts of China; this is probably because they know that Hong Kong businesses have contributed tremendously to their economy. It is not difficult to lobby the government [concerning the two proposed laws].”Footnote 56 According to another interviewee, “It is probably because the Hong Kong businesses have expressed serious opposition that the legislation has not been passed. However, I am not entirely satisfied. I will not be satisfied until the regulations are completely abandoned.”Footnote 57
Japan
An official from the Japanese External Trade Organization in Hong Kong, which is Japanese government-supported, suggested that Japanese businesses in China consider the promulgation of the Shenzhen Ordinance and Guangdong Regulations to be one of their two urgent concerns (the other one being increasing labour costs).Footnote 58 They are worried that the legislation will provoke labour disputes and increase labour costs. Also, they are against the idea that outsiders, for instance hired trade union presidents and government officials, who have no knowledge of the companies, can participate in the bargaining process. In other words, they fear that they will be losing their workplace power over wage determination and enterprise operations to workers and outsiders. The Japanese External Trade Organization's lobbying activities included meeting the Guangdong provincial government to express its concern, and submitting an opinion paper, which, however, is not publicly available.
Taiwan
Representatives from the Dongguan–Taiwan Business Association, and the Shanghai and Guangzhou office of the Taipei World Trade Centre, a Taiwanese government-supported agency focusing on economic affairs in China, were interviewed. They noted that thousands of Taiwanese factories had closed down during the global financial crisis in 2008–2009, and that the profit rate of many Taiwanese firms had fallen owing to the rising costs of labour and raw materials, along with unfavourable international market conditions. The priority for both bodies was to negotiate actively on behalf of Taiwanese companies with the provincial and municipal governments for favourable terms such as a reduction in tariffs and taxes and the loose implementation of labour laws. It was against this socio-economic background that the Dongguan–Taiwan Business Association itself had not come up with any official position on the proposed regulations. The major concern of Taiwanese enterprises is their transformation from export-oriented businesses into ones based on the domestic consumer market, rather than the new labour regulations. Moreover, although some Taiwanese small and medium-sized enterprises (SMEs) had reservations about the proposed regulations, as the burden of increasing labour costs would be heavier for them than for large firms, they do not have much say within the association. Bosses from big firms, who have different considerations from the Taiwanese SMEs, usually dominate the membership of the association's executive committee. These bosses “told the government that they will follow its policies on collective bargaining” because “they want to use this to bargain with the government for more privileges and concessions.”Footnote 59
In spite of the little attention given to labour regulations by the Dongguan–Taiwan Business Association, surveys had been conducted among its members to find out their opinions on the Shenzhen Ordinance and Guangdong Regulations. Taiwanese business associations have a stronger influence in China compared to those of other countries because of the special political ties between Taiwan and China. Take the association as an example. It has close contact with, and much influence on, the local Dongguan government. It meets the government every month and can directly contact the vice-mayor for anything important. Every three months, an expanded meeting with the government is held at the city level. It was in this expanded meeting with the government that the association presented the opinions of Taiwanese firms on the two proposed regulations.
Before closing this section, it is important to note that the legislation of the Shenzhen Ordinance and Guangdong Regulations was not suspended solely because of the lobbying efforts of overseas business associations. It is true that they exerted pressure on the Guangdong and Shenzhen governments; however, their opposition was not the only concern of the governments.Footnote 60 During our fieldwork, we found that many SOEs were also sceptical about the laws. They did not openly oppose the laws and mainly expressed their opinions and articulated their interests through the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), which supervises and manages SOEs on behalf of the state.Footnote 61 The labour and legal scholars that we interviewed revealed that SASAC is one of the fiercest opponents of the legislation within the party-state. The interests of domestic and global capital regarding labour regulations have converged; this convergence has strengthened the associational power of capital as a bloc and in turn has heightened its capacity to influence state policies.
Moreover, the suspension in legislation was also owing to the party-state's own worries about the spillover effects of labour activism and industrial conflict that might be triggered by the Shenzhen Ordinance and Guangdong Regulations.Footnote 62 After the wave of labour protests sparked by the Honda workers’ strike in 2010, the party-state became more anxious to pacify aggrieved workers. As a result, the Shenzhen Ordinance and Guangdong Regulations were put back on the table for discussion. According to an interviewee from the HKGCC, Guangdong government officials had indicated to her that they did not support the legislation and that they were pressured by the central government to make Guangdong a pilot province in this regard. However, the party-state later realized that if collective negotiation were to be implemented effectively, it would have to be backed by a strong workers’ organization, which in turn might help breed independent workers’ organizations in the country.Footnote 63 As the effects of the strikes in 2010 faded, the potential negative impacts of the two regulations on social and political stability began to outweigh their positive effects in the eyes of both the central and the local governments. Therefore, faced with the convergence of interests of foreign and local capital and of the party-state, the legislation was put on hold once again.
Conclusion
By examining how the various class agencies of transnational capital lobbied against the Shenzhen Ordinance and the Guangdong Regulations, this article seeks to fill two important gaps in literature. First, while current studies have illuminated well the structural power of TNCs and the associational power of domestic business associations in China, the associational power of transnational capital, as exercised through lobbies, and its influence over state regulations has been underexplored. Second, in terms of business lobbying in China, previous studies have investigated the activities of individual businesses but little attention has been paid to the lobbying campaigns and strategies of overseas business chambers (with a few exceptions). Drawing on the literature on global labour studies, this paper contends that transnational capital has exercised two forms of power over labour in China: structural power and associational power. We have elaborated how transnational capital utilized these two forms of power to influence the legislation of local regulations on collective negotiation in Guangdong and Shenzhen. Furthermore, inspired by the concept of the “varieties of capitalism,” we have formulated the notion of “varieties of transnational capital” to analyse the differing positions and lobbying strategies of transnational capital coming from various countries concerning these two regulations. Our arguments and findings are summarized as below.
First, the associational power of global capital, as exercised through commercial chambers and the government agencies of its home countries, has effectively compelled the Chinese governments to mothball the legislation of collective bargaining regulations in Guangdong and Shenzhen that are critical for strengthening workers’ associational power. The differing positions and lobbying tactics adopted by business associations from various global regions were shaped by two determining factors related to the characteristics of different varieties of transnational capital: 1) the positions of their members in global production chains, and 2) the industrial relations model in their home countries. Many of AmCham South China's members had invested in labour-intensive manufacturing industries that would be heavily affected by the proposed regulations. Furthermore, its US member-firms were more used to a liberal industrial relations model in which collective bargaining does not play an important role. Therefore, AmCham South China subtly and covertly lobbied the governments against the laws. The EUCCC and other national business chambers and government agencies from Europe did not lobby against the two laws because wage determination in their home countries is largely coordinated through collective bargaining, and the European firms in China were concentrated more in the service and high value-added industries, which would not be so impacted by the upward wage pressure created by collective bargaining. With regards to East Asian transnational capital, business associations from Hong Kong and Japan strongly opposed the two regulations because their members were involved in the labour-intensive manufacturing industries, which would be directly affected by the laws, and they were sceptical about collective bargaining, which has never played an important role in their home countries.
Second, alongside the transnational factors, the geographical-juridico politics in China also shaped the position various business associations adopted in regard to the proposed regulations. Since the Shenzhen Ordinance and the Guangdong Regulations were local laws that would only impact Shenzhen and Guangdong, those overseas business chambers whose jurisdictions lay in other provinces were not so concerned. This explains why AmCham China, whose members came from the northern and central parts of China, did not oppose the two regulations, while AmCham South China actively lobbied the governments. Similarly, as East Asian transnational capital is concentrated in the south China region, the corresponding business chambers vigorously lobbied against the laws.
Third, the suspension of the two proposed laws was largely the result of the convergence of the interests of both local and foreign capitalists and the party-state. The capitalist bloc opposed the laws owing to concerns over rising labour costs while the party-state's reservations were related to the uncontrollable spread of labour activism that might have followed the legislation of collective bargaining.
Fourth, an analysis of workers’ power cannot be separated from that of capital's power, or vice versa. Borrowing from the frameworks proposed by Erin Wright and Beverly Silver of workers’ three types of power (marketplace power, workplace power and associational power), previous studies have demonstrated that both the marketplace bargaining power and workplace bargaining power of Chinese migrant workers have been enhanced in the past decade in the context of rising labour shortages and labour protests. However, compared to that of their domestic and global rivals, Chinese migrant workers’ associational power is fundamentally weak because the only state-endorsed union, the ACFTU, has failed to represent them properly. The ACFTU and its local branches have played a role in representing workers’ interests in the two proposed laws. The Shenzhen Ordinance was first drafted by the Shenzhen Federation of Trade Unions; however, that organization did not insist on its original position once pressure came from the top.Footnote 64 Many labour NGOs in Guangdong support these two laws but they do not have the leverage to influence their legislation. Workers’ associational power remains weak because its formation has been constrained by two political factors: the state's manipulation of trade unions and the absence of freedom of association in China. There was hope that the Shenzhen Ordinance and the Guangdong Regulations would provide the legal means to enhance workers’ associational power to some extent; however, this study finds that besides the political constraints, the associational power of capital is another significant obstruction to the rise of workers’ associational power.
Appendix
Table 1: List of Interviewed Chambers of Commerce and Government Agencies
