Confucianism and Trade Imbalances

The enlightened dictatorship of money

China’s failed apprentice system – part 3

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This the last part in a series on why wages are so low.  I will collect a few thoughts here, and see if it turns out into a coherent whole.

I realized that an important part of this situation, which I shouldn’t leave out, is really simple: Chinese discrimination against Chinese.  I had a Chinese client a couple of weeks ago who wanted to speak to me, and only me.  He only spoke Chinese, and I explained to him that I would have to refer him to my colleague for any meaningful communication to take place. He still wanted me to be his point man, even though I really didn’t have much to say to him. This seems to be an issue particularly in the Southeast, where I lived for two years.  (The client was from Ningbo.)  (See also this story from Nanjing, for instance.)

Anyway, earlier in this series I retold this story that a friend told me about aviation because it highlighted two things I had heard about healthcare:

  • People who go half of their careers without being able to do any real hands-on work, because of their bosses’ delicate egos.
  • Employers owning their employees’ work licenses and refusing to let them leave for other work.

The second factor is due in part to what might be the single most unappreciated fact about China: how local everything is.  During the Maoist era, localities were told to make their own arrangements for health, and these sorts of bureaucracies tend to end up as bottom-up patchworks just as often as top-down structures.

This system goes all the way back to China’s feudal past.  Land is extremely important in China.  For this reason, Google Maps isn’t allowed to match satellite images up exactly with its maps.  North and South are not universal attributes – highways in Beijing will direct you towards Guangdong, rather than the South Pole (which is a practically equivalent distance from there) since one is in China and the other is not.  Even public spaces become like little kingdoms, as there are walls put all around the place restricting walking routes.  (I will someday get a picture of the South Railway MRT station in Beijing, which has a series of metal railings fencing off areas of absolutely nothing.)  I could spend an entire post or more talking about Chinese spatial orientations.  This also has to do with feng shui, and, at its core, land might be linked with the concept of face.  That’s how fundamental territorial divisions are to the Chinese psyche.

So China is full of these little kingdoms, relics in the more recent (Communist) past of the danwei work-unit system.  This leads to a surplus of little kings, who don’t like to see their status challenged.  We can see these leaders acting like little kings now with the accounting standoff: they are not used to being questioned, even when it comes to increasing efficiency.  These relationships are born from tradition, not from any notion of maximizing shareholder value.  As a final example of the importance of physicality in Chinese law, any company document must be notarized by a company stamp, which functions as the official company signature.  A great deal of power is placed on the owner of the stamp – typically the management of a company, not the shareholders.

Wages are often set so low that they even fail to maximize profitability.  Healthcare is a very good example of the result: there are lines outside of clinics, sometimes for days, for top doctors.  Meanwhile, for everyone else, healthcare is getting more violent – yes, violent.  Attacks on hospital workers are becoming frequent enough (in the context of a generally low-crime society) that police are being stationed inside the hospitals.  For the workers, healthcare is unprofitable enough (despite this demand) that it’s not really a particularly sought-after profession.  The whole system is geared not towards maximizing value, but towards preserving these little fiefdoms.

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Written by Maofucious

September 21, 2012 at 11:12 PM

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