Shanghai and SMIC
Trip Start
Apr 26, 2006
1
10
13
Trip End
May 10, 2006
Shanghai,
China
Thursday, May 4, 2006
The effects of globalization are one in which most people discuss on a macroscopic level. Few get an up close perspective on the actual instance of globalization. Today I arrived in Shanghai a day in advance for my interview at SMIC (an Integrated Circuits company) for my interview on May 5th. From my research of the company, I saw pictures of a beautiful campus along with many excellent facilities. It was a beautiful picture painted for the investors and customers to see how the company had created a wonderful environment for its workers to live and work. From the pictures and descriptions, I had imagined a Western styled campus not much unlike a Microsoft or a Google campus found back stateside yet when I got here, I was shocked how things really were.
While the environment was serene, the actual campus was nothing like the pictures. Instead of a Western campus, what I found was a tiered system of living. At the top were housing for Westerners and for top executives and from what I could see, the do have the nice environment shown in the pictures on the company websites. At the bottom were dormitories for the typical worker to which I was assigned a room. I do not know what the previous life was like for the individual workers working on the campus but my guess is that this was probably a decent living compared to many of their peers. However from Western standards of living, what they are getting is at best barely passable.
I guess what I see is that while the company is providing better living standards than what many of these workers would otherwise get, I couldn't not help but think that these workers are undervaluing their worth in the grand scheme of things. Moreover the tiered level of living enforces castes and restricts social interaction and social mobility between different socioeconomic groups. If you were in the worker class at SMIC, there seems to be limited upward mobility.
This is precisely the effect of globalization. The economics of globalization dictate that companies source products or services from different regions of the world in order to get what they are looking for at the lowest costs. This means moving to regions of high poverty in order to exploit the low cost of unskilled or semi-skilled workers. These workers are enticed by the promise of (limited) upwards social mobility but do not have a realistic chance of moving upwards. More importantly, the wealth and the greater profit that are the result of lower cost of goods line the pockets of the persons/investors sitting on top of this social pyramid.
From the perspective of 1st world countries, put a downward pressure on domestic low-skilled and semi-skilled workers. Because of the 1st world costs of living are in effect in these countries, these poor skilled workers cannot compete with the same workers in a poor country. More insidiously, the lack of resources for these individuals results in the lack of access services and/or resources to could help these workers or their children climb the social ladder. In theory the resources are still their but in practice it is not available at all. The net effect is that we are beginning to see social stratification in 1st world country as well.
Staying in the Worker Dormitory at SMIC
My living quarter facilities were both cramped and spartan but it was manageable. I do not mind the conditions nor do I need much luxuries to survive but I could not live in these quarters because of the futility and depressing conditions of the quarters. What's more bothersome is the extravagant and luxurious apartments of the foreign workers and upper management in plain view of the dormitory compound. In addition there are 2 sets of shops, one set for the richer folks and one set for everybody else. I don't know how people in the upper tier of the company live in plain sight of the majority of the workers here yet feel indifferent to the disparity of conditions. How can one live in a caste-like system without feeling some sort of social concern for their fellow persons? I've heard from friends who describe the SMIC company as one with strong Christian influence yet, the way things are done almost goes against the basic principles of Christianity of charity and concern for the less fortunate. Even a non-Christian like myself understands and feels troubled by the lack of concern for this principle.
SMIC and My Interview
It not clear to me that the group that I am interviewing for really wants me. Sometimes I wonder if these guys are just going through the motions of interview simply because I was recommended from above. In Chinese culture, when your boss recommends somebody, there is social pressure to NOT say no. If anything else wanted to see how things are run, how business is conducted, and what the manufacturing conditions are like at a sourcing company. I had to come see the campus because I have no idea what it is like prior to this experience. This type of information can only help my career and I will use this interview was mainly a fact finding mission.
China's Internet Cafés
The interesting thing about staying in the middle of nowhere and mingling with the locals is that you get a feel for what life is really like here. I went to an internet bar (since I don't have jack in my dormitory room) to do some errands and stuff like that. Anyways, I got to see what a government sponsored internet café is like in China. Basically it's just a dark, dingy place. What's even weirder is that in order to use the facilities, you have to register yourself with your identity card. In my case, I had to register with my passport. Functionally, everything is pretty much the same as any internet bar except that it's just darker and smokier. Most of the people using the internet were younger folks playing online games, chatting or other social stuff. Nobody uses it for business or for ecommerce simply because outside of the city centers, nobody seems to have the internet at home.
It all makes you wonder about all these high Western valuation for all these businesses doing "ecommerce" like stuff in China. True that there is huge potentials for the investments. However there are also huge issues in trying to apply the Western business model to China (probably the same issue applies based on what I've seen in India in my last trip). This brings me back to my concerns with certain management consulting and financial projections practices. Sometimes the fancy graphs and Western models aren't the same as what you see on the ground. More importantly sometimes Western auditors don't really see what's going on because people will show you what you want to see in order to get the investments.
