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As Asia has become the fastest industrializing region in the world and as labour rights have become a controversial issue in the world's trade agenda, the industrial relations of Asian factories that produce labour-intensive goods for the global export market have come under scrutiny. Many of these factories have Taiwanese, Korean and Hong Kong owners, who hail from the so-called Newly Industrializing Countries (NICs). Today, these firms occupy a special place in the global production chain. Unlike many transnational corporations of the developed world that no longer manufacture goods but instead buy from offshore suppliers, these Asian corporations are the front-line producers in poorer foreign countries.
Korean and Taiwanese managers are particularly known for their disciplinarian1 approach in their offshore factories, which have gained a reputation for harsh working conditions not only in Asia but also elsewhere in the world, including Central America2 and southern Africa.3 The impression has been that the workers in such factories are treated the same way in all the host countries, but this paper argues that the stance of the host government makes a noticeable difference to industrial relations and working conditions at the factories. The paper supports this thesis with a study of Taiwanese management behaviour in factories in Vietnam and China.
Taiwan: From an Indigenous to an Offshore Manufacturer
The Taiwanese miracle was built on an export-oriented manufacturing economy that supplied consumer products for the Western market, particularly the US. But starting in the 1980s, rising costs in Taiwan began to price Taiwanese suppliers out of the international market: for instance, in shoe production, two-fifths of the factories that started up during 1968-87 had collapsed by 1989.4 To survive, Taiwanese capital needed to relocate while continuing its relationship with international buyers.5 Taiwanese investment in Southeast Asia became noticeable after 1986, at a time when the Taiwanese government would not allow Taiwanese businesses to invest in China. But after 1990, with the easing of cross-strait political tensions, vast amounts of Taiwanese capital poured into China, at the expense of Southeast Asian countries, which had previously been the main recipients. Up to the end of 2001, China absorbed about half of the Taiwanese capital invested overseas, totaling US$29.4 billion.6 In 2002, Taiwanese-based computer companies produced more machines on the Chinese...