Some of the most challenging and important issues in debates over globalization concern capital relocation, labor rights, and development prospects. Some argue that the hyper-mobility of productive capital—relocating from high-wage to low-wage areas in search of cheap and pliant labor—has led to a “race to the bottom” in workers’ wages and sounded the death knell for workers’ capacity for collective resistance in both Global North and Global South.

China looms large in these debates, due to its outsized role in global production and its growing impact on global governance. Scholars have argued that the mobilization of China’s vast reserves of cheap and disciplined labor has led to a race-to-the-bottom in wages and labor standards, producing a downward spiral in workers’ power and welfare.

Notwithstanding its popularity, the thesis that capital is footloose, and that capital relocation produces a straightforward race-to-the-bottom is suspect on both theoretical and empirical grounds. In fact, our knowledge of precisely how capital relocation interacts with labor and what role workers play in shaping landscapes of global production and firm strategies in work organization and labor control is limited.

This is in part due to a lack of systematic empirical studies on work organization and labor control at the intra-firm and plant-level operations embedded in specific locations.  It also reflects the tendency in the literature to treat labor as merely a factor of production or location, or as passive victims of capital’s constant search for cheap labor.

Yet as studies in labor geographies have shown, despite the power and spatial asymmetries between labor and capital, workers have agency to strive to improve their relative position, and they intentionally and unintentionally reshape the geographies of capitalism through their actions.

In my recent study of geographical relocation and expansion of the electronics industry from China’s coastal regions to its interior, I seek to contribute to a more dynamic and nuanced understanding of capital relocation in relation to labor through an agency-based global production network (GPN) analysis that emphasizes the role of local states and worker agency in the making of work regime dynamics.

The electronics industry is at the forefront of the recent waves of capital relocation and industrial upgrading occurring in China, with major manufacturers already sourcing a significant proportion of their shipments from Chongqing and Chengdu—the two largest cities in southwest China. I chose one platform firm, one lead firm, and two contract manufacturers located in different value-added positions in the electronics GPNs, as well as their plants in Chengdu and/or Chongqing involved in the process of relocation/expansion of production, as my cases. All the companies have followed similar relocation/expansion trajectories from the Yangtze River Delta (YRD) to West China in recent years.

Based on extensive fieldwork conducted in Chongqing and Chengdu between 2012 and 2017, I find that a migrant labor regime in coastal regions has shifted to a local-labor based development strategy in western regions when capital moves inland.

This shift, I argue, has increased labor agency and given rise to capital’s labor control problems and work regime dynamics that are unique to the relocation process and western regions in China. More specifically, my evidence shows that as most workers become locally-situated and work closer to home, they tend to have more local social networks and family and community support than long-distance migrant workers in coastal regions do.

As a result, workers have increased agency and they are more likely to quit, job-hop, or push back for better pay and working conditions. Faced with the changing migrant labor regime and the associated labor problems, the local governments of inland provinces have to play a more active role in building local labor institutions suitable for global production, including subsidizing labor reproduction and consumption costs and stabilizing local labor markets.

While primarily attended for capital’s labor needs, some of those local labor institutions, such as the overhaul of the household registration (hukou) system and the public housing project, have de-commodified labor and boosted workers’ labor market bargaining power and agency, as workers are less desperate to take any jobs available. These new local labor conditions, in turn, have influenced firms’ localization strategies in order to bring more stability to their workforce.

But because of their different positions and labor processes in the electronics GPNs, management has adopted distinct labor control strategies. The result is that, rather than a race-to-the-bottom in work conditions, three distinct work regimes have emerged in the new sites of production in western China, depending on firms’ respective positions in the GPNs and workers’ responses/agency embedded in the GPNs and local labor institutions.

The work regime at the platform firm’s Chengdu plant, a world-class chipsets assembly and testing facility, can be characterized as advanced quality production and negotiated commitment between workers and management. This case demonstrates the active role of worker agency in influencing the company’s localization and labor control strategies through negotiation with management, including a plant-wide strike that forced management to change labor control strategies to earn workers’ cooperation and commitment.

At the lead firm’s Chongqing plant, the work regime can be characterized as “lean-and-dual” and fragmented discontent among the workforce. On the one hand, lean production practices have been widely adopted. On the other hand, management has adopted a core-peripheral staffing strategy to divide and control workers, and to balance the functional flexibility provided by core workers and the “numerical flexibility” obtained from peripheral workers. The result is fragmented discontent among temporary workers, who have thus far resorted to individualized coping strategies or everyday resistance to exercise their agency, rather than seeking collective actions to openly challenge management authority and unfair treatment.

Located in the low value-added position of the electronics GPNs, contract manufacturers face cutthroat competition and razor-thin profit margins. By combining scientific management with flexible production practices, they constantly seek efficiency maximization, cost reduction, and standardization. The work regime at the two contract manufacturers can be characterized as flexible Taylorism and high-level labor turnover and resistance.

Across all the cases, workers have exercised active agency to improve or mitigate their circumstances, from individualized coping strategies and everyday resistance, to collective actions such as strikes and protests. But the levels and potential of workers’ agency vary and are shaped by the GPN structures in which workers are embedded.

Thus, even though workers at both the platform firm and contract manufacturers went on strikes to demand higher pay and better conditions, the strike at the platform firm was able to pressure management to transform the work regime into a labor-management negotiated commitment, while the strikes at contract manufacturers were only able to get limited economic results (unpaid overtime) without changing the work regime.

This does not mean, however, that the more advanced and profitable firms will automatically adopt a “high road” labor strategy. Rather, as my case demonstrates, workers’ response/agency has played an important role in influencing management localization and labor control strategies. Thus, the variegated work regimes are not simply the result of firms’ positions in the GPNs and their actions, but are the result of dynamic, relational struggles between capital and locally situated workers as well as state practices.

Indeed, as described in the article, industrial relocation to western China is not simply driven by global capital seeking flexible conditions and cheaper labor. Rather, it is embedded in the national context of state-led economic development aiming to reduce regional disparity and strike a balance between industrial profitability and political legitimacy.

This story itself challenges the basic assumptions of the race-to-the-bottom argument associated with capital relocation. It provides important context for industrial relocation and work regime dynamics in western China. These findings contribute to an agency-based GPN analysis that highlights the important role of local states in building location-sensitive labor institutions and workers’ constrained, varied agency in influencing work regime dynamics.

While this study shows that workers have agency, locations are not homogenous and substitutable, and that capital’s local labor control needs put constraints on its ability to move freely, our evidence also points to the fundamental power asymmetries between local labor and global capital.

The findings have several implications for labor and local development in an era of globalization. First, to remain competitive in global manufacturing, countries and local states need to build integrated labor institutions that bring more stability to the local labor market and provide appropriate conditions for production.

In other words, the competitive advantage of a locality in a GPN needs to be built on integrated, comprehensive labor institutions that increase the overall labor competitiveness, rather than simply on labor cost. For China, with growing labor shortages and the changing migrant labor regime, this requires local states to develop inclusive social policies to better accommodate migrant workers and account for their reproduction costs. The past export-led growth model that was built on regional disparity and exploitation of migrant workers is not sustainable.

Second, from a development point of view, scholars have argued that developing countries or regions can attain more desirable development outcomes through active state policies aiming at industrial upgrading within particular GPNs. It is true that without forward-looking and concerted policy efforts that aim to purposefully navigate the global value-added hierarchy, developing countries may find themselves essentially running in place without changing the status quo of the global economic hierarchy.

However, studies have shown that industrial upgrading does not necessarily lead to social upgrading in labor rights and working conditions. In fact, when discussing policies to promote industrial upgrading, the local officials in Chengdu and Chongqing I interviewed were more interested in automation and technologies assisting companies to increase productivity and profitability than in labor rights and environmental protection.

Therefore, even if China manages to move up in global value chains, without a paradigm shift and reorientation toward more balanced development focusing on peoples’ livelihoods, labor rights, social equity, and ecological sustainability that goes beyond the conventional developmental state, the prospects for China to escape the pitfalls of the energy-intensive, mass-consumption model remain dim.

Lu Zhang is an Associate Professor of Sociology and Global Studies at Temple University.

To read more, see: Lu Zhang. “A ‘Race to the Bottom’ or Variegated Work Regimes? Industrial Relocation, The Changing Migrant Labor Regime, and Worker Agency in China’s Electronics Industry” in Review of International Political Economy 2021.

Image: Electronics Factory in Shenzhen, China by Steve Jurvetson via Wikimedia Commons (CC BY 2.0)