1. 1
Management Approaches and Labour Conditions in the Chinese Context
An explorative study on the role of management in the labour condition
outcomes of Chinese private and state-owned firms.
By
Hanna R. Nyqvist
August 2016
Bachelors Programme in Development Studies
Major in Economic History
Supervisor: Erik Green

2. 2
Abstract
China has experienced an exceptional amount of privatization, market liberalization and reform
in the last forty years. With these changes in China’s economy and the strategy of using labour
as its comparative advantage, it is of paramount importance to the development field, to
investigate how these changes in the market have affected management approaches and their
subsequent labour conditions. Through Wang and Chee’s theory of Humane and Legalist
management, this study explores the differences between labour conditions of the long-
established state owned firm (SOE), and the private firm. This paper finds that labour conditions
are substandard and at times, dangerous, in both private and public Chinese firms. Quantitative
data analysis show favourable conditions in private firms, whilst qualitative data analysis show
favourable conditions in public firms. This discrepancy is due to the lack of available relevant
data, and thus, this study acts as a stepping stone for more targeted further research in the topic.
This discrepancy also suggests that further research must be done if Wang and Chee’s
theoretical foundation is to be empirically validated. Suggestions for further research are
presented at the closing of this paper.

3. 3
Acknowledgments
I would like to offer my sincere thanks to my supervisor, Erik Green, for his continued advice
and patience throughout the writing process of this study. I would furthermore, like to share my
greatest appreciation to Benny Carlson, for making this thesis logistically possible, despite the
unideal circumstances along the way. Lastly, I would like to thank Niklas Wallin Bernhardsson
for voluntarily proof-reading and offering much-appreciated recommendations during the last
stretch of this thesis.

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Table of Contents
1. Introduction 6
2. Theoretical and Conceptual Framework 6
Humane Management Approach 7
Legalist Management Approach 9
Knowledge Gap & Modified Theoretical Framework 11
3. Background and Significance 11
State Owned Enterprise (SOE) Reform 13
Changes in Labour 13
4. Literature Review 15
Confucianism within Chinese Businesses 15
The Legalist Approach and Labour Conditions in China 19
5. Methodology 20
6. Quantitative Data: Annual Statistics 22
National Bureau of Statistics of China 23
Quantitative Analysis 30
7. Qualitative Data: Labour Law Contracts and Case Study Analysis 33
Labour Law Contracts of 1994 and 2008 33
Labour Watch Reports: Private Firms 34
Labour Watch Reports: State Owned Firms 38
i. HEG 38
ii. China Non-Ferrous Metals Mining Corporation (CNMC), Zambia 39
Qualitative Analysis 40
8. Conclusion 41
9. Overall Limitations and Suggestions 43
10. Bibliography 44
Appendix A 49
Appendix B 50

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List of Figures
Figure 2.0 Wang and Chee’s theory of Humane and Legalist management approaches 7
Fig 2.1 Main tenants of Humane Theory (Wang & Chee, 2011) 7
Figure 2.2 Hierarchical Relationships of the Humane approach (Wang and Chee, 2011) 9
Figure 2.3 Main tenets of Legalist Theory (in descending order of importance) 9
Figure 2.4 Modified Theoretical Framework for this Study 11
Figure 3.0 Enrolment in Secondary Education, Both Sexes (Number), (The World Bank, n.d.) 14
Figure 4.0 Effective Ways of Communicating (Li and Moreira, 2009) 17
Figure 4.1 The Contributions of Confucianism and Buddhism (Li and Moreira, 2009) 17
Figure 6.0 Number of Employed Persons in Urban Units (Annual Report, 2015) 25
Figure 6.1 Average Wage of Employed Persons in Urban Units by Status of Registration (Yuan) (Annual
Report, 2015) 26
Figure 6.2 Total Wage Bill of Employed Persons in Urban Units and Related Indices (Annual Report,
2015) 27
Figure 6.3 Proportion of Female Formal Employees by Ownership (Annual Report, 2015) 28
Figure 6.4 Sex Ration (Annual Report, 2015) 28
Figure 6.5 Average Wage (Yuan), (Annual Report, 2015) 29
Figure 6.6 Average Education (Years), (Annual Report, 2015) 29
Figure 6.7 Average Age (Years), (Annual Report, 2015) 30
Figure 6.8 Summary of figures 6.5, 6.6 and 6.7 31
Figure 7.0 Private Company Case-Study Profiles 35
Figure 7.1 Public Company Case-Study Profiles 36

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1. Introduction
Over the past four decades, China’s economy has undergone a tumultuous time of transition
and strategic change. Historically being a centrally planned economy, China has experienced
an exceptional amount of privatization, market liberalization and reform. In developmental
terms, it is important to understand the effects these changes have had on the labour force of
China. Through Wang and Chee’s theory of management, this study explores the differences
between labour conditions of the long-established state owned firm (SOE), and the private firm
– a relatively new concept in China. This study uses Wang and Chee’s theory that SOEs utilise
a Humane management approach, and private firms, a Legalist approach. By using the lens of
management, it is potentially possible to distinguish to what extent management affects labour
conditions. This is a topic of significance that critically analyses the societal effects the Open
Door Policy of the 1980’s has had on China’s labour force.
This study applies Wang and Chee’s management theory in the context of China’s economic
history and analyses its impact on current labour conditions. To do so, this study begins with
laying out the theoretical and conceptual framework which includes the Humane and Legalist
approach. The paper continues on to establishing the contextual foundation of China’s recent
economic transition, beginning around the 1980’s with the Open Door Policy. Available
quantitative and qualitative data from secondary sources are then examined, ending with a
thorough discussion of the results in an attempt to answer the following:
Assuming the legitimacy of Wang & Chee’s theory, what differences in labour conditions
are observed between public and private Chinese firms?
Secondary research question:
Based on available empirical data, to what extent is Wang & Chee’s theory validated?
2. Theoretical and Conceptual Framework
The theoretical basis of this research begins with comparing the differences between two
management approaches: Humane and Legalist. These two approaches are tied together by
Wang and Chee’s theory that public firms use a Humane approach in their management whilst
private firms use a Legalist approach. The Humane approach takes on board values and ethics

7. 7
based on Confucianism. The Legalist management approach on the other hand, revolves around
legal frameworks and values that reflect the modern capitalist approach (Wang and Chee,
2011). This theory can be visually represented as follows:
Figure 2.0 Wang and Chee’s theory of Humane and Legalist management approaches
Humane Management Approach
Wang and Chee (2011) illustrate how Confucianism affects the Humane management approach
in figure 2.1. Wang and Chee go a step further and discuss how these values can potentially
lead to certain labour conditions and treatment.
Fig 2.1 Main tenants of Humane Theory (Wang & Chee, 2011)
“Ren”, loosely translates to benevolence, however more accurately refers to “correct
behaviour” (Wang & Chee, 2011). In a managerial and business context, this means that any
leader must have the correct code of conduct. Being people-driven is the main outcome of such
behaviour – being focused on relationships within and outside the workplace, respecting
authority, as well as superiors, and caring about team members (Wang & Chee, 2011). Much
emphasis is put on the leader of an organization, stating that one must be many things including
Public Firm Private Firm
Humane Legalist

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educated, fair, assertive, gentle, kind, trustworthy, “ren” and socially appropriate. A leader must
be a person of respect and thus treat the people within the company in a respectful manner. It
is no wonder then, that leaders – in SOE’s especially – focus on solidarity rather than change
and profit (Wang & Chee, 2011). The attributes of a Humane approach are very much supported
by empirical data discussed in the literature review section of this paper – there is much
evidence of these Confucian/Humane values within Chinese businesses.
In terms of labour condition outcomes, theoretically, the Humane approach should have a
positive effect. The emphasis of having respectable and harmonious relationships within the
workplace suggests that treatment of workers should be of a fair and just nature. Disloyalty and
corruption go against the benevolence of Confucianism and thus would seem to be limited
within the Humane framework. The focus on training and personal development (Wang &
Chee, 2011) should also allow employees to improve their skills and get promoted to positions
of higher stature over time. Contrastingly however, there are theoretical hindrances within this
framework. The emphasis on relationships has the potential for nepotism. This combined with
the importance of hierarchy within the organization can limit the actual potential for growth
and development within a company.
One notable downside of Confucian thinking is the disregard for legal institutions. Due to the
emphasis on social contracts, Chinese business leaders can sometimes be unaware of legal
responsibilities. This was especially the case in the 1980’s when the Chinese economy began
opening up to foreign trade (Wang & Chee 2011). Foreign businesses found it too risky and
unattractive to do business with Chinese firms who did not have the same regard for legal
contracts and rules, which thus put pressure on China to adhere to a Legalist approach. The
literature review will expound on this relationship further.
Women and business within the Humanist framework is also a point of weakness.
Confucianism encourages the respect of hierarchies – hierarchies that are presented in figure
2.2.

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Figure 2.2 Hierarchical Relationships of the Humane approach (Wang and Chee, 2011)
Based on these relationships, it is of no surprise that in Chinese business culture, there is a great
deal of discrimination against women: the “Innocent Maidens” (Wang & Chee 2011: 32).
Interestingly enough, this reputation is not necessarily seen as dismissive within Chinese
society - nevertheless, the prejudice towards women is subtle yet existent.
Ultimately, one may find the Humane approach an ideal one as an employee due to the focus
on fair and just action. In reality however, interesting dynamics may result that hinder the
realization of these conditions. It is important to thus gather empirical data to analyse how
working conditions actually manifest themselves under a Humane environment.
Legalist Management Approach
The Legalist approach can be presented as follows in figure 2.3:
Figure 2.3 Main tenets of Legalist Theory (in descending order of importance)
This theory is synonymous with mainstream corporate governance, meaning an emphasis on
strict and transparent regulations, discipline and equality. In terms of authority, this framework
Authority
Law
Tactics

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insists on strong leadership – an “everyone knows who’s boss” mentality (Wang & Chee, 2011).
Regulations are also a large part of this framework, requiring strict rules that employees follow
rigorously and consistently. Suggested management techniques/tactics include:
1. Set up a profit-driven culture
2. Strict job descriptions and duties aligning with said descriptions
3. Manage people by satisfying self-interest and have clear targets
4. Conduct scrupulous performance targets
5. Cautiously promote people
6. Be rational and fair
It is evident from these set of suggested tactics that the Legalist approach seems much more in
line with Western ideals of business than the Humane approach. Chinese managers experience
the conflict between wanting to run organizations in a Legalist manner but have the pressures
of the Confucian emphasis on personal relationships. The Legalist thinking was encouraged by
the government during the 1990’s when it was found that using the Confucian understanding
of morals and benevolence lead to certain forms of fraud and physical punishments. If a leader
found an action just, this opinion was given precedence over legality. Ultimately, the Legalist
approach was brought to mitigate these problems during the 1990’s. The emergence of the
Legalist approach was necessary for China’s new economic landscape and international
cooperation. As a result, private companies and joint ventures that sprung from the Open Door
Policy are more likely to use this “institutionalist approach” (Wang & Chee 2011: 43).
This framework has the potential to lead to positive impacts for labour conditions depending
on regulations and laws. The labour laws in China are thus paramount in analysing whether this
approach has positive or negative consequences for employees. This research paper will analyse
China’s labour laws to identify whether the regulations set up have the potential to lead to
satisfactory labour conditions. The rigidity of this approach and no-nonsense environment is
popular for companies since it increases the efficiency of production, however that is not to say
that the conditions of this efficiency are ideal for the workers.

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Knowledge Gap & Modified Theoretical Framework
Theoretically, the Humane approach and Legalist approach should lead to different labour
condition outcomes due to their different tenants. Taking Wang & Chee’s theory into
consideration, this research paper will aim to fill the knowledge gap of whether there are
different labour condition outcomes by analysing both qualitative and quantitative data. By
aiming to fill this knowledge gap, the theoretical framework of this research study is modified
and completed as follows:
Figure 2.4 Modified Theoretical Framework for this Study
3. Background and Significance
My research takes its historical point of departure in 1978 with the implementation of China’s
Open Door Policy (Huan: 1986; Yeung & Sung: 1996). This policy was an incredible overhaul
of China’s development strategy – turning their self-sufficient and inward strategy into one of
active participation in the global economy. This was a pivotal point wherein China’s economy
adopted Western ideals of progress. Prior to this date, China had undertaken the process of
adapting to foreign ideas in terms of technology and science. The “Zhong xue wei ti, xi xue wei
yong” (“Chinese ethical knowledge as the foundation, Western knowledge and technology for
practical application") (Tang, 2015: 70) strategy of the mid-nineteenth century, chose to adopt
foreign technology and science whilst keeping the traditional cultural values, political
Public Firm Private Firm
Humane Legalist
Wang & Chee,
2011
Labour
Conditions
A
Labour
Conditions
B
Knowledge
gap to be
filled by this
research
paper

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institution and economic system. This is a recurrent theme throughout Chinese history: the
need to evolve, conflicting with the desire to maintain tradition – a theme also evident in
the discussion of management approaches in Chinese firms. Traditional values are very much
embedded in the Chinese way of life, from politics and economics, to the family unit and
personal relationships. It is due to this embedded structure that the adoption of foreign ideals
faces opposition no matter in what manner the change hopes to manifest itself (Huan: 1986).
During the 1980’s, China’s national economy underwent expansion in regards to the urban
industrial and commercial sectors, along with a more lenient pricing system which promoted
the development of private sectors. The focus on greater autonomy within private enterprises
prompted the ability for the Chinese economy to reduce the institutional gap between
themselves and other market economies. Decision making of how, how much and what to
produce was left to enterprises. Most significantly, China adopted a strategy based on foreign
trade – meaning that emphasis was put on finding its own comparative advantage in the world
economy. As a result, the private sector boomed in China throughout the 1980’s and into the
21st
Century. An appreciation for this structural change is paramount for this paper’s research
question, considering that it is due to this change that the Humane management approach began
to slowly be replaced – albeit, not completely – with the Legalist system. The change from a
centralized and traditional economic system to a liberal one has direct ideological implications
for the management approaches within this new system. (Hsu: 1990)
Although this ideological transition was caused by the need for economic reform, its
consequences reached beyond the markets and spilled over into the political institutions of
China. Political change came in the form of a decentralized decision-making system and a
certain level of reformed official ideology (Huan, 1986). The Post-Mao regime were, moreover,
realistic in their approach to its relations with Hong Kong and Taiwan, which resulted in
enterprises with joint ventures and funding from these regions. Hong Kong kept their capitalist
system, whilst Taiwan underwent a reunification: both processes aiding to the cooperation of
all three economies. It was also at this point that government officials were “replaced by better-
educated, younger and more open-minded people” (Huan, 1986: 56). This transition of people
and policy mirrors the transition that was occurring with management ideology in China.

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State Owned Enterprise (SOE) Reform
An open market strategy led to a great deal of privatization. By the 1990’s and even more-so
by the 2000’s, a large part of firms existing in China had become private – either from the
creation of new private firms or the consequential privatization of SOEs that occurred during
the decentralization of the economy. This had a direct impact on China’s labour force and their
resulting labour conditions.
During the massive restructuring of SOEs (gaizhi1
), layoffs took place to “save the large, let go
of the small” (Yueh, 2013: 4). Layoffs were buffered by extended welfare services such as
medical services, along with a payment plan to help employees transition into new jobs.
Gradually, more people were employed in private firms, bringing down the number of SOEs
from 10 million in 1994 to 162,000 in 2000 (Yueh: 2013). The move from agriculture to
industry also created a massive migration movement from rural to urban. This transition has
been uneven in China, with rural areas falling behind the blossoming of urban areas. This is
seen in China’s income per capita figures, which, compared to national economic growth,
reflect a less positive picture. (Xia: 2014).
Changes in Labour
In the centralized system prior to 1978, labour was controlled and administered by the
government; this included centrally determined wages and a comprehensive package of
employment benefits. “The Iron Rice Bowl” concept existed wherein employees were
guaranteed life time employment by the state. All this, of course, had to be changed with the
restructuring of the market and types of employers (Yueh, 2013). Labour reforms came in the
form of wage liberalization, leading to productive characteristics such as education and skill-
set, determining wages. This not only increased competition within the labour market, but also
created greater incentives and increased job mobility (Yueh, 2013). This return on productive
characteristics such as education is reflected in educational statistics, illustrated in figure 3.0.
With the need for better productive characteristics, enrolment in secondary education rose
tremendously since 1991. The relationship between education and labour is a prime example of
1
China introduced a system of privatizing SOE’s in which business actors could buy out their firms at a price
that was based on recent profitability (Lu and Dranove, 2013).

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the shifts in ideologies that occurred with the opening of China’s economy. The post-Mao
government implemented educational reform policies in the 1980’s in an effort to increase
competitiveness with foreign markets (Ngok, 2007). Education was seen as a necessary
attribute not only for employability inside China, but also in terms of economic competitiveness
with other nations. This example of the changing perception of education, supports the
argument that with privatization, came the introduction of Legalist management in China -
emphasizing that success must be skill-based.
Figure 3.0 Enrolment in Secondary Education, Both Sexes (Number), (The World Bank, n.d.)
As a result of the changes caused by the combination of labour reforms and SOE reforms, labour
productivity in China increased sevenfold in the period between 1978 to 1990, and has
continued to increase (Yueh, 2013). All this is of great relevance to the realm of development
since these economic changes had an influence on the well-being of Chinese employees. It is a
common argument that China’s economic growth was heavily based on the successful factor
reallocation of labour. Labour has, over the years, become China’s comparative advantage in
terms of global trade. The factors determining increased labour productivity in China have not
been conclusively studied, however there is a positive correlation between exports and labour
productivity founded by Kraay (2006). The movement of labour out of agriculture and into
industrial sectors has also been founded to be a great source for allocative efficiency (Yueh,
2013). Ultimately, labour was affected by sectoral shifts between state to private and agriculture
to industry. This resulted in a new labour landscape: more people employed in industrial,
private firms. With this new dynamic comes the question of how traditional values and
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2011
2012
2013
Enrolment in secondary education, both sexes (number) Amount

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management approaches were changed by the decentralization of institutions, and most
importantly, how these managerial changes affected labour conditions for employees.
4. Literature Review
There is an abundance of literature regarding Confucianism in Chinese businesses, Legalist
management and labour conditions. There has not been extensive research however, on the link
between these different management styles and the subsequent labour conditions. The
knowledge gap I therefore aim to fill with this research, is the exploration of how labour
conditions differ between the traditional management approach (Humane) compared to the
more modernized approach (Legalist). Before delving into the analysis however, the foundation
must be made. In this foundation, I will use previous research on Chinese businesses and
Confucianism, as well as the emergence of the Legalist system within China. Lastly, this section
will include a short discussion of the significant debates within the topic of labour conditions
in China.
Confucianism within Chinese Businesses
Confucianism has been an integral part of Chinese culture for roughly two thousand years. As
Marx saw it, China’s philosophical traditions based on Confucianism has created its identity as
we know it today (Meissner: 2006). In Confucianism, harmony is the basis of good guanxi2
–
the vital aspect of all relationships (Leung: 2011). These relationships are based on hierarchies
represented in figure 2.2. and apply to business settings as much as personal dynamics. These
relationships are the basis of the Confucian way – they seemingly go beyond formal rules,
which creates a clash between the Humane and Legalist management approaches.
Li and Moreira’s paper, “The Influence of Confucianism and Buddhism on Chinese Business”
(2009) is an excellent source of empirical data regarding the perpetuation of Confucianism
within modern Chinese firms. They present Chinese business managers in China, as well as
overseas, who use Confucian values in everyday proceedings. According to the study, Chinese
2
Guanxi is defined as “the system of social networks and influential relationships which facilitate business
and other dealings” (“Guanxi”, n.d.)

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firms believed the most effective ways of communicating are building long-term connections
and paying attention to harmony. This supports the important cultural values in the Chinese
economy, which their firm survey showed to be: interpersonal harmony, trust, collectivism and
guanxi. Their study explores in detail, how Confucianism has contributed to business behaviour
– what is clear is the fact that these Confucian beliefs have persisted in modern day firms.
Confucianism was suppressed during the Cultural Revolution, but Li and Moreira’s study
illustrates the resurgence of Confucian values in China. A survey done by Liu Zhongy in 2005,
founded that 62% of correspondents between the ages of 16 and 39 had the same beliefs as the
same group two decades prior. Li and Moreira expound on this finding by highlighting the
recent promotion of religion and spirituality in sectors of public life. They propose that there is
a growing trend of incorporating religion in business (i.e. “Confucian Merchants”3).
The survey
and research conveys the strong, and arguably strengthening, relationship between spiritual and
material life in China (Li and Moreira, 2009). Li and Moreira’s research is divided into two
categories: Chinese business in China and Chinese business/merchants abroad. Both categories
hold the notion that guanxi is a determinant of a successful business.
In regards to Chinese firms within the mainland, a survey of 288 participants from various firms
in China was undertaken (Li and Moreira, 2009). The surveys were classified by location,
profile, and type of ownership. The main findings are shown in figure 4.0. The graph represents
the effective ways of communicating, which shows that 69.8% of people believed that building
long term connections (guanxi) was paramount – a main characteristic of Confucianism. Figure
4.1 presents what contributions Confucianism and Buddhism have made to Chinese business
environments, as believed by employees. Unsurprisingly, the common attributes of both
religions are well represented in the results. The research also found that 81% of respondents
had an educational achievement of a bachelor level or higher. For the purpose of this paper’s
research, this is a positive finding in the discussion of the increasing importance of productive
characteristics in an increasingly Legalist landscape.

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3
The term rushang (Confucian merchant) and ruguguang (Confucian mercantile outlook) has been used in
the Chinese language dating back to the Ming and Qing dynasty. The implication of these terms is that
additional to a man’s business involvement, he is also a man of Confucian education (Zurndorfer, 2004).
Figure 4.0 Effective Ways of Communicating (Li and Moreira, 2009)
Figure 4.1 The Contributions of Confucianism and Buddhism (Li and Moreira, 2009)

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The People’s Republic of China has been ruled by a strong communist regime since 1949, and
its communist past still lingers in the business behaviour of employees. In regards to employees
of SOE’s, business drive and motivations differ greatly from Western ideals. The primary
interest of people in state owned firms is usually the benefit of the organization rather than
themselves as an individual. Personal gain is not a motivating factor considering that Chinese
employees of SOE’s rarely benefit from commissions, salary raises and promotions (Hung:
1994). Employees in such a setting furthermore do not see projects as short-term. Compared to
Western counterparts, they do not face stringent deadlines based on achieving a specific sales
volume, market share or profit, since there is a sense of security for a firm to be state owned.
The ultimate goal of state owned firms is national development – in turn, the individual
employees take on this goal as their general motivation. Chinese employees working in private
firms have a more self-interested view which motivates their decisions. The entrepreneurial
spirit is much stronger in these types of firms, since willingness and initiative can directly result
in personal gain (Hung: 1994).
In Ma et. al.’s paper “Confucian Ideal Personality and Chinese Business Negotiation Styles:
An Indigenous Perspective” (2015), supportive evidence was found that showed that
benevolence and courage were necessary in Chinese business negotiations. Specifically, in
instances of negotiations between Westerners and Chinese, these two attributes were found to

19. 19
be vital, but wisdom, not as paramount. The results of the paper supported the influence of
Confucianism in Chinese business style. Negotiating with Chinese firms can be difficult for
foreign businesses, and this Sino-West challenge has been an identifiable characteristic of such
processes. In Chinese firms, high intelligence must be combined with a strong grasp of
emotional skills and cultural intelligence, as found by Ma et. al. (2015).
The Legalist Approach and Labour Conditions in China
The Legalist management approach is substantiated by literature and historical evidence that
has been aforementioned in this paper’s background and significance section as well as
theoretical framework section. Compared to the ideological roots of the Humane approach in
Confucianism, Legalism came about through pressures from foreign actors and historical
events. As discussed, when China opened up their markets to international bodies, there was an
increased pressure to form a stronger legal framework. With the introduction of foreign
investment and business into China came the inevitable influence of Western ideals, which has
resulted in the use of the Legalist approach.
China’s comparative advantage in the world economy is founded in its labour force. China’s
labour is relatively cheap and thus production costs are consequently kept low (Chun, 2003).
This advantage however, has implications for labour standards and conditions. Working
conditions in China have been greatly criticized, from small family businesses all the way up
to large foreign-owned MNC’s who utilize Chinese production lines.
International companies for example, use China’s cheap labour to their advantage. High-profile
companies that undergo such a strategy include Apple, Hewlett-Packard and Sony. Foxconn is
a prime example of these manufacturing companies who have been highly criticized for their
poor working conditions. Foxconn’s controversy came to its peak in 2010 when 13 employees
attempted suicide due to the plight of working in such conditions (Lucas: 2013). Foxconn is a
large company that hires more than 600,000 people on fixed-term contracts with a duration of
2 to 3 years. Depending on satisfactory performance, this contract has the potential to be
renewed. The job insecurity that this system creates is one of the points of criticism Foxconn,
and companies alike, face. Investigations carried out about the company revealed that there was
a general feeling of frustration and misery amongst the workers caused by low wages,
deprivation of benefits, being overworked and poor conditions (Lucas: 2013). The management

20. 20
style was described to be “military-like” (Lucas: 2013) – a high level of security existed in the
work areas wherein guards disciplined and controlled employees while they work. Abuse and
violence were furthermore, standard practice by supervisors.
With the increased privatization of China’s economy and the strategy of using labour as its
comparative advantage, it is of paramount importance to investigate how these changes in the
market affected management approaches and labour conditions. Evident through previous
research, there have been detrimental effects for the labour conditions experienced by China’s
employees. This research paper will explore these effects in private and public firms.
5. Methodology
This research will utilize a mixed methods approach. The basic mechanism of this research will
be to test out Wang & Chee’s middle-range theory (2011) with real world empirical data. The
research aims to draw inferences from testing out this middle-range theory, which is defined by
Bryman (2013) as a theory that operates in a limited domain. The domain of Wang & Chee’s
theory is specifically management within Chinese firms and Chinese culture. As this research
begins with an already established theory, it is naturally of a deductive manner. In terms of the
quantitative methods, the paper will include analysis of secondary data such as national
statistics and previous works. A majority of the quantitative data will be gathered from the
National Bureau of Statistics of China’s annual findings (Annual Report, 2015). The data will
focus on urban areas, since this is where the stark transition into privatization is most evident,
as well as where a majority of people are employed. The database has a collection spanning
from 1996 up till 2014, however some of the data sets are incomplete. In some instances, there
are individual years missing, and in others, the bureau had altogether stopped gathering data for
a certain indicator - for reasons unspecified. The analysis portion of this paper will illustrate the
statistics through graphs, as best as possible with the available data. The indicators that will be
utilized are as follows:
1. Average Wage of Employed Persons in Urban Units by Status of Registration
2. Total wage bill

21. 21
3. Proportion of women employed
4. Number of Employed Persons at Year-end in Urban areas
5. Average wage of various job positions within a firm4
6. Average age of employees of various job positions within a firm4
7. Average years of education of employees of various job positions within a firm4
4
This data is only available for 1994. Due to these circumstances, the data must thoroughly be placed into
the specific context of this year during the analysis; taking into consideration when China’s open door policy
began. Depending on what the data shows, there is still potential to discuss the theoretical framework of this
research paper within the realities of this specific year.
Indicators 1-4 will illustrate the different labour condition outcomes in private versus public
owned firms. Indicators 5-7 however, will be used to see whether Wang and Chee’s assumption
that private firms mainly use the Legalist approach and public firms the Humane approach, is
valid. This is possible due to the fact that if one type of firm predominantly uses one of these
approaches, and the other uses a different one, we should be able to observe differences in the
characteristics of their employees. Ideally, these characteristics will match those of the Humane
and Legalist approach, if Wang and Chee’s theory is to be validated. For example, taking into
consideration the emphasis on productive characteristics with the Legalist approach, we
theoretically should see a higher level of education in the employees of a private firm, given
that they produce similar things or offer similar services. Another example is that since age is
a decisive factor for authority and hierarchy in the Humane approach, we theoretically should
find older employees in positions of power at public firms compared to private firms.
To expand on the aforementioned statistical figures, annual pensions and medical insurance
benefits will be discussed in a more descriptive manner.
In terms of qualitative analysis, a comparative document analysis of China’s Labour Law
Contracts of 1994 and 2008 will be done – a vital step considering the Legalist management
approach is based on a functioning and legitimate legal system. The document analysis aims to
explore the differences in laws as well as differences in where the responsibilities lay between
employee and employer.

22. 22
Following this will be a case study analysis of recent reports from China’s most extensive
labour watch agency: China Labour Watch.
Limitations of the methodology
There are apparent limitations to this approach. Firstly, definitions of key terms may have
evolved over the 18 years that the bureau has been collecting the data. For the purpose of this
research paper however, the official definitions currently in place on the database will be taken
into consideration. There is also the issue of how reliable the statistics are due to their origin.
The National Bureau of Statistics of China is an entity that is directly under the State Council
– focusing on the statistical and economic accounting within China. Understandably, there are
questions of how accurate these statistics are, especially when there is no autonomous agency
with data that can be used for comparison. Furthermore, the indicators may reveal the effects
of unobserved factors – for example, the age of employees in private firms may be younger due
to the fact that private firms are a relatively new concept in China compared to state-owned
firms, and not due to the Legalist management approach. In terms of indicators 5-7 being
limited to the year 1994, any interpretations must be done with caution and take into account
this very limited time frame. Regarding the qualitative data, case study selection was found to
be limited, and thus, comparisons made may not be to the specific standards of the “most similar
case study” design (Bryman, 2013). Due to these limitations, the paper aims to use the
quantitative data to observe workforce trends and labour condition patterns with a consideration
for the subtlety of its reliability and validity. To expound on these patterns, the research will
move on to qualitative analysis wherein a more detailed and descriptive exploration can take
place. Due to the limitations, this research does not aim to conclude with a clear causal
relationship between management, ownership and labour conditions. Instead, by providing a
descriptive and detailed analysis of the currently available data regarding the relationship
between management, ownership and labour conditions in China, this research aims to act as
the first stepping stone for further and more thorough research.
6. Quantitative Data: Annual Statistics

23. 23
National Bureau of Statistics of China
This section will present and describe the data available from the National Bureau of Statistics
of China. Certain data sets are simplified with a category titled “Units of other Ownership”
whilst others are set out in detail into the following categories: Cooperative units, joint
ownership units, limited liability corporations, shareholding corporations, private enterprises,
units with funds from Hong Kong, Macao and Taiwan, and self-employed individuals. Due to
the simplification, although it is still significant to observe the differences between the three
categories, a deeper analysis of the data may be implausible in the sense that one cannot
conclusively differentiate completely state-owned from privately owned.
Figure 6.0 shows the number of persons employed in urban. For much of the period since 1978,
state owned enterprises employed the most persons in urban units and was only overtaken by
private enterprises in 2011. During the period of 1978 to 1998, state owned enterprises
employed on average, four times more than any other ownership type firm. By 1998 however,
the number of state employees began to decline – possibly explained by the 5
Chinese
Communist Party’s 15th
Congress of September 1997. Urban collective owned units employed
much less people than state firms, however took on the same pattern of decline beginning in
1998. Collective ownership is a concept tied to communal cooperation and socialism, which
explains the decline of popularity once an emphasis on privatization was put in place by the
government. Private enterprises essentially started with a miniscule number of employees
relative to state firms in 1978, only to overtake by 2011. This massive increase shows the extent
and success of China’s privatization strategy. Similarly, limited liability corporations and self-
employed individuals saw an increase beginning in the mid 1990’s.
Figure 6.1 represents the average wage of employees. Foreign funded firms paid its employees
more than all other categories until 2013 when share-holding corporations overtook. Although
it is possible for governments to buy shares in a share-holding corporation, the management
and running of such a corporation is decided by the board of directors and executive
management team (“Share holder”, n.d.). Since the focus of this research paper is the
management approach of a type of firm, shared-holding corporations will thus be considered
private. Units with funds from Hong Kong, Macau and Taiwan increased its wages relatively
more than the other categories, excluding the shareholding corporations. Since the Open Door
Policy, China has been encouraging FDI to a successful extent. In 1999, the amount of foreign

24. 24
capital invested into China was at US305.99 billion – the overseas Chinese communities of
Hong Kong, Macau and Taiwan have been China’s largest source of FDI up to this day (Huang,
2004). It is explainable then, how these overseas Chinese communities have become a great
source of income for many of mainland China’s employees. The general trend throughout all
categories is ultimately upwards however, with private enterprises currently leading the pack.
5
The Chinese Communist Party’s 15th
Congress of September 1997 in which the privatization of large SOEs
and the restructuring of smaller SOEs was emphasized as a top priority (Demurger et al, 2012).

25. 25
Figure 6.0 Number of Employed Persons in Urban Units (Annual Report, 2015)
0
2000
4000
6000
8000
10000
12000
People (10,000)
Year
Number of Employed Persons in Urban Units
State-owned Units
Urban Collective-owned Units
Cooperative Units
Joint Ownership Units
Limited Liability Corporations
Share-holding Corporations Ltd.
Private Enterprises
Units with Funds from Hong Kong, Macao
& Taiwan
Foreign Funded Units
Self-employed Individuals

26. 26
Figure 6.1 Average Wage of Employed Persons in Urban Units by Status of Registration (Yuan) (Annual
Report, 2015)
0
10000
20000
30000
40000
50000
60000
70000
1995199619971998199920002001200220032004200520062007200820092010201120122013
Yuan
Year
Average Wage of Employed Persons in Urban Units by Status of Registration (yuan)
State-owned Units
Urban-collective owned units
Cooperative units
Joint ownership units
Limited Liability Corporations
Share holding corporations Ltd.
Others
Units with funds from Hong Kong,
Macau, Taiwan
Foreign funded units

27. 27
Figure 6.2 Total Wage Bill of Employed Persons in Urban Units and Related Indices (Annual Report,
2015)
Figure 6.2 shows that units of other ownership have persistently had a higher rate of increase
for the total wage bill of employees in comparison to state owned and urban collective owned
firms. The difference between the three categories is most profound in 1998, when both state
owned and urban-collective firms declined to a significant degree, whilst units of other
ownership increased sharply from 124 to 156. A possible explanation to why this prominent
change occurred could be the Chinese Communist Party’s 15th
Congress of September 1997 in
which the privatization of large SOEs and the restructuring of smaller SOEs was emphasized
as a top priority (Demurger et al, 2012). It was also acknowledged that the private sector and a
strong legal framework were vital for China’s future economic success. As a direct result, there
was a massive reallocation of labour from the public sector into the private sector. Thus, the
decline of total wage bill for SOEs and urban-collective owned firms could be due to the
movement of labour into the private sector as well as the privatization of SOEs.
Figure 6.3 illustrates the proportion of female formal employees. Evidently, state owned firms
kept a roughly steady proportion throughout the period between 1995 and 2002. In 1995 the
proportion of female formal employees in state owned firms was 36.1% and 36.7% by 2002,
with slight variations in between. Alternatively, both urban collective owned units and other
ownership units hired less women over time. Other ownership units had the most drastic
decrease, from 48.3% in 1995 to 40.4% in 2002. To put this into context, figure 6.4 illustrates
the ratio from 1995 to 2013. The graph shows that between 1995 and 1999 there were minor
shifts in the sex ratio, which does not explain the reason for the decline in women hired by firms
0
20
40
60
80
100
120
140
160
180
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Indices (previous year = 100)
Year
Total Wage Bill of Employed Persons in Urban Units and Related Indices
State Owned
Urban-collective
owned units
Units of other
ownership

28. 28
of other ownerships. It is interesting that the period of 1995 to 1999 is the period of most
stability in terms of sex ratio, and yet the proportion of women employed by units of other
ownership declined the fastest. After the year 2000, the sex ratio declined, which may have
enhanced the decline in women employed – although this still begs the question of why state
owned firms were able to maintain a steady proportion whilst firms of other ownerships were
not.
Figure 6.3 Proportion of Female Formal Employees by Ownership (Annual Report, 2015)
Figure 6.4 Sex Ration (Annual Report, 2015)
Figure 6.5 illustrates the average wage differentials between a division chief (manager), section
chief and office staff member. Unsurprisingly, employees are paid a higher wage in private
enterprises than in government-owned firms. However, the difference in wage between a low
0
10
20
30
40
50
60
1995 1997 1998 1999 2000 2001 2002
Total formal employees (100% unit)
Year
Proportion of female formal employees by ownership
State-owned Units
Urban Collective-owned units
Other ownership units
103,67
103,83
103,51
103,86
106,74
106,3
104,31
103,45
102,19
102,71
102,86
103,13
103,27
105,2
105,17
105,12
105,22
99
100
101
102
103
104
105
106
107
108
1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2007 2008 2009 2010 2011 2012 2013
Years
Sex Ratio

29. 29
ranking employee (office staff) and high ranking employee (division chief) is greater in public
firms.
Figure 6.6 represents the average years of education of the employees. Although the differences
are very small, the employees in public firms have, on average, more years of education than
in private firms.
Lastly, in figure 6.7, the average age of employees in each job type is displayed. The results are
varied, with civil servants being older on all rankings except the lowest (office staff).
Figure 6.5 Average Wage (Yuan), (Annual Report, 2015)
Figure 6.6 Average Education (Years), (Annual Report, 2015)
8283
6452
5338
8718
7540
6185
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Division Chief Section Chief Office Staff
Average Wage (Yuan)
Civil Servant
Personnel in
Enterprise
12,7
11,8 11,8
12,1
11,2
11
10
10,5
11
11,5
12
12,5
13
Division Chief Section Chief Office Staff
Average Education (Years)
Civil Servant
Personnel in
Enterprise

30. 30
Figure 6.7 Average Age (Years), (Annual Report, 2015)
Quantitative Analysis
The quantitative data provided by the National Bureau of Statistics of China paints a rather
varied picture of the labour conditions in China. When applying Wang & Chee’s theory upon
the data, it is uncertain whether the data points to a conclusive answer of which type of
management approach is better for a Chinese employee – or whether Wang & Chee’s theory is
even supported by the empirical data. When analysing total wage bill, it is evident that firms of
“other” ownership spend more on employees than state owned or urban-collective owned firms
– which is magnified considering that up till 2011, state owned firms employed more people
than private firms. This is further corroborated by the average wage figures. In all years of
available data, private firms – or privately affiliated firms – paid employees a greater wage than
public firms. Thus, when observing wage figures, it is clear that on average, an employee has a
higher likelihood of being paid more at a private firm.
In regards to opportunities for women, firms of other ownerships began to gradually decrease
the proportion of women being hired between 1995 and 2002. Considering the limitations of
the data set only ranging from 1995 to 2002, it is uncertain whether the pattern continued into
later years. What can be observed however, is as the proportion of women employed by private
firms decreased, state owned firms remained at a steady level.
50,8
48,6
35
49,2 48,2
42,2
0
10
20
30
40
50
60
Division Chief Section Chief Office Staff
Average Age (Years)
Civil Servant
Personnel in
Enterprise

31. 31
Although the fact that the average educational years are higher in public firms, the margin of
difference is less than 0.8 years, which realistically means that public and private employees
have the same amount of educational years. When analysing the average age of employees in
different positions however, civil servants are shown to be older, except for office staff
members. The greater difference in age within public firms, does reflect the strong hierarchical
nature of Confucian thinking. Ultimately, out of the three indicators (wage, education and age),
Wang and Chee’s theory holds up in two out of the three categories (wage and age), whilst the
third (educational years) is left inconclusive due to the difference being too small. Thus,
although the empirical evidence supports Wang and Chee’s theory, any conclusion drawn
should be done with caution and be supplemented by a great deal of further research.
The discussion of indicators 5-7, which analyses the validity of Wang and Chee’s theory, is
summarized in table figure 6.8. The table compares the expected result based on Wang and
Chee’s theory to the actual result.
Figure 6.8 Summary of figures 6.5, 6.6 and 6.7
Attribute Private Firm Public Firm
Expected Result Actual Result Expected Result Actual Result
Average Wage Higher ranking
personnel are
paid more the
higher they are
on the corporate
ladder. On
average, wages
should be
higher than in
public firms due
to profit-driven
culture
Higher wages
for high-ranking
personnel, and
higher wages in
private firms
compared to
public firms on
all levels
Due to the
older-younger
hierarchy being
important in the
Humane
approach,
wages are
expected to
increase the
older an
employee is
On average,
managers are
older and are
paid a higher
wage compared
to lower ranking
workers
Average
Education in
years
Productive
characteristics
are rewarded in
private firms,
thus higher
ranking
personnel
should have
more years of
education. On
average, private
employees
should have
Managers do
have higher
years of
education,
however on
average, private
employees have
slightly less
years of
education than
civil servants
Education
should not have
large
differentials
between ranks
and in general
should be lower
than in private
firms
Education levels
are higher in
public firms
than private
firms on all
levels

32. 32
more years of
education than
civil servants.
Average age Age should not
matter as much
between
rankings
The difference
between the
average office
staff and
manager is only
7 years – much
less than public
employees
The age of
higher ranking
personnel
should be
noticeably more
than lower
ranking workers
The difference
between office
staff and
manager is
more than 15
years –
noticeably
greater than in
private firms
*Boxes are shaded green when expected and actual results match
In regards to social welfare indicators, annual pension figures and medical insurance benefits
paint a dim picture. In the 2015 Annual Human Resources and Social Security Statistical
Bulletin (Ministry of Human Resources and Social Security: 2016a), the government published
figures showing that only 262 million workers received a basic pension from employers.
China’s total workforce for 2015 was around 780 million, out of which 357 million received
government supported pensions. A similar phenomenon occurs in terms of medical insurance.
In 2015, only around 200 million labourers received medical insurance from their employers
(Ministry of Human Resources and Social Security: 2016b). In recent years, China has begun
to reduce the responsibilities of pensions and medical insurance on private enterprise
employers. In April of this year, the Ministry of Human Resources and Social Security
emphasised that to support the success of enterprises, there would be a reduction of social
insurance contributions from employers – Beijing has already reduced their regulatory amount
that employers must contribute to pensions by 1% since April (Ministry of Human Resources
and Social Security: 2016b). The result is that burden is placed on individuals and government
forces. The issue with this, is that there is a gap between pensions provided by employers and
those provided by other means. The average annual pension for retirees receiving employer-
based pay-outs was 28,363 yuan (Ministry of Human Resources and Social Security: 2016b)
whilst retirees receiving pensions from other means had an average annual pay-out of 1,432
yuan.

33. 33
7. Qualitative Data: Labour Law Contracts and Case Study
Analysis
This section will discuss the findings of a qualitative content analysis of China’s Labour Law
Contracts of 1994 and 2008, as well as various labour watch reports regarding indecent working
conditions.
Labour Law Contracts of 1994 and 2008
Due to the increased economic cooperation between China and other nations that resulted from
the Open Door Policy of 1978, there was a need for an improved legal framework to protect
workers and regulate firms. The labour law contract of 1994 (Lex Mercatoria, n.d.)
acknowledges the existence of China’s then-new private sector, with different articles placing
responsibility on not only the State, but individual enterprises. The contract places
responsibility on all types of firms – from state-owned, private and joint ventures, to foreign
funded – and discusses issues such as workers’ rights, collective contracts, health, safety and
training (Warner, 1996).
There is undoubtedly a redundancy to some articles, which is emphasized when comparing the
1994 law to the modified labour law contract of 2008 (Npc.gov.cn, n.d.). One example is that
although there is a general understanding that all types of firms are addressed in the 1994
contract, nowhere is this actually stipulated. Already in the second article of the 2008 contract,
the distinction is clear: “This Law is applicable where organization such as enterprises, self-
employed economic organizations and private non-enterprises units within the territory of the
People Republic of China… establish labour relationships”, followed by an inclusion of “state
organs, institutions and public organizations” (Npc.gov.cn, n.d.). This general pattern can be
seen in the body of both laws: the 2008 law expounds much more on who exactly is responsible
for what. It can be assumed then, that the vagueness of the 1994 law created loop holes and
issues in the 14 years it was enacted.
Through coding the two documents, it is possible to see whether the laws emphasize the role of
the state more than firms, and whether more responsibility is placed upon the employee or
employer. In the 1994 law, much is said about what employees should have, but not specifically
who is responsible for providing these rights. There is a lack of targeting employers and their

34. 34
duties towards employees. This is improved in the 2008 Law wherein detailed instructions are
set out in all aspects of work – from closing contracts, providing benefits, paying wages, to
labour disputes and compensations. The most significant finding for the purpose of this research
study however, is that in both laws, there is no distinction between state-owned or privately-
owned firms – meaning that all laws equally apply to firms no matter what the ownership type.
The laws are also phrased in a way that allows room for negotiation between employer and
employee, which is a strategy continuously used by China and described as the “autonomous
consultation by both parties and regulated by the government according to the law”
(Information Office of the State Council of the People’s Republic of China, 2004: 16). Taking
all this into account, China’s labour law framework is not shaped in a way that would
directly lead to differences in labour conditions of firms of varying ownerships. However,
Lan, et. al. (2015) found in their study, which explores the effects of the Labour Law Contract
of 2008, that despite the universal application of the laws, there has been varying results
amongst firms of different ownerships.
In terms of SOE’s, there has been a mixed bag of consequences. Prior to the Labour Law
Contracts of 1994 and 2008, workers employed by SOE’s received a great deal of social benefits
which were subsequently decreased through the new Labour Laws (Lan, et. al., 2015). In the
1990’s, public sector workers generally earned more than private sector workers, however this
gap has decreased over time. The earning gaps across all ownership types has been converging
since the mid-2000’s and has transitioned into favouring private and semi-public companies
(Demurger et al, 2012). This is a stark contrast to the 1990’s wherein public firms had a
privileged position over private firms.
Labour Watch Reports: Private Firms
To add a well-rounded and thorough analysis to this paper, this section will conduct case study
analyses of the most high-profile and extensive reports carried out by the China Labour Watch
agency and the Human Rights Watch. China Labour Watch is a non-governmental organization
aiming to “increase transparency of supply chains and factory labour conditions, advocate for
workers’ rights, and support the Chinese labour movement” (chinalaborwatch.org: 2016 )
This section will be divided into two parts, the first part will explore and analyse conditions in
private firms of Chinese and foreign ownership, the second will conduct the same analysis on

35. 35
Chinese SOE’s within and outside China. These companies are summarized in the tables below
(China Labour Watch and Solidar Suisse, 2016).
Figure 7.0 Private Company Case-Study Profiles
Private Companies
Name Ownership Type
and Location
Size Industry
Xinhui Ri Xing
Stainless Steel
Products
Joint Venture
between Macao and
Japan, located in
Jiangmen City,
Guangdong Province
More than 1000
employees
Kitchenware
Three A Stainless
Steel Products
Began as an SOE in
1984 and was
privatized 1999,
located in
Guangdong province
1400 employees Cookware
manufacturer
Xiangfeng Stainless
Steel Manufactured
Products (Linkfair)
Chinese firm, located
in Guangdong
investments from US
and Hong Kong)
2300 employees Cookware
manufacturer
Guangdong Master
Group Stainless
Steel Company
Hong Kong owned,
located in
Guangdong province
More than 1000
employees
Kitchenware
Anotech
International
Kitchenware
Company
Hong Kong owned,
located in
Guangdong province
600 employees Kitchenware
Pegatron Taiwanese owned,
factory located
outside of Shanghai
80,000 employees Electronics
manufacturing

36. 36
Figure 7.1 Public Company Case-Study Profiles
Public Companies
Name Ownership Type
and Location
Size Industry
HEG Technology Chinese state
controlled
firm located
in
Guangdong
15,000 employees EMS supplier
China Non-Ferrous
Metals Mining
Corporation
(CNMC)
Government-
controlled
company in
Zambia
6,000 employees Copper mining
The five companies dealing with Cookware and Kitchenware (Xinhui Ri Xing, Three A
Stainless Steel Products, Xiangfeng/Linkfair, Guangdong master Group, and Anotech
International) were chosen due to the extensive research done on them by China Labour
Watch’s detailed 73-page report entitled “Dirty Frying Pans” which was published in February
of 2016. It was found that all five of these companies manufactured products for internationally
renowned brands such as IKEA, Walmart, Macy’s, Carrefour and Cuisine Sante International
(China Labour Watch and Solidar Suisse, 2016). IKEA’s 365+ line of frying pans for example,
were produced in these factories where an employee earned up to 0.14USD for each pan, which
is a meagre 0.7% of the market price (China Labour Watch and Solidar Suisse, 2016). The
following section will give examples of the issues found during the CLW and Solidar Suisse
investigation of these companies. Many of these issues were common amongst many – if not
all – the companies.
At Xinhui Ri Xing, job applicants are made to pay a 63.5 RMB (10.23 USD) exam fee for a
written test and medical test to be eligible as an employee. Falsified contracts and forms are
also common practices. Despite not receiving any training, employees are made to sign forms
establishing that they have. Most shockingly however, is that if applicants are hired, they are
made to sign labour contracts with details such as contract length, wages, hours, work content
and location left blank for the employer to fill afterwards (China Labour Watch and Solidar
Suisse, 2016). These contracts typically include a 49-hour workweek, out of which, 9 hours of

37. 37
overtime. No minimum wage is paid and a piece-rate wage system is used. Occupational safety
is also a point of much contention. Masks and gloves are not worn by workers who use industrial
alcohol, welders do not have any eye protection, ventilation is poor, and no medical kits are
available (China Labour Watch and Solidar Suisse, 2016). Workers end up paying various
unforeseen fees, including insurance which is bought by the company on an employee’s second
month. Other fees include fines for unsatisfactory work, daily food and medical check-ups
(China Labour Watch and Solidar Suisse, 2016). Audit fraud was also recorded by CLW and
Solidar Suisse: in one instance Xinhui Ri Xing paid 966 USD to pass an inspection in March
of 2016.
The four other cookware companies treat their workers in a similar fashion. Three A Stainless
Steel Products, for example, do not provide workers with days off, therefore any days that
employees do not work, go unpaid. Due to the low minimum wage in the city the factory is
located in, wages are low and workers rarely decide to take unpaid leaves. Absolutely no
overtime pay is provided and wages are calculated on a piece-rate basis (China Labour Watch
and Solidar Suisse, 2016). Social insurance is not provided by Three A unless the worker
specifically asks for it – regardless of the fact that Chinese Labour Law calls for mandatory
social insurance. The Xiangfeng/Linkfair case reports many instances of prejudice that the
other companies were also guilty of. One example of such a prejudice is the refusal to hire
anyone who does not know someone already working in the plant. The reason being that stolen
items would be untraceable and contact persons during emergencies unavailable (China Labour
Watch and Solidar Suisse, 2016). Due to the piece-rate system of these cookware companies,
wages fluctuate based on demand. Thus, during high demands, an employee of Linkfair can
earn up to 4,000 RMB (644 USD) whilst during low demands, as low as 1000 RMB (161 USD).
At Guangdong Master Group (GMG) although there are no high and low seasons, workloads
depend on orders and can lead to either an unpaid day off or a busy work-day with unpaid
overtime hours (China Labour Watch and Solidar Suisse, 2016). GMG pay their polishing
department a daily wage that adds up to 100 RMB (16 USD) (China Labour Watch and Solidar
Suisse, 2016), however other workers, such as the pressing department, are subjected to the
piece-rate system. Gender discrimination was a problem in the Anotech factory, where,
although there was a high demand for new workers, the hiring was restricted to only males due
to the managers’ belief that women had less resilience when it came to hard work (China Labour
Watch and Solidar Suisse, 2016). Unlike the other companies, training, uniforms and contracts
are paid for by Anotech. Furthermore, labour contracts are already complete when a new

38. 38
employee is asked to sign. CLW and Suisse Solidar’s report notes that environmental damage
is specifically caused by the Anotech factory which spews industrial waste – including metals
and oils – into the nearby river connected to the city’s local water supply.
The degree of issues in each company varies, but the main problems generally similar between
the cases can be summarized as such:
1. Non-transparent labour law contract signing: contracts left blank until after the
employee signs
2. Piece-rate wage system: undermines the minimum wage and does not follow the law’s
requirement for proper overtime pay and days off
3. Social insurance not provided systematically: either social insurance is not provided at
all or given as a choice to employees who have to pay for the insurance themselves
(albeit the fact that Chinese law requires the provision of social insurance)
4. Safety measures not established: employees working in hazardous positions are not
provided with safety materials or are unaware of the potential issues
5. Training not provided: workers are made to sign forms stating they experience training
when in fact no training is provided
6. Various discriminatory limitations when hiring: employers discriminate against women,
people unable to pay for written/physical exams, and other more trivial parameters, such
as knowing someone already working in the factory
A detailed checklist of which companies were guilty of having which issue can be found in
Appendix A. Aside from the above mentioned issues, poor living conditions are experienced
by workers living in on-site dormitories. Pictures and evidence of these living conditions and
the issues listed above can be found in Appendix B.
Labour Watch Reports: State Owned Firms
i. HEG
Case studies reveal that Chinese state owned firms face similar labour conditions as described
above. Another report carried out by the CLW investigated Huizhou HEG Technology, a state
owned firm producing mobile phones to companies such as Samsung, Huawei and Oppo. The

39. 39
investigation was carried out between 2012 and 2015, showing that over this period little to no
improvements were made. HEG had issues with hiring procedures, discrimination, labour
contracts, working hours and wages among other aspects.
Hiring procedures are not systematic amongst all HEG factories. In certain factories, recruiters
aim for a 3:1 woman to man ratio when hiring (China Labour Watch, 2015). Underage workers
above the age of 16 are allowed in some factories, whilst in others, the minimum age is 20.
Despite these rules however, underage workers are not given special protections as required by
China’s labour law contract. Job applicants are also made to carry the burden of fees when
applying for work at HEG, including a physical exam. Discrimination of other forms were also
found in 2012, including only hiring people under 30, and not hiring people with tattoos, long
hair or disabilities (China Labour Watch, 2015).
Working hour and wages is a common problem throughout privately owned and state-owned
firms. Working hours are a continuous problem at HEG where workers can work up to 12 hours
a day with only 1 day off in a week. On average, workers earn 2000 RMB (314 USD). This
varies between 1350 RMB (slightly over the minimum wage) and 4000 RMB. HEG purchases
social insurance for their employees, however there were notable cases in which workers said
they did not receive their insurance cards. In certain factories, the purchase of social insurance
is offered as voluntary, which goes against Chinese labour law.
In terms of living conditions within company dorms, HEG subsidises 67% of meals. Facilities
are decent, with the cafeterias having working air conditions, fans and proper eating utensils.
Housing is not free, but includes air conditioning, with two bathrooms per dorm that provides
hot and cold water.
Occupational safety and protection is demonstrated during the pre-job training that is provided
in the beginning of a worker’s employment. These include three days of lessons and safety
drills. Protective equipment is also generally used by employees.
ii. China Non-Ferrous Metals Mining Corporation (CNMC), Zambia
According to a report by the Human Rights Watch, the main issues found when investigating
CNMC were health and safety measures, as well as wages and working hours (Wells, 2011).

40. 40
In terms of health and safety, surveys done found that Chinese managers persistently ignored
warnings of hazardous work areas and overruled them. Underground miners for example, are
under the risk of suffering broken limbs and fingers (Wells, 2011). Falling rocks and debris are
also a hazard for miners who do not have the proper safety equipment. During the processing
of the rocks, sulfuric acid is the most widely used substance - acid burns and lung disease caused
by inhaling dangerous fumes are some of the problems faced. Between 2001 and 2011, 15 fatal
injuries were recorded, with many more injuries causing long-term health problems (Wells,
2011). There were also reports that CNMC did not provide drinkable water on the mining sites.
Since breaks were prohibited, workers essentially worked a full day in the heat without potable
water (Wells, 2011). When workers tried to use the water used for mining to cool down, a
Chinese manager reportedly beat the men. Although this incident was reported to police,
nothing was done.
Workers said they worked hours that extended beyond the limit set by the Zambian government,
totalling an average of 12 hour shifts per day. Working hours are much more important in this
firm compared to the firms previously discussed since the type of work within mining includes
hazardous activities such as handling acid and inhaling fumes and dust particles. Days off are
deducted from overall salaries, meaning that essentially workers are expected to work 365 days
a year (Wells, 2011). In terms of wages, Chinese mining companies in Zambia pay base salaries
that are a fourth of what competitors in the area offer for the same type of work (Wells, 2011)
– an amount that the Human Right Watch established was insufficient to meet workers’ basic
needs.
Aside from these problems, CNMC have actively prevented the formation of unions amongst
their employees – the Human Rights Watch wrote of these “anti-union” activities in a letter to
the company suggesting the necessary changes to improve labour conditions (Wells, 2011).
Only one union had been allowed to form – NUMAW – whilst other employees who attempted
to sign unionizing papers were threatened with termination. This intimidation and threat of
termination is a strategy used in various occasions according to the report.
Qualitative Analysis
Evidently, both privately owned and state-owned companies have their fair share of labour
malpractice and misconduct. Through thorough analysis, it is evident that the private companies

41. 41
experience 1more misconduct in regards to labour law contracts, living conditions, social
insurance and job training. The overlapping issues seem to be safety regulations (except for the
case of HEG), overtime hours and low wages. Verbal (threats, intimidation, etc.) and sometimes
physical abuse are used as strategies to discipline workers in both private firms and SOE’s. It
is interesting to note that malpractice and misconduct are evident abroad, which suggests that
labour misconduct by Chinese firms occurs whether the process is in mainland China or abroad.
This potentially aids to further research on the fact that management style is what influences
misconduct more-so than geographical setting.
The limitation in this case however, is that the cases chosen are not of completely similar design
as specified by the “most similar case study” design method (Bryman, 2013). The research was
carried out around the same time period, between 2011 to 2016, which gives a good comparison
of labour conditions in this contemporary time period. Due to the fact that surveys and research
were not carried out for the specific purpose of this research paper – being that they are
secondary research – it was difficult to find research that consisted of the necessary descriptions
of labour conditions in similar types of firms. The cases chosen succeed in giving a comparison
of the different labour misconducts experienced in the various firms, however the analysis
would be strengthened if the firms were of similar size and providing the same product or
service.
8. Conclusion
Wang and Chee’s (2011) stance on the use of a Humane and Legalist approach in Chinese firms
is validated by previous research done on this subject matter. Through Li and Moreira’s study
(2009) of Confucian attributes in Chinese businesses both on the mainland and abroad, it is
clear that Chinese management style has, and still is, influenced by traditional values of
Confucianism – a Humane approach. The evidence supporting the implementation of the
Legalist approach is shown through the evolution of China’s Labour Law contracts, as well as
literature that emphasises the effects of the Open Door Policy and privatization. The
overlapping forces of privatization and foreign investment propelled the need for a restructured
legal framework, restructured SOE’s and labour reforms. Therefore, there is evidence of both
the Humane and Legalist approach in previous research and literature.

42. 42
Taking specific attributes of the Humane and Legalist approach and measuring their validity
through empirical data, this research paper finds mixed results that question the validity of
Wang and Chee’s theory. When comparing the results between a manager and general office
staff, Wang and Chee’s theory only holds up for two out of the three categories available (see
figures 6.5, 6.6 and 6.7). Although the empirical evidence technically supports Wang and
Chee’s theory, only three measures were available with data from 1994. This data is hardly
reliable enough to come to any conclusion. Ultimately, although research has been done which
conclusively supports the parallel existence of the Humane and Legalist approaches in Chinese
business, research has not been specifically done to measure the extent of their prominence in
private versus public firms. Thus, Wang and Chee’s statement that the Humane approach is
more prominent in public firms and the Legalist approach in private firms cannot be
corroborated by previous research.
This research paper experiments with the idea that labour conditions of private and public firms
should be different assuming that Wang and Chee’s theory holds. Using available qualitative
and quantitative data, this research paper finds that there are differences in the labour conditions
of private and public firms. In terms of wages, a private employee earns more per year (figure
6.1). As a woman, there is a higher probability of being hired by a private firm than a state
owned firm (figure 6.3). Half of China’s workforce is supported by government pension
schemes, a disproportionate amount to the number of workers actually employed by
government firms, meaning that the government is taking the burden away from private
employers. A similar situation exists for medical insurance, with only 25% of workers getting
insurance from employers. Thus, although social benefits are more guaranteed in public firms,
the amount is much less than a privately-based pay out (Human Resources and Social Security,
2015).
Qualitative data analysis of China’s labour law contracts shows that there is nothing in the legal
framework that should directly lead to different labour conditions between private and public
firms. This being said, empirical data from labour watch reports not only prove that the labour
laws are being violated in both private and public firms, but that there are differences to the
degree of violation between types of ownership. The similar violations found in public and
private firms were safety regulations, overtime hours, low wages, verbal and physical abuse.
Private firms however, are more likely to have misconduct in terms of law contracts, living
conditions, social insurance and job training.

43. 43
Ultimately, the quantitative data shows that conditions are better in private firms,
however qualitative data shows that other labour conditions are less detrimental in public
firms. This research paper finds that given the available data, there is no clear choice of whether
a private or public firm provides its employees better labour conditions. What can be concluded
however, is that the realities of management and its effects on labour conditions in China are
more complex than what Wang and Chee’s theory suggests.
9. Overall Limitations and Suggestions
The most significant limitation of this study is the lack of available and reliable data. This
limitation inevitably limits the scope of analysis and hinders the ability for finding a substantial
interpretation of how Wang and Chee’s theory manifests itself in a real world setting. Further
research is necessary for the possibility to observe whether management approaches have a
great impact on labour condition outcomes in China. Developmentally, it is important to
determine how these vast changes have affected the lives of both public and private employees.
Suggestions for further research include:
- Limiting the scope of research by region or industry since conditions may be influenced
by regional regulations and industry regulations
- Surveying public and private firms of similar design (i.e. size, industry, product/service,
ownership frameworks)
- Collecting more relevant nationwide quantitative data not currently available
- Possibly focusing on a certain perspective of labour condition other than the standard
measures – for example, alternative methods of measuring well-being using an
organizational behaviour approach such as happiness and job satisfaction surveys
(Steger, 2012; Romina, 2006)
Another limitation exists in the theoretical framework itself. With the introduction of the Open
Door Policy, came a surge of new types of workers that prior to this time, did not exist in large
numbers. These workers include migrant labourers and informal labourers (Zhou, 2013; Ling
et. al., 2014). To overcome this limitation, further research must supplement the current
theoretical framework with a consideration for different types of workers. In conclusion, this
research study takes into account types of ownership and types of management – the suggestion
for further research is to add the third dynamic of types of workers.

44. 44
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Appendix A
Source: China Labour Watch and Solidar Suisse, 2016

50. 50
Appendix B
Source: China Labor Watch and Solidar Suisse, 2016

51. 51

52. 52

53. 53

54. 54

55. 55