Study on Industrial Dispute of
Taiwan-Invested Enterprises in China
Chich-Jen Shieh
I-Ming Wang
Yung-Sheng Yang
ChangJungChristianUniversity
1. Introduction
Taiwan-invested Enterprise refers to three kinds of enterprises, which are joint venture, cooperative venture and sole proprietorship invested in Mainland China by Taiwan businessmen. On the other hand, local enterprises in Taiwan are defined as Taiwan Enterprises in the study.
In the trade between Mainland China and Taiwan Area, Mainland China has become the first largest export market and the biggest origin of favorable trade balance of Taiwan, while Taiwan has become the second largest import market of Mainland China. Mainland China has become the first place in which Taiwan businessmen have invested most overseas. Statistical data of Ministry of Department of the People’s Republic of China showed that 6 of the first 10 foreign businessmen listed in export in 2004 were from Taiwan (HONHAI, QUANTA, ASUS, TPV, COMPAL and BENQ).
In the course of Taiwan-invested enterprise’s being more and more fused into economy of Mainland China, industrial contradiction accordingly became prominent and intensive. Laborer income in China is on the low side, which directly inhibits increase of domestic demand as well as intensifies dependence on export. On the other hand, over-competition in export of low-value-added product further depressed labor price so as to locate China in the low end of value chain in the international division of labor. Material benefit and foreign investment profit of foreign consumer seized income and consumption of China laborers. All these formed a vicious cycle. Enterprises can not further form core competence and the cost saved from low labor expenses is even offset by the waste resulted from frequent flow of personnel.
2. Status Quo of Industrial Dispute of Taiwan-invested Enterprises
As reported in China Labor Union Statistical Yearbook, industrial dispute in Mainland China is assorted into 10 large categories, which are work assignment, labor remuneration (wage, bonus, allowance), insurance welfare, industrial security and sanitation, punishment, resignation or voluntary resignation, performance (or alteration, rescission, renewal) of labor contract, time for duty, special protection of female employee, and others. In 2004, the disputes arisen from punishment, resignation or voluntary resignation and labor remuneration were the most (Chen, 2004).
How did Taiwan-invested enterprise usually settle the industrial dispute occurred? As described in available literature, labor dispute was mainly settled through coordination of labor union and labor bureau. The ways taken most frequently were consultation, coordination or mediation in enterprise (Wu, 2004; Lin & Chen, 2003). As viewed from the data for labor union to participate settlement of industrial dispute, the number of dispute on which mediation commission in Taiwan-invested enterprises reached an agreement through mediation in 2003 accounted for 69% of total number (1,370) of dispute settled. The correspondent data rose up to 78% (659/848) in 2004 (China Labor Union Statistical Yearbook, 2003/2004). The settlement methods on labor disputes in Mainland China include consultation, coordination, mediation in enterprise, arbitration by arbitral commission, lodging a suit with people’s court, etc. In practice, most of labor dispute cases were settled by the first three methods. Moreover, mediation with arbitration also accounted for over a half of arbitral cases, and the proportion of actually appealing to arbitral award or lawsuit is not high.
There was not much investigation and study specially aimed at industrial dispute of Taiwan-invested enterprise in Mainland China. Gao, Zeng, Chen and Yuan (2000) ever studied 43 typical cases of industrial disputed related to Taiwan-invested enterprise, and concluded that the disputes on labor management mode and labor contract approximately accounted for over two-thirds. Luo (2004) also held that it was easier to provoke dispute in any of the following cases, such as lower wage paid, deficient labor protection, no labor contract signed, and deficient communication on management, etc. Liu (2004) pointed out that householder-style authoritative management stricter for laborers and less of humanization would provoke occurrence of industrial dispute.
Huang (2004) presented that more common industrial dispute related to Taiwan-invested enterprise in Mainland China includes the followings: lack of medical insurance or labor contract for probationary employees, longer working hour, insufficient payment for overtime work, unreasonable wage difference, decrease or delay in payment, slow raise, medical payment far behind expectation, military assignment for job/workplace, and defective dismissal. By summing up the reports of relevant literature in the past, industrial dispute suffered more usually by Taiwan-invested enterprise in Mainland China could be assorted into the three categories. (1) Dispute is arisen from improper management of capital party, such as abrupt attitude, simple mode, rude management, etc. (2) Dispute is arisen from argument on rights and interests like overtime, post redeployment etc. between labor and capital. (3) Dispute is on fair employment, mainly referring to fairness of payment of wage and bonus.
3. Quantitative Analysis
Data is not shown, but findings are introduced. As discussed above, the following approaches were set up first in the study for further analysis. Causes of Industrial Dispute, the independent variable, was assorted into three dimensions such as Management, Individual, and Leadership. Measures for Resolving Industrial Dispute, the dependent variable, was assorted into two dimensions such as Dispute on the Right Event, and Dispute on the Adjustment Event. Characteristics of Industrial Dispute, the adjustment variable, was assorted into two dimensions such as Manufacturing Industry, and Service Industry. Major objectives for the study were to discuss the correlations among the three dimensions of Causes of Industrial Dispute, the two dimensions of Measures for Resolving Industrial Dispute, and the two dimensions of Characteristics of Industrial Dispute. Moreover, the adjustment effect of Characteristics of Industrial Dispute on the correlation between Causes of Industrial Dispute and Measures for Resolving Industrial Dispute was further discussed. Taiwan-invested Enterprises in Guangdong Province in China, which were taken as samples, were responsible for filling causes of industrial dispute, characteristics of industrial dispute and measures for resolving industrial dispute in 700 questionnaires sent out. However, 625 questionnaires were reclaimed.
It could be learned from Pearson’ correlation coefficient that characteristics of industrial dispute has a positive correlation separately with causes of industrial dispute and measures for resolving industrial dispute. Individual Dimension was in no correlation with Right Event Dimension and Adjustment Event Dimension. It was found that manufacturing industry can enhance the positive correlation of Individual Dimension with both Right Event Dimension and Adjustment Event Dimension. As to service industry, it raises the positive correlation between Individual Dimension and Adjustment Event Dimension on one hand. On the other hand, it increases the negative correlation between Individual Dimension and Right Event. It could be found that characteristics of industrial dispute could not play a significant role in regulating the correlation between Leadership Dimension and Right Event Dimension and Adjustment Event Dimension. The reason might be that a higher correlation had existed between Leadership Dimension and Right Event Dimension and Adjustment Event Dimension so that a simplex regulatory variable, characteristics of industrial dispute, could not play a regulatory role.
4. Discussion
The conditions of industrial dispute occurred in Taiwan Enterprises should be firstly understood at the time of study on the industrial dispute occurred in Taiwan-invested enterprise in Mainland China. The contradiction of Taiwan Enterprise in Taiwan local area was being brought into the boundary of Mainland China with the establishment of Taiwan-invested enterprise in Mainland China. It won’t slowly disappear like hurricane but may be more and more intensified. Comparative analysis on this would be helpful for us to better understand the underlying causes for industrial dispute occur in Taiwan-invested enterprise in Mainland China. Therefore, the study was to start the discussion from industrial dispute of Taiwan Enterprise in Taiwan in order to get out the result in conformity with historical background and actual situations, followed by recommendations for settlements of industrial dispute of Taiwan-invested enterprise in China.
4.1 Management Experiences on Taiwan Industrial Dispute
“Taiwan Labor Dispute Settlement Law” shows that the methods of settling industrial dispute include coordination, mediation, arbitration and judicial action. Through classifying and summarizing the types of industrial dispute occurred in Taiwan enterprise in recent 10 years, the disputes can be roughly divided into contract dispute, wage dispute, welfare dispute, safety sanitation dispute and other dispute in order of the number of dispute, while “working hour (insurance, management) dispute” also had a tendency of rapid increase. As for the nature of dispute case settled with the aid of administrative organ, most of cases (account for over 99.0% in recent 2 years) belonged to the disputes on “right events” (Taiwan Area Labor Statistical Yearbook, 2004).
As viewed from labor administrative management, the issue of present industrial dispute in Taiwan is reflecting the issues on labor administrative management, such as (1) A part of labor decrees are urgent for amendment; (2) Both labor and capital are lack of legal concept; (3) A part of local labor administrative organs does not settle issues by levels; (4) The dispute on closing plant and business increases everyday.
Generally speaking, industrial dispute is divided into dispute on the right event and that on the adjustment event. The dispute on the right event is also called as dispute on law, referring to the dispute on right and obligation of party concerned based on the stipulations of decree, collective agreement, and labor contract. While the dispute on adjustment event is also called as dispute on event, referring to the dispute on both parties’ claiming continuous maintenance or alteration of labor conditions, such as disputes on adjustment of wage, bonus, allowance, and working hour. If the reason for occurrence of dispute is the right event, both parties can directly lodge a judicial action with court or apply for mediation. In case of failure in mediation, both parties can lodge a lawsuit with court. As for mediation event, the dispute case can enter into an arbitral procedure if failure in mediation or either party concerned applies for arbitration. (Deutsch, 2005; Danford, Richardson & Stewart, 2005) As being able to be settled according to law by non-court, mediation event needs objective arbitration of an arbitral organization. Chen (2004) ever explained the cultural values influencing operation of Taiwan-invested enterprise in Mainland China. Under planned economy in the past, country dominated work allocation and provided safeguard of life. In the past 10 years, planned economy has been transformed into market economy, but many employees still hold the past mindset. Local staff in Mainland China widely stress viewpoint of fair distribution but lack for viewpoint of public-private antithesis and life discipline. Common laborers are in low educational level without any consciousness of cost, quality and competition. This often arouses staff’s argument on management system and manager’s conduct. (Huang, Lu, Tang & Huang, 2004; Mogensen, 2003)
4.2 Enhancing Mutual Trust and Cooperative Relationship between Labor and Capital
From interaction of labor and capital, it could be observed that both are lack of mutual trust and communication. Taiwanese cadres are arbitrary and impatient with staff management. On the other hand, considering being bullied and oppressed, the local employees in Mainland China often take collective mode to seek fairness so as to cause conflicts, such as strike, punch-up and threat. Chinese characters used in Mainland China and Taiwan are similar, but wording has been different for a long time. Therefore, misunderstanding always happens for either oral or written communication. The most common way for Taiwan businessmen in Mainland China to communicate with their employees is a face-to-face verbal mode, which indicates a very limited channel for organizational communication, let alone appealing dissatisfaction and unfairness of employees. Dundon, Wilkinson, Marchington and Ackers (2004) stated that the level of staff’s voice practices embedding in an organization is more important than the voice extent of any particular individual or collective schemes.
Mullen and Kochan (2000) stated that the coalition as a dynamic and organic creative entity that fosters synergy leadership, and personal and organizational transformation. Bad comments of cadres of Taiwan-invested enterprise on local staff in Mainland China easily cause opposition of laborers to leading cadres. In addition, it is difficult for management level to endure the staff’s behavior showing no responsibility. Therefore, unreasonable and punitive practices are often taken to request and rectify staff attitude, including roll call a half hour ahead of schedule, admonitory talk, no off duty before the job is done very day. Local staff are threatened to face a deducted wage. This practices adopted seriously confront inconformity with staff’s viewpoint. Therefore, many staff take retaliatory means or stole property of plant as compensation. All these formed a vicious cycle. (Wong & Slater, 2002; Wu, 2003)
4.3 Perfecting Consultation System and Industrial Interaction
Because of lack of mutual trust and suitable communication channels for both labor and capital, contraction of industrial relationship often makes laborers feel increase of unemployment risk, which turns to enhance self-value realization and causes obvious frictions between two sides. Rapid environmental change and frequent work change also influence instability of industrial relationship. Local government fails to coordinate industrial relationship objectively. On the other hand, labor union can not play a great role of cushion coordination due to low rate of organizing (Xu, 2004; Kim & Kim, 2004). Moreover, there were just few of Taiwan-invested enterprises set the industrial consultation conference system so that it is easy to cause corruption of industrial dispute event. (Morgan & Zeffane, 2003)
Shunda Computer Plant Company Limited, a Taiwan-invested enterprise, has been enhancing construction of labor union and building harmonious industrial relationship since 1995. Its labor union organization also greatly develops activities of technical innovation among employees and encourages them to participate in technical reform and technological invention. According to statistical data of the plant from 2003 to now, labor union mobilizes employees to participate in 800 technical reform projects, which has created an economic benefit of 6.7 million US dollars.
In addition, governmental department is supposed to enhance the strength of supervision, intervene in industrial concern and keep rights and interests of employees. Legal safeguard for industrial relationship plays a very great role in keeping employee team stable and industrial relationship harmonious. It is suggested that government of each place should formulate “Regulations for Enterprise Wage Collective Consultation” in its respective location as soon as possible and make specific regulations on contents and procedure of collective consultation, duty of government department, legal responsibility, etc.
Zhu and Fahey (1999) stated that the industrial relations lie at the heart of the reform and determines the outcome of the further transition. As for employees, some of them mentally rejected the advantageous position of Taiwan businessmen. They often directly express the eagerness for wage adjustment and welfare without any implication, have no regard for faith of work, lack for the sense of work efficiency and quality management, and used to be good at self-protection and reluctant to bear unemployment risk or substitute voluntary saving for partial social security. They sometimes misunderstand competition as struggle, and treat corporate operation management in a political-oriented way (Luo, 2004; Liu, Tjosvold & Wong, 2004; Wang, 2004; Zhu & Warner, 2005; Taylor, 2001).
As for capital, generally speaking, some Taiwan businessmen often implement strict supervision due to no trust in capability or willingness spirit of local laborers. The management cadres pay no attention to humanization management, disrespect or even beat laborers, and deliberately depress wages, because the statutory system of Mainland China is not well designed and many matters are not definitely normalized. Some standards do not conform to international practice, on one hand. On the other hand, there is a great difference for practicing administrative laws in different places of Mainland China. Therefore, it is difficult for Taiwan Businessmen to follow laws and regulations, and some of them take the strategies which are lawful in form but lawless in fact (Luo, 2004; Liu, 2004; Wang, 2004; Xiong, 2001; Wong et al., 2002). Since the social systems of Mainland China and Taiwan are different and ideologies between them are certainly of greater difference, the modes and methods of settling problems are different. Now that Taiwan-invested enterprises want to have a foothold in Mainland China for survival and development in the global competition, they should firstly understand decrees and laws of Chinese Government. Matters should be handled in accordance with international practice and on the basis of seeking common points while reserving difference.
5. Conclusion
Industrial relations influence corporate operation. Its harmony needs joint efforts of labor, capital and government. Industrial dispute is one of problems confronted by Taiwan-invested enterprises in Mainland China, including weak enforcement for labor contract and collective contract, inflexible wage payment, incomplete labor protection, lack safeguard for lawful rights and interests, etc. Enterprises with dangerous labor environment usually do not sign contract deliberately to escape their responsibilities. Some enterprises used to sign contracts just for governmental inspection in a way of formality, weak content pertinence and vague labor standard stipulations such as rest, vacation and labor insurance. In addition, in Taiwan-invested enterprises, the difference between cultural backgrounds of Taiwanese cadres and those of local staff influences the gap of cognition on such aspects as enterprise operation management, labor management decree and system, leadership, and working mode. The gap of cognition will cause conflict of personnel on management, such as hostility of local staff to Taiwanese cadres, and the cadres’ violation of local decrees.
Therefore, Taiwan-invested enterprises may attempt to establish community labor union in order to promptly find and solve problems in industrial relations. Definite establishment of legal labor union not only keeps rights and benefits of local staff, but also helps corporate development. The labor union is the channel and carrier of staff’s participation in corporate management. It coordinates industrial relations and carries out relevant laws and regulations. It helps staff’s self-education and self-management. It also helps maintain the strength of supervision to ensure effective implementation of labor law and labor union law. Shunda Computer Plant Company Limited is a good example in this approach.
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