China Tanzania Joint Venture Textile Factory Has Been Mired In Labor Capital Conflict For Many Years

As the second largest shareholder, the Tanzanian government has always emphasized friendship Textile mill It must be a purely productive enterprise, which has not developed the tertiary industry and mixed operation - which should be a more profitable project.

More than a year ago, in the printing and dyeing workshop of Friendship Textile Factory in the suburb of Dar es Salaam, Tanzania, in addition to doing his own job well, Mgeya, a front-line worker, had to work part-time as a butcher to support his family. Even so, he, his wife and four children still lived a tight life.

On March 24, 2013, Chinese President Xi Jinping's visit to Africa began in Tanzania, and the China Tanzania Joint Communiqu é issued yesterday ushered in a new era for Chinese enterprises to "go global" to Africa. Undoubtedly, the changes of Friendship Textile Factory after years of planned economy and market economy, as well as the collision of Chinese and Western cultures and management systems, have more important reference and reference significance for the future of "going global" of Chinese enterprises.

Tracing the origin of friendship textile factory

Dar es Salaam, located in a small bay on the west coast of the Indian Ocean, was once the capital of Tanzania, but it is still the de facto capital after the relocation. Along Morogoro Avenue, about 7 kilometers from the city center, there are clusters of Chinese buildings in the 1970s.

Green bricks and tiles, gray buildings, hollowed out walls, as if back to the old China. This is Friendship Textile Factory.

In 1965, the founding president of Tanzania, Nirell, came to Beijing and asked China to build a textile factory for Tanzania. At that time, China's diplomacy was vigorously exploring Africa and agreed with Nyerere. With the support of China's interest free loan of more than 70 million yuan, the textile factory was built in the suburb of Dar es Salaam and named "Friendship Textile Factory".

In 1968, Friendship Textile Factory was put into operation. Saidi, a mechanic, claimed to have been working in the factory since then and experienced the ups and downs of the old factory.

As one of the five key state-owned enterprises in Tanzania, Youyi Textile Factory will be operated by local people after being put into operation, and Chinese people will provide guidance and technical transformation, but will not participate in management. For a long time, it was a model project of China's assistance to Africa.

However, in the 1980s, Friendship Textile Factory was in trouble. By 1992, Friendship Textile Factory had accumulated losses of more than 10 million US dollars and was on the verge of stopping production. The then deputy director of the printing and dyeing workshop, G
Limbili) retired early and returned home at this time.

When our reporter met Rimbiri in a small village in southern Tanzania, he was already a seventy year old man. According to his memory, he chose to work in Friendship Textile Factory at the beginning, because he saw that Chinese masters helped manage the factory and made it very efficient. However, the Chinese gradually left later. The local people were not well managed, had a "lazy" attitude, and "did not follow the rules and regulations formulated by the Chinese". In 1992, when he saw that the factory basically stopped production, he returned home.

In 1992, it was also a milestone for China to move towards a market economy. In 1995, a visit by Zhu Rongji, then Vice Premier of the State Council, directly promoted the restructuring of Friendship Textile Factory. In front of the gate of Youyi Textile Factory, the full name of the company - "Tanzania China Joint Venture Youyi Textile Co., Ltd." was written in English, and the blue placard on the top of the gatehouse, "Follow the laws of the market economy and prosper the factory with scientific management methods", witnessed the history of restructuring in that year.

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According to the files of Friendship Textile Factory, on July 21, 1995, the Friendship Textile Factory, which had been silent for three years, came back to life. At 10:45 a.m., Zhu Rongji's motorcade arrived. After inspecting the new equipment provided by China for the factory, he offered to make a speech and talked about his views on the current situation of Friendship Textile Factory.

Zhu Rongji's approach is to establish joint ventures. He proposed to transform the Friendship Textile Factory into a Sino Tanzanian joint venture and put the management right in the hands of the Chinese side. He will also set the Friendship Textile Factory as a model for the reform of aid to Africa.

At that time, Changzhou Textile Industry Bureau of Jiangsu Province (hereinafter referred to as "Changzhou" due to the subsequent change of the bureau) happened to carry out technical transformation at Friendship Textile Factory. When Zhu Rongji visited Chinese experts, he immediately named Changzhou to take over Friendship Textile Factory.

In 1996, the Sino Tanzania joint venture Friendship Textile Co., Ltd. began to operate. The Chinese side will convert more than 70 million yuan of interest free loans into 51% shares, and Changzhou will send the chairman and appoint the general manager; The Tanzanian side holds 49% of the shares. The Ministry of Finance appoints a director, and the deputy general manager is also a Tanzanian person.

Under such equity arrangement, Baraza became the deputy general manager of Friendship Textile Factory. At that time, he was the general manager of the Upongo textile factory next door. When our reporter saw him in the office, he was over sixty. Similarly, the original state-owned enterprises have been transformed into market-oriented joint ventures. The Chinese side took over the management, which prevented the Friendship Textile Factory from going bankrupt until today.

As of 2012, the restructured Youyi Textile Factory has produced more than 100 million meters of cloth and achieved sales revenue of more than 100 billion Tanzanian shillings (hereinafter referred to as "shillings"). The calico produced by Youyi Textile Factory is of reliable quality, and most of the time the supply falls short of demand. At present, it occupies about 10% of the local market. Take Kangga, the main product, for example. The market price has risen from about 600 shillings/m in 2006 to about 2300 shillings/m in 2011, and there is still no shortage of sales.

Friendship Textile Factory has also created considerable social benefits for the local people. For more than ten years, the company has paid more than 20 billion shillings of taxes to the Tanzanian government, which is already a large tax payer in poor Tanzania. The company paid more than 20 billion shillings in wages and benefits to its employees, providing about 2000 people with the most jobs.

The biggest achievement of Friendship Textile Factory is not these tangible assets, but intangible value. At present, Friendship Textile Factory is the only remaining overseas textile enterprise since the implementation of the market-oriented reform of foreign aid in 1995. Zambia Mlongushi Textile Factory, which was established and restructured at the same time as Friendship Textile Factory, has closed down; When the reporter went to visit, the factory gate was closed and weeds were overgrown.

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Planning and market

Although the restructured Friendship Textile Factory came back from the dead, it did not turn losses into profits, but encountered greater trouble. In addition to making profits in the first year after restructuring, the company has suffered losses for consecutive years.

From 2007 to 2011, Friendship Textile Factory lost 1.5 billion to 2.5 billion shillings annually. In 2011, the company stopped production for several months due to the shortage of cotton (20140, - 50.00, - 0.25%) (the main raw material of the textile industry), which was once on the verge of stopping production; In 2012, the company continued to lose money. Over the past decade, the company has accumulated losses of nearly 20 billion shillings, which has exceeded the capital stock at the current exchange rate.

In addition, according to the audit of a Chinese domestic firm, at present, the total assets of Youyi Textile Factory are about 26 billion shillings, and the liabilities are about 30 billion shillings. The debt ratio is up to 115%, and it has become insolvent. The net asset is about minus 4 billion shillings, which indicates that the enterprise is operating in debt and is barely able to survive mainly by long-term loans (free of interest).

According to the statistical caliber of a local consulting company, the book assets of Youyi Textile Factory after deducting depreciation are about 34 billion shillings. Even on this basis, the debt ratio is also high.

Why does a company whose products are favored by the market lose money and operate in debt year after year?

It should be recognized that the general direction of marketization is right. However, the subsequent employment policy of Friendship Textile Factory directly foreshadowed the long-term labor disputes later.

A party concerned described the original situation as follows: In 1996, Changzhou just took over the factory, was not familiar with the situation of the old workers, and still handled the employment problem in the traditional way of state-owned enterprises. The restructured Friendship Textile Factory has adopted a policy of overall contracting for about 2000 old workers in the old factory, and enjoys the treatment of permanent workers indefinitely. Among them, the sick, the old and the infirm, and the troublemakers.

The original employment plan only had 1250 people. These 2000 old workers not only far exceeded the employment plan and became a heavy burden, but also became an unstable factor for Friendship Textile Factory.

After the operation of Youyi Textile Factory, the operation was not completely market-oriented. For example, the Tanzanian government, as the second largest shareholder, has always stressed that Friendship Textile Factory must be a purely productive enterprise. It has not developed the tertiary industry and mixed operation - which should be a more profitable project.

In the correspondence between various departments of the Tanzanian government and Friendship Textile Factory, and in the strong words of representatives of the Tanzanian government on the board of directors, our reporter can feel the fierce conflict between the market and the plan everywhere, which also makes it at a loss in the market and the plan, laying the foreshadowing for the long-term dilemma later.

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Technical transformation problems

After a short period of profit, Friendship Textile Factory has suffered a large loss since 1998. In the face of losses, both the company's management, the board of directors and both governments are trying to turn losses into profits.

At first, all parties believed that backward technology, outdated equipment and low product grade were the main reasons for the loss. Since 2001, Youyi Textile Factory has started the technological upgrading and transformation with a total cost of about 100 million yuan, which is called "Phase II Technological Transformation" internally. However, due to practical obstacles, the "second phase technical reform" failed to achieve the expected results.

From the table of implementation of "Phase II technical reform", it can be found that in the implementation process, the capital investment of spinning, weaving, printing and dyeing is not balanced. do spinning Compared with the investment in weaving, the budget has shrunk significantly - the budget allocated to weaving is more than 25 million yuan, but only 30% of the actual use is achieved, and the original plan of air jet looms has not been implemented; But the original budget of more than 30 million yuan allocated to spinning did not use the last penny. On the other hand, for printing and dyeing, the budget is about 20 million yuan, but it is actually overspent, much more than spinning and weaving.

As for the impact of unbalanced use of funds, we can learn something from mechanic Saidi. When our reporter saw him again in the printing and dyeing workshop, the factory was the busiest afternoon. The machines in the spinning and weaving workshops are roaring and crowded; But the huge printing and dyeing workshop is quiet, all the machines are idle, and only a few workers sit idly.

Saidi calls himself "machine chief" and has a say in machines. In his opinion, the "second phase technical reform" has improved the performance of the machines in the printing and dyeing department, and the speed of the printing and dyeing process has increased rapidly, and the output has increased. The problem is that the machines in the other two departments (spinning and weaving) are too slow and the output is too low. The new machines in the printing and dyeing department have to wait for the old machines for spinning and weaving. Some machines have been idle, such as jigger, mercerizer, etc.

Our reporter checked the factory date of the machines in the printing and dyeing workshop on the spot and found that many of them were relatively new. For example, the printing machine is "1620mm type" and "1850mm type" manufactured in 2000, and has also undergone technical transformation. Most of the old equipment is concentrated in the spinning and weaving workshops. For example, the carding machine is the "A186H" type produced in 1979, which has been used for more than 30 years. Many more machines are idle because they are too old or damaged.

But what really offsets the achievements of technological transformation is the long-standing labor capital contradiction. After the technical transformation, the production capacity of the factory has been greatly improved; However, the new machine is of increasing scale efficiency - that is, the longer the machine runs, the lower the proportion of fixed costs and the higher the gross profit. This requires workers to work overtime. However, trade unions and activists among workers use their influence to encourage workers to refuse to work overtime, go slow or even strike.

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The failure of introducing steam turbine generator is a typical example.

Like many African countries, Tanzania suffers from power shortage and frequent blackouts. In 2003, Tanzania suffered from a widespread power shortage. Therefore, the company spent more than 15 million yuan to purchase a 1500 kilowatt steam turbine generator set and supporting equipment at a price several times the budget to solve the power problem. However, the startup and shutdown time of this turbine is too long, which takes three or four hours. In other words, it must work 24 hours a day to maximize its effectiveness, or it will cause a great waste just by turning on and off.

In order to adapt to the new machine, the management tried to change the shift arrangement system, trying to work in two shifts every 12 hours and pay high overtime wages. However, this was strongly opposed by the Trade Union of Friendship Textile Factory. At last, the Trade Union set up another set of information, which was still based on an 8-hour single shift. There are also more and more workers slack off.

Of course, the trade union has another version of this matter. In the view of the trade union, working overtime for high overtime pay is not worth it, because it damages health and violates the law. Now, this steam turbine has been damaged. In Africa, due to the low quality of labor force and the heavy dependence on imports of parts, the depreciation of equipment is surprisingly high, and things often go bad soon.

Not only the steam turbine, but also the machines in the whole factory are inefficient. Since the completion of the "second phase technical reform", the utilization rate of machines in the three workshops of spinning, weaving, printing and dyeing is only 30% to 40%. The main reason is that there is no shift, and the root is labor capital conflict.

Labor capital contradiction

When talking about the labor conflict of Friendship Textile Factory, we can't help mentioning two important events in the company's history: "10000 lawsuits" and "150000 lawsuits". These two lawsuits are the two "mountains" pressing on Friendship Textile Factory, and also the concentrated embodiment of the tension between labor and capital. Behind it, it reflects the common problem that Chinese enterprises face when investing overseas - labor capital conflict, and the maladjustment to the labor law, cultural habits and even language of the host country.

"10000 lawsuit" refers to the workers' claim that the company underpaid them every month. In 1998, the President of Tanzania made a speech praising the Friendship Textile Factory, saying that "60000 shillings a month has brought good wages and benefits to workers". The president's good words were a great compliment. However, the workers seized on the details of the President's speech, saying "wages and benefits" separately, and asked the company to "reissue" 10000 shillings per month of welfare allowance on the grounds that the 60000 wages mentioned by the President were only basic wages.

Since then, the workers have fought against the management by means of sabotage, protest and even strike. It was not until the representatives of the Tanzanian government made a special trip to the Friendship Textile Factory to hold the workers' meeting that the storm came to an end. However, the seeds of disagreement have also been sown.

Moreover, the storm has not subsided. In 2004, workers began to claim the "arrears"; In 2006, the trade union formally sued the management to the local court "owe them 10000 shillings per month".

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In court, the vague language in the contract has become the focus of controversy. According to the Chinese management, when the old factory was transformed into a new factory, they sent an employment notice to each employee. The English version was given to the management and the Swahili version was given to the workers (note: the official language of Tanzania). The contract says that "workers are entitled to a monthly allowance of 10000 shillings, which is included in their wages". However, according to the grammar of Slovenian, it can also be understood that it is not included in wages. This loophole was caught by the trade union.

The trade union believes that although there are differences between English and Slovenian contract versions, the legal effects of the two are the same. According to the chairman of the trade union, the management also said to them that the differences between the two language versions were "irrelevant". This naturally led the trade union to choose a Slovenian version that was beneficial to its own side. "If the factory had corrected its mistakes immediately, things would not have been as serious as they are today," the chairman of the trade union told our reporter.

The trial of the case went through many twists and turns. In 2008, the Tanzanian High Court decided in the first instance that the management lost the lawsuit, and should pay workers 10000 shillings per month allowance, totaling 1.5 billion shillings (about 6 million yuan). In October 2011, the management was forced to start paying the workers. However, in the view of the trade union, "the factory is self defeating".

One wave is not flat, another is rising. What made the management feel more pressure was another "150000 lawsuit" involving compensation of about 5 billion shillings (about 20 million yuan). This directly threatens the cash flow, the lifeblood of Friendship Textile Factory.

The "150000 lawsuit" started in 2007. That year, the Tanzanian government suddenly raised the monthly minimum wage of the textile industry from 60000 shillings to 150000 shillings, plus 65000 shillings of subsidies. At that time, this meant a monthly income of 1000 yuan, which was much higher than the local income level, and also exceeded the affordability of local textile enterprises. In the protest of textile employers, the government announced that 20 textile enterprises, including Friendship Textile Factory, would be exempted from the 150000 minimum wage.

Not surprisingly, the exemption order was strongly opposed by the trade union. The trade union sued the Tanzanian government and Friendship Textile Factory jointly on the ground that the exemption order was illegal.

Compared with the "10000 cases", the "150000 cases" are more dramatic, and the labor and management sides have attacked and defended each other in the continuous appeals and lawsuits. At the end of our reporter's interview, the case was still under trial, but it was basically judged that the management would lose the lawsuit. Although the Tanzanian government reset the minimum wage to 80000 shillings in April 2010, the management still has to pay 150000 shillings monthly wage and 65000 shillings allowance during the period.

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The loss of two lawsuits brought huge compensation, which undoubtedly made the situation worse for Friendship Textile Factory, which had suffered losses for years. The management told our reporter frankly that the capital chain of the enterprise was under great pressure, and the cash flow was at risk of breaking. However, in the eyes of the chairman of the trade union, if the company stops production and goes bankrupt, it is the problem of the factory; However, we would rather close the door and pay the wages "owed by the factory".

However, although the trade union won two lawsuits, the workers did not benefit from the poor performance of the enterprise. Due to the two lawsuits, the labor and management are in more antagonistic mood, and production cannot be carried out smoothly, and wages naturally cannot rise. This is a "lose lose" situation between labor and capital.

At present, Friendship Textile Factory is looking for strategic restructuring to revitalize itself. In fact, Friendship Textile Factory has always owned an excellent asset - lots. The factory area is very large, and it is the gateway to the main roads in and out of the city, just like Guanzhuang to Beijing, or Jiangqiao to Shanghai. The geographical location is superior, and it is suitable for real estate and logistics development. If this asset is revitalized, Friendship Textile Factory is expected to be revitalized again and form a diversified comprehensive enterprise integrating textile, real estate and logistics.

Our reporter learned that there are already domestic private enterprise Expressed a clear intention to acquire the shares of Youyi Textile Factory. However, for various purposes, the Tanzanian government and Congress have delayed or obstructed the reorganization of Friendship Textile Factory. In the board of directors, representatives of the Tanzanian government also had lengthy and inefficient discussions with Chinese directors.

So far, restructuring has been discussed for several years without substantive progress.