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Workers Challenge "Privatization for the Elite"

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Since the second half of the 1990s, China has been through waves of privatization of state-owned enterprises (SOEs) in a drive to pave the way for a market economy. Previous issues of CLNT have focused on state workers’ resistance to such cases of privatization such as the recent Tonghua Steel incident. This issue will look at an interesting case where an ordinary worker has been persistently and creatively trying to defend workers’ interests in an SOE where he worked that has been quietly privatized. What is notable about this case is that this worker, Liu Rongli, mobilized his fellow workers to try and set up a workplace union and struggled to force the management to offer company stocks to its workers and for greater management transparency. In this issue, we translate two articles both written by Liu about the corrupt privatization of state assets in China, and about the difficulties involved in unionizing restructured SOEs.

Privatization and the Tonghuasheng Company
What is now Tonghuasheng Company used to be part of a large SOE, the Beijing Forging Factory, which at its peak had 1,500 workers. After going through several reforms, bankruptcies and mergers in the 1990s, it remained under state ownership until 1998 when it became collectively owned. In 2003, Tonghuasheng Company was further restructured and officially became privately owned. The former managers became the new owners.

One central issue of contention is that in the process of privatization, or “change of system” to use the more innocent-sounding Chinese phrase (gaizhi), the former managers transformed state assets – which are supposed to be collectively owned and the fruit of collective labor – into their private assets. This was done quietly and without any consultation with workers. This greatly irritated the workers and Liu Rongli, who has been working there since 1980. Another related issue is the right of workers to participate in management, as they realise that not having the right to know and decide on company affairs they are easily deceived and manipulated and could be effectively dispossessed of the wealth created by their labor.

Early Attempts at Resistance and Becoming Stockholders
There have been several attempts at resistance by workers, beginning shortly after the privatization. In October 2003, workers organized a Staff and Workers’ Representative Congress meeting in which they expressed their anger about the privatization and how the workers were treated. The next Congress meetings were then essentially made vacuous by the management.

It was not until 2005 that real progress began to be made. In May, Liu Rongli persuaded and mobilized his fellow workers, and together they began petitioning the management and local authorities. Under pressure the management conceded, and the workers successfully became stockholders in 2006. The first translated article describes this campaign to become stockholders.

Follow the links below to read Liu Rongli’s article on using stockholdings as a way to re-assert some degree of worker control over privatized SOEs

Forging a New Path for State Enterprise Reform


Not only did it bring practical benefits to the workers, becoming stockholders is also significant in raising the consciousness of workers to see themselves as rightful participants in the company’s affairs – manifested, for example, in demanding democratic election of a company supervisor overseeing the company’s finance, which the managers repeatedly refused.

Setting up a Union
The struggle to set up a trade union is another significant attempt for Liu and his fellow workers to gain legitimacy for their actions and a say in the supervision and management of the company. It is not surprising that the management sabotaged workers’ meetings to discuss setting up a union and eventually helped block the election of union leadership by essentially bribing and persuading workers not to make trouble (promising them a pay rise, for example). When Liu successfully obtained a letter from the local trade union to ask the management to set up a union according to Chinese law, the managers simply refused. The effort is currently stalled, but has nevertheless put considerable pressure on the management, which is increasingly facing a crisis of legitimacy.

There have been a couple of cases where workers attempted to set up unions, such as the trade unions at Wal-Mart stores
http://www.clntranslations.org/article/34/promising-wal-mart-trade-union-chair-resigns-over-collective-contract-negotiations and the Ole Wolff union in Yantai

But as Liu points out, it is far more difficult to set up a union in privatised SOEs than in foreign-invested companies for reasons he analysed in the second article selected for this issue.

Follow the link below to read Liu Rongli’s article about why it is easier to unionize a foreign-owned company than a domestic one:

“Comparative analysis of the reasons for the failure to establish a union at Tonghuasheng”


A Worker-Intellectual
Liu Rongli, now almost sixty years old, has limited formal education but reads widely, likes to think critically about social issues and likes to write (his articles can be read on his Chinese-language blog www.blog.sina.com.cn/liourongli). The second article (on paving a new road for enterprise reform) selected for this issue highlights Liu as a worker-intellectual.

The fact that Liu is a critical thinker is both a blessing and burden to him. His advocacy often goes beyond what his fellow workers demand, and he thus often feels isolated not only by managers but also by fellow workers, who sometimes regard Liu as a trouble-maker.

The struggle, despite periodic collective efforts, remains mostly an individual effort on the part of Liu. Despite successfully getting fellow workers to sign protest letters and participate in petitioning, Liu has not been able to consolidate labor solidarity among his fellow workers. Neither has solidarity been forged between workers in other factories in the same factory compound (which all previously belonged to the same SOE before privatization), even though some of them have undergone a similar privatization process and thus have similar problems for workers. The fact that Liu has carefully framed his resistance within the laws also eschews any possibility of militant collective action such as street action.

Other constraints hinder the growth of the struggle, such as the small size of the company with less than a dozen workers at the moment. With little media attention (except a BBC interview), the quite successful efforts by Liu and his fellow workers is little publicized, thus generating practically no public interest and support, unlike the situation in Nanchang Bayi Wal-Mart and Ole Wolff in Yantai. State media refusing to report on this story, even after Liu made several contacts to state-owned media outlets

The Significance
While the struggle may not be as spectacular as the large incidents like Tonghua Steel, it is nevertheless significant in its symbolism of workers trying creatively with determination and perseverance to defend their legitimate interests, and an inspiration for workers elsewhere facing the same problems.

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