ZHONGSHAN, China - Pan Qing Mei hoists a soldering gun and briskly fastens chips and wires to motherboards streaming past on a conveyor belt. Fumes from the lead solder rise past her face toward a ventilating fan high above the floor of the spotless factory.
Pan, a 23-year-old migrant worker, said the fumes made her lightheaded when she first arrived from a distant farm village three years ago. Now she's used to them -- just as she's used to the marathon shifts, sometimes 18 hours a day.
Hundreds of thousands of young Chinese like Pan have flocked to the Pearl River Delta to work in electronics factories that assemble computers and other products for the world's major tech companies. These hard-driving, highly efficient component factories, many of them owned by Taiwanese companies, are essential to the personal computer industry as competition drives down prices.
What has escaped notice is one secret to their success: They take advantage of a workforce willing to work extraordinary amounts of overtime, often in violation of China's national labor law.
Workers like Pan come from impoverished villages for a few years to live in company dormitories, eat in company cafeterias and routinely work minimum 12-hour shifts, six days a week.
Pan's base wage of 30 cents an hour is roughly China's minimum wage. Working at least 130 hours of overtime a month, at up to 50 cents an hour, she earns about $150 a month. Much of that she sends home to support her parents, who are subsistence farmers, and what is left she spends on her room and board, and she saves for medical emergencies.
With its estimated 100 million migrant workers and its notoriety for low wages and lax enforcement of labor and environmental laws, China is fast becoming the world's premier electronic workshop, analysts say. Contract manufacturers that make components for leading PC companies are moving operations here from Taiwan, Malaysia and Mexico, and bringing their subcontractors with them.
Long work hours
Young, rural women from poor villages
But critics of economic globalization, and its unintentional side effects in the Third World, are expanding their scrutiny beyond Nike and the Gap to high tech. The industry's clean image and its reputation for high standards of corporate responsibility are at risk.
"The problem is that overtime abuse is just as bad in the high-tech industry as it is in the garment industry, and the hazardous-materials issue is even worse,'' said S. Prakash Sethi, a professor at Baruch College's Zicklin School of Business in New York. "It's false to say workers love overtime. They do it because they cannot afford to live without it.''
Pan Qing Mei is typical of the young rural women who have rushed to the electronics factories in the Pearl River Delta in recent years. This is China's gold coast, where special export zones adjacent to the former colonies of Hong Kong and Macao are driving the nation's economic boom.
Standing on a polished floor under bright lights, Pan is one of hundreds of women working along rows of assembly lines in the factory owned by Wistron Corp., a subsidiary of Taiwan-based Acer Group. Wistron recruiters visited her vocational high school in northeast Guangdong, about 300 miles from Zhongshan, and signed her up as one of the plant's first workers.
In classic company-town fashion, she works, eats, sleeps and spends her scant free time at Wistron, which deducts room and board from her paycheck.
Since she started, her total monthly income has doubled. But the demands on her time have also accelerated, said Pan, wearing the company uniform of a checkered, static-free jacket and white cap.
Most contract manufacturers in China like Wistron, experts say, run their factories on two 12-hour shifts, enabling them to lower costs by hiring fewer workers. That means managers expect Pan and her co-workers to put in at least 72 hours during a six-day workweek. The central government's law restricts a laborer's monthly hours including overtime to 249; Pan typically works a minimum of 312 hours a month.
Wistron appears to be violating the law by encouraging employees like Pan to work so much overtime, but the company says the local labor bureau allows up to 36 overtime hours a week, not 36 hours a month as the central government's law mandates.
Indeed, in the casual legal environment of China's outlying provinces, local labor officials assert they can waive enforcement of the national law, experts say, enabling municipal governments to attract foreign investment with competitive incentives that include no enforcement of labor regulations as well as tax holidays.
Labor loopholes
Local officials waive national laws
"There's a loophole in the national labor law that these people are taking advantage of,'' said Anita Chan, a labor scholar at the Australian National University and co-editor of its China Journal. "Even if one can argue the practice is not necessarily illegal, it's not moral.''
That gray zone of regulatory enforcement puts women like Pan in a particularly vulnerable spot. The assembly lines of these factories are almost exclusively staffed by young women who don't stay long on the job and are easily replaceable. In Shenzhen, the core of the regional industrial zone, half its 3.5 millions migrant laborers in all sectors work seven days a week, according to a Chinese labor think tank. About 60 percent are women, typically between the ages of 17 and 23.
The overtime trap can be seductive for these workers, and the line between volunteer and compulsory work often is blurry. Pan said she needs the overtime so she can send money home to her parents and two sisters.
Her melodic voice lowered to a whisper when a grinning factory supervisor approached within earshot of her conversation with a foreign reporter.
"The overtime hours are very long, but it's not just about making money,'' she said. "There's nothing to do here after work, nowhere to go. I play a little basketball, but that's all there is.''
Wistron managers boast of their good record on employee welfare at the plant.
"We're a Taiwanese company, and there are political considerations to our being here in China, as well as issues with our customers,'' said David Shen, the plant's account manager. "We can't afford to violate local laws and customs.''
Asked later to clarify the company's overtime policy, Wistron officials did not respond.
Whether the overtime in these plants follows Chinese regulations -- or acceptable international standards -- is a question that threatens to hound U.S. electronics companies as they send their production work to contractors in China.
"The worst hazards in a Chinese factory are invisible,'' said Chan Ka Wai, an investigator with the Hong Kong Christian Industrial Committee, a labor-monitoring group that has exposed widespread abuses in the electronic toy industry. "And it's not a problem with labor standards, it's a problem with enforcement and corruption.''
One U.S. high-tech giant is addressing concerns about working conditions as it enters the opaque world of contract manufacturing.
In its contracts with Chinese suppliers, Microsoft has specified a 40-hour workweek and allows only "consensual overtime'' during peak production periods of the Xbox game console soon to be made by Wistron.
"My understanding is that the 12-hour shift is not the norm for the Xbox,'' said Matt Pilla, a Microsoft spokesman. "As we get into hardware production, we want to make sure our overseas partners share our values.'' Pilla said Microsoft plans to monitor compliance with labor standards as part of routine quality audits of its contractor factories.
Competitive edge
Asian contractors help cut costs
To succeed in a fiercely competitive market, PC brand companies have relied on offshore contractors for years. With the exception of Dell, whose own employees still do the final assembly in the United States -- adding custom features and plugging in the microprocessor and other high-value parts -- PC makers rarely even touch the products that they design and market, industry experts say.
The move to contractors in China is "accelerating,'' said Tim Dinwiddie, who manages a sprawling electronics factory complex in Zhuhai for Flextronics, one of the largest U.S.-owned contract manufacturers. "Most everything in the electronics industry is going to come to China during the next four to five years,'' he said.
Critics of contract manufacturing say it can be a model for high-tech sweatshops that exploit low-wage migrant workers and jeopardize their health and safety. But proponents call it a model of productivity that lowers overhead, cuts consumer prices and raises living standards in developing countries.
"It's not Dell that competes with Compaq as a single company, it's the whole supply chain each company uses,'' said Seungjin Whang, co-director of Stanford Business School's Global Supply Chain Management Forum.
Whang believes that the long hours in Chinese factories are the unintentional consequence of the pressure on contractors and their subcontractors to cut their costs. Fewer employees working longer hours reduces the overhead.
"I don't think PC brand makers cause this to happen deliberately, but it's implicit in their cost-reduction efforts,'' he said.
Dinwiddie of Flextronics said he does not see an end to the demand for "voluntary overtime'' in his workforce. "If we don't provide them with what they think is the right amount of overtime, they will quit,'' he said.
Critics see it differently.
"Instead of benign neglect on the part of manufacturers, it's becoming a matter of negligence,'' said Sethi of Baruch College, who studies labor conditions in China. "They are taking advantage of these girls, and taking advantage of China's inability to enforce its labor laws.''
Seagate's operations in Shenzhen, just across the border from Hong Kong, show that U.S. companies can face the same issues over wages, hours and benefits that confront Taiwanese contractors.
The Mercury News interviewed two former workers from the Shenzhen plant who described working 12 hours a day, sometimes up to 15 hours, for seven straight days over long periods during the past two years. They also said Seagate shortchanged their pension benefits when the Scotts Valley company laid them off and closed the plant in late March.
Seagate did not comment on the disputed pension accounts, but said it was investigating the overtime issue.
The Seagate pension dispute is not unusual, according to Liu Kai Ming, director of Shenzhen's Institute of Contemporary Observation, a fledgling independent think tank of Chinese labor scholars. Nor are the overtime hours at the plant.
"This is not the only case of its kind in the IT sector, and I think it gets a lot worse,'' said Liu, author of the recently published "Migrant Labor in Southern China.''
Labor disputes usually are associated with the dinosaurs of state-owned industry in China's northeastern rust belt, but Liu cited government statistics indicating there were 13,000 labor disputes in the sprawling Shenzhen "special economic zone'' in 1999. That equals almost one-fifth of all such cases in the nation.
Liu said information about the region's electronics workshops is particularly scarce.
"It's very difficult to get cooperation and do research in the IT industry. They don't let us into their factories,'' Liu said. "These companies are not getting pressure from society yet. But in the future, the problems of extraordinary overtime are going to get a lot of attention.''
Zeng Dong Ying, a former Seagate Technology assembly-line worker, fit the description of the typical economic migrant eight years ago, when a labor broker in her home town of Zhuzhou in Hunan province recruited her to work at a joint-venture factory making magnetic heads for computer disk drives in Shenzhen.
But Zeng outgrew the stereotype of the docile and "disposable'' peasant girl who comes to Shenzhen to work slavishly for a few years, then retreats quietly to her rural village. She stayed on at the factory, married a co-worker and returned to the plant floor after giving birth and sending her daughter home to be raised by grandparents.
Zeng worked without complaint, even as her work hours increased steadily. During the past two years, she said, she has worked at least 12 hours, and sometimes up to 16 hours, a day, going for weeks at a time without a day off. She liked the idea of making extra money -- but she also believed she had no choice.
"Too much overtime ruins your life, and toward the end I was tired,'' said Zeng, a small, wiry 29-year-old. "But the factory rule was that if you refused overtime three times you'd be fired.'' Zeng said the factory handbook referred only to general worker compliance, but she believes the message was clear.
Seagate, which acquired the Shenzhen facility in 1996, terminated Zeng and most of the factory's 1,400 workers at the end of March, moving the bulk of the production to a new factory in Wuxi, north of Shanghai.
The layoffs would have been unremarkable if Zeng and one of her colleagues had not noticed something wrong with their pension accounts.
It turned out Zeng was among 890 Seagate workers, all hired through the same labor broker in Zhuzhou, with the same problem. Their pension premiums had been set aside over the years, but the funds allegedly were not invested into accounts through the Shenzhen pension office.
They did something that can be risky for laborers in authoritarian China today: They organized and filed a grievance. Seagate did not respond to their complaint, even after they hired a Chinese lawyer, who was rebuffed by the local government agencies he approached for redress, according to documents obtained by the Mercury News.
Zeng maintains that the pension cash-out she received, along with her standard severance pay, was thousands of dollars less than what it would have been had Seagate enrolled her in Shenzhen's social-insurance program, as her contract stipulated.
"I want the president of Seagate to know about this,'' said Zeng, trembling as she spoke through an interpreter outside the gate of her old factory. "I'm angry with Seagate. Social-security insurance is about my future, and I was cheated.''
Seagate did not respond to Mercury News questions about the pension funds. But a company official issued a statement addressing the overtime controversy.
"It came to our attention that there were circumstances in connection with our operations in Shenzhen that were not in compliance with overtime requirements,'' the statement said. "We are taking aggressive action to correct any issues, and are committed to maintaining compliance and continuing to ensure a safe and positive work environment for our employees.''
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