Recently, the hit documentary “American Factory”, produced by a company backed by the Obamas’, led to heated discussions about the differences in the corporate culture and management style in America and China. Cao Dewang, one of the protagonists and the chairman of Fuyao Glass, had to face some backlash due to his conflict with local unions. He is also the only Chinese citizen to ever win the Ernst & Young Entrepreneur of the Year award.
In October 2014, Cao chose General Motors’ factory that occupies a land of 180,000 square meters in Dayton, Ohio, and bought it for $15 million. Around that time, local residents thought the Chinese were bluffing. As seen in the documentary, building this factory on the foreign soil requires not only capital and personnel, but most importantly a sense of mutual understanding.
On September 16th, a reporter from the Beijing News interviewed the billionaire, whose net worth is around $2.4 billion. He talks about the origins of this documentary and clarifies some of the negative impressions about the Dayton factory. He also shed some light on the duality of unions and the future of manufacturing in America.
About American Factory
Discussing his initial reasons for accepting the creation of this documentary, Cao Dewang said earnestly, “If we use our tongue to introduce the Americans to Fuyao, it would take a lot of work, and we can’t actually do it. So this documentary works perfectly, allowing Americans to become acquainted with Fuyao and our Chinese factory. At the signing ceremony, I was very proud to say that we are a private company from China and we also stand for China’s manufacturing industry. The United States is far away from China. If they need to know more about China’s factories and manufacturing, they should come and visit my factory. Now my factory in America is open to local residents once a month.”
When asked how he felt about the documentary, Cao answered, “My management team watched this film together with me. They were scared. They were worried that the documentary would cause union disputes. Others say that I was too kind and was being used by the Americans. (I think) the director is telling us that China’s prosperity is attributable to the hard work of the Chinese people, and we are not bragging.”
Negative impressions on Fuyao Glass
The main criticisms levied by foreign audiences are focus around the impressive work schedule of the Chinese workers. “Some scenes in the documentary smeared my factory. For instance, a female worker who wiped glass said that she worked 12 hours a day and returned home twice a year. In fact, not only in my factory, but many civil servants and company staff also kept their kids at their hometown, and went back home twice a year. It’s the same everywhere else in China, and the Americans couldn’t understand the cultural difference here.”
As depicted in the documentary, compared with American workers, Chinese workers didn’t show strong reluctance to working overtime. Cao explained, “In fact, each year, our factory works overtime merely 5 to 7 times, and it is mainly because sometimes orders are too urgent and it is difficult to recruit enough people in a short time. And every time we will pay the workers double for overtime.”
The documentary also filmed the scene of some factory workers classifying glass with their bare hands. Cao responded by saying that garbage disposal, including glass, is usually outsourced. “The two picking glass are not employees of our company. However this phenomenon does exist in China.”
Influenced by the neo-liberalism prevalent in the Reagan government, the percentage of union members among workers declined drastically since 1980, to merely 11%. Excluding government officials, the number in the private sector is only around 7%. After the several peaks in the post-war era of the 1960s and 1970s, unions have endured a difficult time since.
According to Cao, he once talked to the US government officials about how both employers and employees in the United States should learn from China. “In terms of the employee-employer relationship, the Chinese government has the Union Law and the Labor Law. If workers have problems, they could always negotiate with their employers. With the labor law as the basis, the behavior of both sides will be under examination to reach a certain consensus. In the United States, when there are conflicts and contradictions between employers and employees, production will then be destroyed, and factories cannot be sustained. Therefore, China and the United States should learn from each other’s strengths to make up for their deficiencies. It’s a good thing for the world.”
Speaking of the shortcomings, the existence of unions could sometimes stand as obstacles to elevating the working efficiencies. “In the United States, there will be no increase in productivity when there are unions.” said Cao. “About four or five years ago, I visited a factory in Detroit. The first time I attended the meeting there, I realized – one row are the directors of each department, and the other row is the union leaders sent to supervise the directors. That means for every management post there are two people doing it. What do you think the factory’s efficiency is going to be like?”
The future of manufacturing
When President Trump said “Make America Great Again” he advocated for the return of the manufacturing industry to America. He believes that the overseas outsourcing of the manufacturing industry caused by globalization has destroyed the middle class in America and hollowed out the real economy, which has led to the decline of the United States. However from the documentary, it is apparent that in order to rejuvenate the local economies of the rust belt region, America must rely on the inflow of Chinese capital and entrepreneurs.
“When I talked with US officials concerning the revival of American manufacturing, I believe that based on my experience in starting a factory, the United States must solve several problems in order to restore its status as a manufacturing power. First, the United States now lacks industrial investors and bosses. Second, de-industrialization has led young people to engage in industries such as finance and real estate. The manufacturing industry lacks young workers.” Cao said, “Why did Foxconn’s project end in the US? Because in America the cheapest is energy resources such as electricity and natural gas, and labor cost is the most expensive. The Foxconn factory falls into the labor-intensive industry. Unlike Fuyao, which is a high-energy and heavy industry, how could Foxconn recruit so many workers?”
“Thirdly, the existence of the union system. The tensions between employers and employees have hindered the development of the US manufacturing industry, and it’s actually very difficult to deal with. This is because the bipartisan campaign mechanism and the election program are the main sources of tension between employers and employees. This issue cannot be resolved in the short run.” Cao explained during the interview.