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In China's cities, a turn from factories

In a country with a supposedly bottomless supply of labor, the Daojiong Hequn Plastic Processing factory has somehow hit bottom. The plant in southern China can no longer find enough young women willing to spend their hours bending over machinery slicing artificial hair for toy dolls bound for the United States.  In China's burgeoning economy, there are better opportunities elsewhere.
Yang Weng, a villager from outside Chongqing, has returned home jobless after failing to find decent factory work in Guangdong, a southern province.
Yang Weng, a villager from outside Chongqing, has returned home jobless after failing to find decent factory work in Guangdong, a southern province.Peter S. Goodman - The Washington Post
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In a country with a supposedly bottomless supply of labor, the Daojiong Hequn Plastic Processing factory has somehow hit bottom. The plant in southern China can no longer find enough young women willing to spend their hours bending over machinery slicing artificial hair for toy dolls bound for the United States.

The $50 monthly pay is too little. The 14-hour days are too long. In China's burgeoning economy, there are better opportunities elsewhere.

Throughout the southern province of Guangdong, whose factories produce nearly one-third of China's exports, and in other industrial areas along China's coast, labor is suddenly wanting -- particularly the 18- to 24-year-old women who have become the staple workers of China's export trade.

According to a recent report from the Ministry of Labor and Social Security, China's factories lack 2.8 million workers, 2 million alone in the prime manufacturing zone along the Pearl River Delta.

It is not so much a labor shortage -- there are still tens of millions of peasants and former employees of the state-owned factories who need jobs -- as a mismatch between the cutthroat wage demands of the export trade and the rising expectations of Chinese workers. The government report blames the situation on poor working and living conditions, stagnant pay and chronic violations of China's labor regulations in the sprawling manufacturing towns that have based their growth on selling to the world market.

Where once a paycheck, even under harsh conditions, was enough to entice tens of millions of people to leave their villages in China's interior and flock to factories on the coast, workers are beginning to turn their backs on the prospect of laboring in 100-degree heat, living in rat-infested dormitories and being cheated out of their earnings.

They are instead staying in their home villages to take advantage of rising farm wages -- up 15 to 40 percent in the past year as the government streamlines taxes and as growing domestic spending power raises the price of vegetables and meat. Or they are finding jobs closer to home in the factories sprouting up in inland cities along China's expanding road and rail networks.

'The work is too hard'
At bus and train stations here, migrant workers carry belongings in plastic sacks, headed back to villages in the interior. "The wages are too low and the work is too hard," said a 21-year-old man from Guangxi province as he waited to board an all-night bus home. "It's a waste of time."

As more and more of the world's manufacturing shifts to this country of 1.3 billion people, the notion has taken hold that China has so many peasants in such desperate straits that it will continue to press global wages lower for decades, particularly given that independent labor unions are banned and even the threat of organization meets with stiff prison sentences. Now, some economists foresee steady wage growth here, as factories are forced to improve working conditions to keep operations running.

"Manufacturing wages are going up, and they are going to keep going up," said Jonathan Anderson, a former International Monetary Fund official and now chief economist at UBS Investment Research in Hong Kong.

Given the low starting point of wages, China will continue to capture low-end manufacturing jobs from around the world for the next decade, Anderson predicted. But by then, average wages are likely to exceed $100 a month, up from the current $50 to $60, and labor-intensive industries such as textiles and toys are likely to revert to countries now losing jobs to China, such as Thailand, Malaysia and Indonesia.

The known labor shortages are largely limited to the main exporting areas along China's coast. Nationwide, an estimated 150 million people either work on subsistence farms or in state-owned factories that are likely to be closed, and they will need jobs.

But Zhen Shengzheng, director of the Sociology and Population Research Institute at the Guangdong Academy of Social Sciences, said that increased opportunities at home have caused people to reevaluate the terms of the mass migration that sent more than 100 million farmers streaming towards cities in recent years. Once they take the costs of living in a big city into account, "fewer people are leaving the provinces," he said.

"Why go away and live far from my family when I can make the same salary here?" said Tang Changjun, 22, who earns about $125 a month at the Zhongshen Motorcycle Corp. factory, which opened two years ago in the southwestern city of Chongqing. It sits within the newly developed Erlang High-Tech Industrial zone, next to another motorcycle factory and an air conditioner plant. Tang's sister works at a computer factory in Guangdong, earning roughly the same wages. She is thinking of returning. "There are more and more opportunities here," he said.

'We have few choices'
Anderson, the UBS economist, argues that what is going on is not an overall lack of labor, but a shortage of the 18- to 24-year-old women preferred as factory workers. They are less likely to have family complications that pull them away from work and are more tolerant of poor conditions, managers say. "You have run out of this demographic," Anderson said.

Some workers say talk of shortages is merely a ruse promulgated by factory managers to attract more people to the cities and keep wages low. But factory managers insist the shortages are real and have forced them to pass up orders.

Advertisements seeking more workers plaster street corners. Banners drape most factories imploring laborers to apply for jobs. At the Baoan District Labor Personnel Department in Shenzhen, a government agency that is supposed to impartially link laborers and factories, director of human resources Ren Xuegong said some plants pay him up to $12 for each worker he sends their way.

Many factories have reluctantly begun hiring workers over 30. "We have few choices, so we have to widen the age range," said Yang Xiaojun, a manager at Starlite Holdings Ltd., whose plant in Shenzhen makes greeting cards for Hallmark and packaging materials for brands such as Microsoft and Fisher-Price. It employs 3,500 people. Yang said he could use another 500.

The Starlite chairman's office occupies more than 1,000 square feet; its leather couches look out on marble and mother-of-pearl statuary. On the factory floor, Yang Xiuli, 23, a mother of two and freshly arrived from the central province of Henan, rushed to insert 450 birthday cards per hour into boxes, first affixing yellow stickers to the back: "Wal-Mart Price $3.34." That's a little less than she earns in a day.

The company manager said it would be difficult to raise wages because profit margins are already close to zero. Major customers such as Hallmark have such huge scale they can dictate prices, forcing factories to squeeze costs where they can.

Tricking new arrivals
Dongguan, a dreary expanse of gray, concrete-block buildings in the Pearl River Delta, has long had a reputation for aggressive cost cutting. Its companies have reputations as egregious offenders of workplace standards. About 1 million jobs are vacant here alone, according to the provincial government.

The Daojiong Hequn fake hair factory occupies a two-story building amid dozens of others, on what had been village fields before the manufacturing boom of the past two decades. Its 50 workers share two toilets, sleep eight to a closet-sized room in bunk beds and are forbidden to use radios or watch television in their dorms in order to conserve electricity.

The plant needs 10 more workers, a company executive said. Production has dropped by one-fifth, and a major customer has been lost -- a Shenzhen factory that makes dolls. With raw material prices up as well, profits have plummeted from about $37,000 a month to about $7,000, the executive said.

But instead of raising wages, the executive said the company tries to lure workers into the plant with the promise of monthly pay as high as $100 if business is good, knowing they will only pay about half that. Most workers leave within a few weeks, the executive said, but the factory keeps replenishing its work force by tricking new arrivals.

Some factories use recruitment agencies that scour far-away terrain for workers. Yet even in areas where economic opportunities remain scarce, word is spreading that Guangdong is a place to avoid.

Last December, Yang Weng, 31, left her village near Chongqing, beneath bamboo-covered mountains that drop down to the Yangtze River, and headed for Guangdong to look for work. Her husband stayed behind to take care of their 8-year-old daughter.

She and her husband had made their living growing vegetables. Last year, the city government took their land for a real estate project, giving them a one-time payment of $2,000.

"I knew I would miss my daughter, but what can I do?" Yang said. "We have no land and we have to live."

She rode three buses and an all-night train, arriving in Dongguan two days later. She did a stint in an electronics factory, another at a printing plant. Both times, she quit after a few days, frightened by warnings from other workers that she would be paid far less than the $90 a month she was promised. She returned home in March and is now helping her mother grow rice and oranges.

"The factories all cheat you," she said. "Everyone there is a liar."

Special correspondent Jason Cai contributed to this report.