Beijing Newspeak

(To skip to the actual point of this post, feel free to go directly to paragraph three) I haven’t been able to witter on very much in the last week or so. One of the reasons for this was a long weekend in Shanghai during which they were two highlights, both occurring in the canal town of Tongli, just outside Suzhou. The first took place in a riverside shack that served fish soup from nearby Tai Hu, which thankfully did not have an obvious blue green tinge. I submitted my order with minimum fuss to an old lady who suffered from the two extremes of dental woes - predominantly toothless but the few teeth that still clung to her gums protruded at near right angles. A young female Chinese urbanite then sat down and proceeded to ask what the old lady could provide in the way of speciality dishes. A wholly satisfying conversation for a foreign onlooker with dodgy Chinese then ensued in which neither party could understand what each other was saying and culminated in the city chick storming off in a sulk and the old woman shaking her head in bemusement as if she had just been pelted with Cockney rhyming slang. The second climax of the trip came in the way of the China Sex Culture Museum which is somewhat suprisingly based in the traditional town. As the visitor walks through the entrance, he or she is greeted by a metre-high, Gollum-like character made of stone, his face distorted in a state of anguish and his body wrapped in rusting chains. He has an 80-centimetre penis, erect and substantial in girth. The sign reads, “Not all the parts of the body can be restrained by chains.”

This flagrant digression can be attributed to today’s superb party shift at Xinhua. I arrived at midday for a gathering in a meeting room on floor 15 to welcome three new foreign experts to the fold. Crisps, fruit and popcorn were provided, as were several cans of Yanjing. Everyone was given a piece of cream cake on the condition that they made a wish for Xinhua. “I wish the foreign experts would not kill our stories,” was a common plea. It ended at 1.30 and I had to work a full four hours before a dinner was held with the more senior members of the department. This is of course featured much toasting of baijiu. On to the topic in hand …

As China Law Blog said in a recent post, the new Labour Law, which comes into effect on January 1 next year, is a “huge deal. Huge I tell you”. The significance of the law was summed up by Huawei’s decision to “ask” 7,000 of its employees who had been working for the company for eight years or more to resign. It was seen as a way to circumvent the new law which states that employees can sign open-ended labour contracts if they have worked for a company for ten years or more. These contracts will make it harder for an employer to fire its workers. The Huawei employees would then sign contracts ranging from one to three years but faced the possibility of having to leave the company when they expired. They were paid a total of one billion yuan in compensation but it was unclear how this sum was distributed. One of the employees to resign, according to Huawei, was its own president Ren Zhengfei.

The media quoted many experts criticising the act. The China Daily reported:

“I can’t understand why Huawei has taken such an unwise step,” You Yunting, a lawyer with JoinWay Law Firm in Shanghai, said.

“Once this problem is solved, new problems will arise and the costs will mount up.”

and:

Lu Tong, a researcher at the China Academy of Social Sciences, said: “I think it’s a very bad example. Other companies will follow Huawei’s example and mess things up.”

Xiao Fangsheng, director of the labor law committee of the lawyer’s associations of Guangzhou in Guangdong Province, agreed that Huawei did not have a clear understanding of the contract law.

“It tries to dodge the disadvantages of the open-ended contract but its efforts will turn out to be invalid.

“Even with the new contracts, employees can still enjoy the benefits of open-ended contracts because they never left the company and are still working for the company even if they quit,” Xiao said.

A few days later, Huawei hit back with a statement reported in China Daily, denying it was trying to evade the law:

BEIJING, Nov. 6 — The country’s top telecoms equipment-maker Huawei Technologies said Monday that the mass resignation last month by more than 7,000 of its employees was simply part of a program to boost its competitiveness.

The privately owned company is one of the first in China to give its staff stock options. However, it said it now needed to revise employment contracts to increase its efficiency, which had been damaged by both the stock option plan and its unique “job number” scheme.

Under the latter, workers who joined the Shenzhen-based company between its establishment in 1988 and 1999 were paid higher salaries and given a better benefits package.

However, in a statement issued to China Daily, Huawei said the stock option and job number schemes, which had initially helped boost morale in the firm’s early days, had in more recent times caused resentment among those not covered by them.

A day later the fun started in Xinhua’s English department. The reporter in Shenzhen tried to claim an “exclusive interview” in which he had somehow managed to persuade Huawei to comment on the issue. As Xinhua has a wonderful talent at doing, a story was formed which sounded like it came straight from Huawei’s publicity department - a hammed up version of the statement that had appeared in China Daily. It spoke of more than 6,000 Huawei staff being reemployed without explaining what had happened to the other 1,000 of the 7,000 reportedly forced to resign. No one could explain the discrepancy. I asked for quotes from some employees and they came suprisingly swiftly. Two employees were full of praise for the practice but I couldn’t help but feel suspicious. Yes, the total compensation figure appeared generous but no sums could be attributed to the individuals making the comments. It was also impossible to assess how reflective the feelings of these two employees were of the general opinion. In the end, the story was never released. It had too many holes. Once again the thread had been pulled and the whole yarn had been unravelled into something that didn’t stand up.

While the Shenzhen Bureau of Labour and Social Security had decided nothing particularly untoward was going on, the All-China Federation of Trade Unions launched an investigation into the mass resignations at Huawei. A story then appeared at Xinhua with news that the ACFTU had persuaded/told Huawei to suspend the resignation plan.

HUAWEI Technologies Co Ltd has agreed to suspend its controversial “voluntary resignation” scheme after talks with trade unions, the All China Federation of Trade Unions said on Saturday.

The federation said it called on China’s biggest maker of telecommunications network equipment to protect workers’ interests after its plan sparked fears that the company was trying to sidestep a new labor law.

There was no further comment from Huawei or any mention of what had happened to the workers who had already resigned, which by all accounts was the vast majority of the 7,000. Unfortunately, we will probably never know as I heard on the state media grapevine while down in Shanghai that the Publicity Department issued an order last week to cease all coverage of the Huawei employment issue and to make no attempt to question Huawei staff about it. Xinhua only reported the ACFTU findings because the trade union federation is an “official” source.

The fact that the media has been silenced has presumably got something to do with the influence of Huawei president Ren Zhengfei, formerly a senior People’s Liberation Army officer. Incidentally, an article in Forbes back in 2004 spoke of Huawei’s “opaque ownership”:

The company says 1% belongs to Ren (enough to land him on the FORBES list of China’s 200 richest people at $96 million) and the rest to a “union” whose principals Huawei has never identified.

Adding to the air of mystery, Ren rarely accepts press interviews (including the one requested for this article); instead, he dispatches insiders to public events. Set against a global wariness among businesspeople regarding China’s dismal record of intellectual-property protection, it’s an approach that makes Huawei a magnet for suspicion, even as it consistently delivers winning products (routers, switches and wireless networking equipment, among other things).

It seems the decision by the ACFTU will deter a raft of companies from following Huawei’s example which is good news for employees. Unfortunately the intervention may be too late for the employees of Huawei. According to Xinhua, the Huawei workers will have their say at a company conference scheduled for an unspecified date. Given the media muzzle it is unlikely we will hear what comes out of it.