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Wang Xiangwei

At first glance, a  string of suicides at Foxconn - the world's largest supplier to electronic-gadget brands like Apple and Nokia - and Japanese carmaker Honda's shutdown of four assembly lines  because of a strike at its auto-parts factory, are unrelated. But both developments, closely monitored by foreign  businesspeople on the mainland and overseas, in fact reflect  the emergence of a bigger and more complex theme - industrial relations. 
Until recently, the mainland was proud of being called 'the world's workshop' for its abundant supply of cheap labour and raw materials. 
Over the past 30 years, multinationals have invested trillions of US dollars to set up shop on the mainland, making it  a key part of the global supply chain. 
But the developments at both Foxconn and Honda show  industrial relations are fast becoming  an important consideration for  multinationals operating on the mainland, as well as for Beijing.  
Several factors have emerged to put labour issues higher on the agenda. 
The mainland's demographic changes and one-child policy mean that the window for cashing in on the demographic dividend - the rise in economic output as the percentage of working people increases - is closing fast. 
The composition of the  work force is also changing. Young migrants from one-child families currently dominate the work force.  They expect more than just a monthly salary, and their pampered upbringings make them  unprepared  to work under conditions in which they are treated like a robot. 
Terry Gou,  chairman of Foxconn, has denied his Shenzhen factories are  sweatshops,  while other company officials have pointed to modern dormitories, swimming pools, internet cafes and other recreational facilities for workers within the company complex. 
But critics have rightly argued that the company's military-style management and discipline are the main factors  behind the suicides,  because the workers  are left with no time or energy to relax. 
Mainland authorities' attitudes towards  Foxconn and Honda  have been ambiguous at  best.  Government officials have refused to criticise Foxconn in any way, merely urging the company to show more 'humanity' towards workers. 
They should be heartened by Foxconn's announcement that it will raise workers' wages by an average of 20 per cent this year.  
Staff at the Honda factory walked off the job on May 17 demanding better pay, but authorities  have not taken any action to persuade or force workers to end the strike. 
Privately, many mainland officials have voiced hope that the two developments   would be a catalyst for better wages  nationwide. 
In March, Premier Wen Jiabao  pledged in his work report that allowing  workers to share in the mainland's rising prosperity  is now a top priority for the government.   
The mainland has come a long way since the  days of its misguided, 'red and expert' policy  for grooming new talent, which began during the Cultural Revolution and continued until the early 1980s. The policy called for  emerging talent to be 'red' first - meaning  loyal to the Communist Party - before  being recognised as expert. 
Predictably, this policy stifled innovation and contributed to a brain drain of talented scientists and researchers migrating to the  US or Europe in the past 30 years. 
Now, the mainland leadership has set out ambitious goals and is dangling strong  remuneration packages to lure some of those people back. A key part of the effort has been the  'thousand people' plan, launched by the central government at the end of 2008.  
It aims to attract about 2,000 of the world's top-notch scientists, researchers, bankers and others to pioneer innovation and research at the mainland's leading universities and research institutes, as well as  to set up their own hi-tech ventures or  work at  leading financial institutions. So far,  662 people from overseas have joined the scheme, according to state media. They include about 448 mainland Chinese  with foreign passports and 20 foreigners who used to work at  institutions such as Harvard, MIT, Boeing, General Electric and Morgan Stanley. 
The fact that  Beijing's plan, launched more than 11/2 years ago,  drew only one third of its  target probably has  a lot to do with its stringent requirements  for age,  academic qualifications and achievements.  
Those who return are offered 1 million yuan (HK$1.1 million)  as a one-off, tax-free signing bonus.  Other benefits include  multiple-entry visas for their dependents, access to the mainland's pension and medical  schemes, stock options and  housing,  relocation and  education perks.  But those generous benefits are unlikely to persuade many  to  return and work on the mainland if they take a close look at the  personal tax regime. 
The mainland, despite being a developing country, has adopted a progressive tax regime commonly seen in developed countries. It carries a maximum rate of 45 per cent.  This  tax regime has long been known as one of the biggest  disincentives for so-called overseas returnees and foreigners setting up shop and working on the mainland. 
Instead, most  move to Hong Kong and  travel to the mainland for work.  Even  those  required to be stationed on the mainland for  longer periods make sure, or their employers do, that their cumulative number of  working days  does not exceed 90, so that they don't have to pay the mainland tax. 
It is high time  mainland officials  began simplifying the personal income-tax regime.



Foxconn, Honda woes reveal changing face of industrial relations