Outside help

Chinese workers discover the leverage of foreign pressure

There is an old Chinese expression, 告洋状, best rendered as “complaining abroad”: taking a grievance that cannot be settled at home to foreigners. It has rarely been complimentary. The implication is that someone has carried a domestic quarrel outside the family and invited outsiders to interfere. In a country often bordering on paranoia about external criticism, let alone foreign interference, one can imagine how disreputable such behaviour has traditionally appeared. A labour dispute at Xingyu Automotive Lighting, a publicly traded car-lamp maker in Changzhou, Jiangsu province, is giving the phrase a more approving resonance.

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Pekingnology noticed Xingyu on August 16, in A useful time to complain, about how employees were beginning to use Hong Kong IPOs as leverage in labour disputes. I may have spotted the mechanism early while underestimating how explosive this case would become. Xingyu recruited well-educated fresh graduates, including holders of advanced degrees, for technical and R&D jobs. Within weeks, some said they were told those jobs were gone: accept ordinary production-line work or leave, with departure also threatening access to some opportunities reserved for fresh graduates.

The symbolism was almost designed to infuriate. China has a record 12.7 million university graduates this year, and youth employment remains difficult. A degree from a good university, even an advanced one, no longer guarantees anything resembling a good start to a career. Xingyu itself is under pressure, with first-half revenue rising only 1.9% and net profit falling 5.3%. “Hired for R&D, sent to tighten screws” was bound to resonate far beyond one factory.

What made the dispute unusual was where some graduates took it. They complained not only to domestic authorities but to the Hong Kong Stock Exchange, where Xingyu is seeking another listing, and to customers including Volkswagen, Mercedes-Benz and BMW. Volkswagen China said it had received the complaint and launched a special investigation; BMW told Chinese media it had noticed the case and communicated with the supplier. Chinese media also reported that Mercedes-Benz’s Business & People Protection Office had replied to a complainant and referred the matter for further review, although Mercedes-Benz itself had not publicly confirmed the reported investigation when Caixin checked.

It is tempting to draw a straight line: the graduates complained abroad, foreign companies intervened and Xingyu backed down. The chronology does not justify it. By September 1st, when Volkswagen and BMW spoke publicly, Changzhou’s government had already announced a special investigation on August 25th; Chinese institutional and social media were already consumed by the case, and Xingyu had already apologised and sweetened its support package on August 27th. Domestic outrage, intense media scrutiny and local-government intervention could perfectly well have made the company blink independently of anything said in Wolfsburg, Stuttgart or Munich.

But complaining abroad still mattered. Its most obvious effect may not have been in Germany or Hong Kong at all, but back home Every complaint, and especially every foreign acknowledgement, became another news hook and another source of legitimacy. An ugly HR dispute became a potential IPO-compliance and global-supply-chain problem. Foreign pressure may not have created the crisis; the act of seeking it amplified the crisis at home.

That became clearer when one lawyer-blogger tried to turn the tactic itself into a political offence. A widely circulated post, since deleted, urged the state to stamp out the supposed disorder of “complaining abroad”, arguing that workers who reported employers to foreign companies or overseas capital markets were inviting foreign “long-arm jurisdiction” under the banner of ESG and labour standards. It went so far as to call for legislation banning such cross-border complaints and for them to be brought within China’s campaign against organised crime. The proposal was promptly mauled online, with critics accusing its author of turning ordinary labour-rights claims into questions of national loyalty.

That reaction is striking. Chinese netizens can be fiercely sensitive to foreign criticism of China, and official rhetoric is hardly relaxed about “external interference”. Yet in this case many people who would normally be alert to such language seemed to see nothing objectionable in workers seeking foreign leverage over a Chinese company; nor has there been any visible official move to rebuke the graduates for doing so. My own impression from watching Chinese public opinion is that, when the two collide, a sense of social injustice can sometimes outrank nationalism.

There are structural reasons for that sympathy. China has no independent trade-union movement outside the state-sanctioned All-China Federation of Trade Unions, the only legally recognised union federation. Employers therefore face far less organised countervailing power from labour than companies do in many capitalist countries. Legal remedies exist, but an individual worker confronting a large listed company still starts from a weak position. A stock exchange or multinational customer can provide leverage that the ordinary employment relationship does not.

Foreign companies need not be charitable defenders of Chinese workers for this to matter. Volkswagen, BMW and Mercedes-Benz impose labour, human-rights or sustainability requirements on suppliers because they have legal, commercial and reputational interests of their own. In China there is also an increasingly familiar perception that Western-headquartered multinationals tend to offer stronger benefits, more predictable employment practices and better labour protections than domestic private firms.

Xingyu, meanwhile, remains under an extraordinary public microscope. Even an error in its annual report that made its vice-chairman appear only seven years younger than his mother became another occasion for ridicule; the company corrected the mistake and apologised, while the Shanghai Stock Exchange sent it a regulatory work letter the same day. The mistake was trivial; the reaction was not. The original employment dispute had touched a nerve that has not stopped throbbing.

As trade and investment relations between China and Europe grow more quarrelsome, that is worth remembering. Foreign investment and global supply chains have imported more than factories, capital and technology; they have also imported complaint mechanisms, supplier codes and expectations about labour treatment that Chinese workers can sometimes use. Trade disputes can be fought on their own merits. The more awkward question is why these protections can still look like an imported product—and when Chinese workers will no longer need to export a grievance in order to import protection back home.