The teeth of the dragon

What happens when the Chinese bids on large contracts outside Mainland China? If one is to take the lesson from what is happening in Africa and South East Asia it would seem that there is reason to be somewhat comprehensive.

Recently there have been moves by China to bid on European railroad contracts. This type of infrastructure work requires large amounts of labour in order to lay the many kilometres of track, which is required.

If one looks at the experiences that we have had with China in the developing world in tendering for major contracts they have often included the use of Chinese labour to execute projects. In some instances have entire shantytowns sprung up overnight, and thousands of Chinese labourers are shipped in order to make the often very tight budgets. According to Chris Devonshire-Ellis is the Principal of Dezan Shira & Associates “The exclusive or almost exclusive use of labour from mainland China almost always runs contrary to local laws and national regulations, work and safety permits, in addition to breaking the host nation’s individual income tax laws, but lax policing, state inefficiency, simple corruption or authoritarian states allow many to turn a blind eye.”

In some instances the use of cheap labour have produces some very bizarre situations were local governments have actively participated in the cover-up of breaches of both national law and the principles of fair trade across boarders. One example comes form Sourth East Asia:

“In order to keep the local population in the dark, many such projects, such as the building of a port on Sri Lanka’s east coast, involve the placing of high security road blocks to prevent access and even Chinese machine gun manned security guards to keep curious locals away. If no-one can see the project, no one can get politically upset about the lack of involvement of local labour, even if that labour is generally considered lazy and inadequate. It is, in many cases, a pragmatic, yet somewhat grey solution to getting much needed projects built. Never mind that it is usually illegal. Authoritarian governments can always find a way.”

In another instance from Africa Chinese management gunned down several works as they protested over working conditions at a mine. The incident as it was called occurred at the Collum Mine near the Zambian capital of Lusuaka. The mine is privately Chinese owned by a family with investment interests in coal mining originally in Jiangxi Province. The Collum Mine managers are all Chinese nationals with little or no understanding of either English or the local language, Tonga.

According to the South China Morning Post, African workers were agitated over labor conditions and were protesting outside the managerial office. The Chinese management apparently panicked and shot workers with several shotguns. No workers were killed, but several were seriously wounded.

Could one imagine something like these incidents in Poland or France? If we only pursue short-term profits and go for the lowest bids we could very well see situations like these emerge in mainland Europe.