Monday, August 2, 2010

Chinese wages, fashion and factories

Image of Chinese workers in a market in Lijiang, Yunnan Province.Dear Gentle Reader,
I wrote about how an hour and a half visit to a high-end beauty salon to get a full hair wash, cut and styling, blow dry, and an obligatory head and neck massage, all with the latest fashion styling trends costs a client the princely sum of 13 RMB (renminbi), also known as 13 yuan.

Which is approximately 1.47 euros.
Or 1.91 USD.
Or 1.98 CDN.
Or 2.03 CHF...

Which should help explain why Western factories have flocked to China over the last 30 years, and, simultaneously, why Chinese workers are, now, starting to strike.

I don't know exactly how hair salons are run in China, but, I assume that they are run similarly to how they are run in the West.

In the West, the salon owner builds the salon and markets the salon.

Stylists (barbers) then rent a chair from the salon; the rental price usually is half the price of services rendered by the hair stylist.

I suspect that the same system is in place in China.

If this is so, the hairstylist at the high-end beauty salon I profiled on Friday takes home half of that 13 yuan charged for each hour and a half (approximately) that the stylist spends on a client.

That amounts to 6.5 yuan.

Which is approximately 0.74 euros.
Or 0.96 USD.
Or 0.99 CDN.
Or 1.02 CHF...

Let us assume that the stylist gets ten paying clients, back to back, in a day.

That means that for 15 hours work the stylist would keep 65 yuan...

...approximately 7.35 EUR.
Or 9.55 USD.
Or 9.85 CDN.
Or 10.15 CHF...

(The rates for 1 1/2 hours, one client visit, were all rounded up.)

...Of course, clients are not lined up out the door for the most exclusive beauty salon in town...

Image of the whole frontage of the hairstylist's shop in Kaifeng, Guangzhou Province, China. The characters in red read 'Ming Fa Lang' which translates, roughly, to 'Famous Hair Corridor' (Corridor as in the Long Corridor in the Summer Palace, outside of Beijing... if that makes things easier).
...Stylists might spend the whole day at the salon...

...At least 15 hours...

...But, only one of the seats had a client getting a haircut when your humble scribe poked his head in; the other chairs were empty...

...So, these hair stylists were living on much, much less than 65 yuan for a day's work...

And, please remember that they have to buy all of their own supplies out of that gross amount.

Stylists need to supply their own scissors, hair dryers, shampoo that they use on clients, hair supplies, et cetera...

And, as this is a high-end boutique, the hair stylists have to look upmarket and buy fancier clothes so that their clientele know that they are truly visiting an upmarket salon...

This is why Western industrialists shifted production to China.

It costs less to live in China, if you live life according to average Chinese standards.

For comparison, the 2010 federal minimum wage in the U.S.A. is $5.15 USD/hour.

If our hairdresser worked for a salary in the USA, and received the federal minimum wage for that 15 hours work, then our hairdresser would make $77.25 USD for 15 hours work in a day, assuming no overtime pay.

Again, for comparison, our hypothetical Chinese hairdresser could make a maximum of $9.55 USD for that same 15 hours of back to back work on ten clients in China...

These 'cheap' 13 RMB haircuts are not actually cheap to Chinese workers; these haircuts are only cheap to foreigners who receive far more than the unobtainable $9.55 USD for 15 hours of work.

As workers do not make a lot of money, prices can remain depressed--including the price of labour in China.

But, the Chinese factory workers, who have been making the baubles and the necessary items for the wealthy West, have become more keen to be able to afford and possess these same baubles and necessities for themselves.

And, they have become jealous of the Chinese factory owners who have become rich off the sweat of their bodies.

And, Gentle Reader, this goes a long way to explaining why we are finally starting to read about strikes in Chinese factories.

Strikes have been going on for years, but were always kept controlled, and hidden--even during the Asian Economic Crisis (1997-1999).

But, worker discontent is so widespread that strikes cannot be hushed up anymore.

Besides, the existence of strikes (and their possible recurrence in the future) are useful for applying pressure on foreign companies during future negotiations regarding future investments... ...and regarding future technology transfer agreements for access to cheap labour...

...Especially if the state guarantees to keep workers more in line, in the future, as workers have been kept in check in the past...

Now, however, Chinese factory workers want and expect to receive more for their blood, sweat and tears.

Otherwise, those factory labourers will turn their backs on their foremen, and on their employers, and head back to their originating villages...

Second image of Chinese workers in a market in Lijiang, Yunnan Province. This image is titled 'Having seen the good life being produced in the factories they toil in, these workers are willing to turn their backs on all, unless they start to get a piece of the good life
Which is happening now.

Which is why cheap labour is flooding into southern China from neighbouring countries in South-east Asia....

The bright side of the coin for the foreign firms who have invested in Chinese factories is that if they start paying factory workers more then that mythical Chinese market of over one billion consumers will finally start to become a reality... ...and the factories will be able to sell to Chinese, not just to overseas markets.


Teresa said...

Great post, Chris! Was there more than one stylist in the salon? In Taiwan such tiny places are usually family run... Or at least they were the last time I had my hair done at the one near my in-law's house in 2005.

Both Sides of Ben Marlan said...

agreed, an excellent post Chris. I like the song too. I tried creating a poem from your three words but couldnt come up with anything. wrote this last night tho (girls are better inspiration for me):

Both Sides of Ben Marlan said...

also, did you check out that post on the band Dawes? you might like them. and just got a cd of The Eels - like it v much. post card coming your way

Thomas and Shilpy said...

Sepiru Chris,

Thank you for your visit to our blog and your kind comments.

It is nice to know that you were in Orissa recently.

We would surely love to meetup in case you come to Bangalore.

Thanks once again...Thomas

Fireblossom said...

Welcome back! Bosco and I want to thank you for the various messages in bottles that washed up in our mailbox with Pommes the Wonder Cat's distinctive signature on them. We agreed that they were magnificent.

if it's all the same to you, though, I will continue to have my hair styled at the place up the street, with the lovely Jessica. China seems a rather prohibitive distance away, even for such a startling bargain. ;-)