If that was five-star, Harney is curious on seeing the one-star type. “Though they often sit just down the road from their five-star brethren, China’s shadow factories are generally off limits to most foreign visitors. Most buyers, auditors, government officials and journalists see only the model factories.”

Eugene Chan, the owner of a local factory, agrees to take Harney on one condition: that she had to be content with a drive-by. “So one sticky summer afternoon, we left the model factory and drove for about ten minutes, passing tired-looking, tiled factories with thirsty palm trees out front, a few restaurants and new apartment buildings. The car slowed and we turned into a narrow road blocked by a metal gate manned by a guard…”

Harney finds that the first tall commercial building had reflective windows, and appeared empty. “Chinese cities are filled with mystery buildings like these, thrown up in a froth of real estate development, their intended or actual uses unclear.” The workers in these places protect the factory’s anonymity, Chan informs. They would tell any inquisitive visitor that they were unemployed; and if government inspectors came, employees would shut the door to the factory.

In spite of his chicanery, Chan’s business is not getting any more profitable, the author observes. Material costs, which account for 60-70 per cent of the total production bill, are on a steady rise owing to skyrocketing oil prices and rising demand in a booming economy; electricity costs tend to double because of running generators to meet power shortages; and the government has been raising the minimum wage quickly.

Labour turnover is a major challenge in these factories. It is normal to have 20-30 per cent turnover every month! “If your factory has too many holidays, they will go to another factory without holiday,” Chan tells Harney. He uses ‘updated management’ techniques to encourage workers to stay longer — such as holding barbecues and taking them to the beach. Employees have to pass Wal-Mart’s audits for working hours and pay, but machines don’t, reasons Chan. “Plus, machines make visiting customers think he’s ‘very hi-tech.’” Audits cost $19,000 to Chan annually. But why? Because many multinationals have started charging their supplier factories for audits, particularly if previous inspections have uncovered code violations, Harney discovers.

Meanwhile, local officials are keen on converting factory land into luxury property district, forcing businessmen to search for alternative sites to relocate to. Chan did his bit, travelling to cities in the Chinese interior, and meeting eager officials in those areas who courted him ‘like a man dates a girl,’ promising a ready supply of workers, good power supply, the flexibility to work around the clock.

D. MURALI

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