Crystal clear

Cao Dewang’s business education began on the streets, cycling a round-trip 80km to sell fruit in the city of Fuqing. He spent some time as a chef before landing a job in 1976 at a state-owned glass manufacturer in his hometown. In 1983 he was asked to take over the failing factory by the local government. He turned it around, changing its name to Fuyao Glass.

Cao’s Fujian-based glass empire became so successful that in 2009 he won the Ernst & Young World Entrepreneur of the Year award – becoming the first ever Chinese to do so. It was this news that sparked WiC’s idea to create a Who’s Hu column to profile the life stories of China’s growing crop of business billionaires (in turn, from this sprang our publication China’s Tycoons, now in its fourth edition and down-loadable from the ‘Books’ section of our website).

Cao is very much in the news again as the key protagonist in the widely discussed Netflix documentary American Factory. It follows the ups and downs of his purchase of a factory in Dayton, Ohio – shuttered by General Motors and reopened by Fuyao to sell glass to the US car industry. The almost two-hour long documentary is billed by Netflix as a film about globalisation and has received wide media attention thanks to its backing by former US leader Barack Obama’s production company Higher Ground.

It makes for gripping viewing, because what it really becomes is an insight into a clash of cultures between America and China. This is nakedly on show because doc-umentary makers Steven Bognar and Julia Reichert were granted such intimate access to the plant and its staff. In some of the most fascinating scenes they were able to film internal company meetings as veritable flies on the wall. By the end you are left wondering if Cao now rues agreeing to giving the pair such freewheeling access, as what emerges is not always flattering – but it does live up to his corporate ethos of ‘transparency’ (in fact at one point in the film you see Chinese executives singing the company song whose theme is “Fuyao holds up a transparent world”).

There is no narrator steering a point of view. Instead the audience is left to make their own judgments from the events themselves and the interviews with tens of Fuyao’s new American staff and its much longer-serving Chinese employees. The outcome: there are no ‘good’ or ‘bad’ guys as such, but what is depicted in the raw is a great deal of mutual antagonism (bordering on racism) on both the American and Chinese side.

The timing of the documentary may offer some ammunition to those in President Trump’s camp who are out to stymie China’s rise (via trade wars and other restrictions on the purchase of US com-panies). That’s because lengthy sections of the movie give American audiences an uncomfortable glance into a possible future when the Chinese are on top.

Appropriately enough, American Factory begins with the closure of an American factory – specifically the GM plant in Dayton in December 2008. There are tears and prayers from a pastor as the US automaker’s decision puts 10,000 locals out of work.

Fast forward to scenes of optimism in 2015 as Fuyao buys the disused plant and spends six months bringing in equipment to reconfigure it as a giant glass factory. “It’s fast, it’s exciting,” is the view of a newly hired American furnace worker in the first of the many one-on-one interviews.

In an auditorium pitch to would-be staff, a US representative of Fuyao explains that the Chinese firm has plants all over the world and a 70% market share in automobile glass. “What we’re doing is melding two cultures together: the Chinese culture and the American culture,” he says.

Around 1,000 local employees are initially hired. But it’s clear from the outset that Fuyao’s executives (and the roughly 200 Chinese factory floor workers relocated to Dayton) view the Americans in a sort of ying and yang way. A cultural education lunch session for Chinese staff goes from the largely unthinkable in China (“In America you can even joke about the president. Nobody will do anything to you.”) to broad-brush stereotyping: “Americans say what they are thinking directly. They don’t hide anything. They are very obvious. They dislike abstractions and theory in their daily lives.”

As the factory begins production Chairman Cao arrives on the scene with a translator in tow. “I love Ohio,” the tycoon declares. Meanwhile the senior American executive Fuyao has hired to run things locally tells a crowd of assembled workers: “The future is bright, folks.”

The Chinese firm is so welcome that a nearby street is renamed Fuyao Avenue and Cao is met with applause as he walks around the factory. The cordial mood even extends to one of the local factory hands inviting him for a barbecue.

Notably almost none of the US staff know what the Chinese are saying, given their dialogue largely takes place in Mandarin. But it’s clear the new owners have already formed cursory views of their Dayton workers, most of whom are new to the glass industry, unlike the veteran Chinese employees. One operations manager tells Cao: “I am pairing an American with a Chinese. The American is the main operator with a Chinese supervisor by their side. The Americans are pretty slow. They have fat fingers.”

Discussion turns to the opening ceremony set for October 6. The senior US managers advise Cao to install an overhang in case of bad weather. Cao dismissively waves off this unbudgeted cost telling them “It won’t rain. The weather will be like it is today.” Paradoxically his natural instinct for tight cost control doesn’t extend to a large door, which he declares “can’t face that way” (it’s not stated why, but WiC presumes feng shui). A senior American boss says the door has already been purchased and installed, but in spite of his objections is told it needs to be changed. “That’s going to cost us $35,000,” he tells a Chinese counterpart in exasperated tones.

However, the initial mood among the US workers in the rustbelt city is generally grateful. A furnace worker tells the documentary makers “I was out of work for years before Fuyao. I’m thankful to have something.”

A 58 year-old American named Rob is also enthusiastic about working with engineering expert Wong – who got his first job at Fuyao at 18 and has worked in the furnace for more than 20 years – “We have spent a lot of time together with him teaching me everything”. Rob – who along with Wong frequently appears in the film – makes a serious effort to befriend his foreign co-workers. He shows photos of a Thanksgiving dinner he hosted at his home, where 13 Chinese showed up and were delighted to be allowed to shoot Rob’s pistol and rifle – “They can’t do that in China. Some of the very brave ones went up and down the road with me on my Harley. They talked about it forever.”

His rapport is borne of empathy: “They told me they had to be here two years, away from their family for no extra pay and it really made me start thinking and appreciate what they are doing for us more and more.”

Of course, even at the outset not all the Daytonian workers who speak to camera are delighted. A glass inspector declares: “At GM I was making $29 and some change an hour. At Fuyao I make $12.84.”

When the opening ceremony occurs – with no rainfall – the bigger shock is when invited dignatary Senator Sherrod Brown goes off script and says he hopes the Fuyao plant will have a union.

Cao is furious, telling his American managers: “You all know our stand on this. We don’t want to see the union developing here. If we have a union it will hurt our efficiency, it will create loss for us. If union comes in, I am shutting down.”

As he flies back to China he is evidently still irked, making his first swipe at the quality of his new workforce in Ohio: “American workers are not efficient and output is low. I can’t manage them. When we try to manage them, they threaten to get help from the union.”

The scene then shifts to Fuqing, and the visit of a dozen US managers to HQ. They tour Fuyao’s ultra-efficient mega-factory. The camera follows them as they watch the various young Chinese workers shifting the glass on production lines with a nimbleness and grace that resembles ballet. “They’re non-stop,” comments one, and another adds “we hope someday to get this good”..

At this point in the documentary there is an unmistakable contrast between the Fuqing workers and those filmed in Dayton. The average age of those at the US plant looks to be considerably older and in their body language many betray a lack of enthusiasm for the work, beyond the money offered. The Chinese workers are definitely a lot quicker and are proud of the product they’re making (“It’s a hard job, but I love it,” says one longtime furnace worker).

But there is also a more militaristic atmosphere. The American managers look on in bemused awe as a team assembles for a ‘preparation meeting’ before a 12-hour shift. There is chanting of slogans, and each is perfectly lined up like a pla-toon, with each addressed by their manager as a number (“18 move over there”). The team’s name is ‘Improvement’.

One of the observing US supervisors subsequently talks to a local counterpart (interestingly he is the only American in the entire documentary who can speak Mandarin). The Chinese staffer says: “You guys have eight days off every month. Only eight hours a day, that’s an easy life. These workers only have one or two days off per month.”

The American replies: “That’s why I told you American workers are too lazy. We have some extremely diligent workers. Very motivated, very ambitious. They’re great. But most workers are there just to make money, not to make glass.”

The conversation continues: “I heard that your workers like to joke around and talk a lot.” The American replies: “The best tool we can use is duct tape. Put it over their mouths they’ll perform better.”

Can you do that there, he is asked. “No we can’t. But if we could do that we’d have improved production. Because they are too chatty now.”

The visit ends with the Americans attending Fuyao’s annual staff party – an event that resembles the variety show format of CCTV’s Spring Festival Gala. The songs sound similar although the lyrics tend to be more corporate, such as the ladies singing troupe’s: “Intelligence. Lean. Intelligent and lean manufacturing. All industries should adopt them.”

So as to participate, towards the end the dozen or so Americans take to the stage and dance to the Village People’s YMCA.

What takes them aback most, however, is what happens next: six couples (all Fuyao staff) get married on stage in a simultaneous betrothal. This leads one of the US managers to walk out of the banqueting hall in what initially looks like a classically bad experience with the local rice wine. Instead it turns out he is tearful and overwhelmed. The wedding experience leads him to pronounce: “We are one big planet. A world somewhat divided, but we’re one. Tonight is an example of that.”

After that uplifting moment, the documentary cuts to the rather dour canteen of Fuyao’s plant in Dayton, where the only colour seems to come from the company’s perky promotional videos on mounted flatscreens. At this point a disgruntled US worker approaches the head of employee relations and angrily asks why the three microwave ovens have been broken for two weeks. He then points to a sign that says the lunch room is being converted to a production space. “Where’s lunch-eon going to be?” he demands.

He’s not done: he jabs his finger at a screen where a video features happy kids from Fuqing. By this stage he is livid: “They have these [videos] on all the time. This is America. We don’t need Chinese children singing in our break.”

Aside from the pay and the videos, the main gripe among the Dayton workers is that in the interests of efficiency Fuyao is sacrificing the sort of health and safety protocols common at their former employers like GM. Bobby, a furnace offloader is interviewed: “I was 15 years at GM and never [had] a workplace injury. My new job at Fuyao. What happens? I get a workplace injury.” He hobbles away on crutches with an injured right foot.

Cynthia, a lamination specialist complains: “The room we work in has only one way in, no doors on the opposite side. If a fire breaks out that’s like being trapped.”

Then a female warehouse employee vents: “Couple of days ago I had to tell the Chinese fella that I absolutely refused to pick up two loads with a stand-up fork lift. It isn’t strong enough. I said if you want to do it, fine you do it. I’m not doing it, I’m not risking somebody’s life.”

At a meeting attended by only US managers, one raises environmental concerns: “I’ve seen a Chinese pouring chemicals down a drain out the back of our dock. There was a trail going right to the sewer. It’s like they don’t even know what the rules are. This is all going into the sewer and drinking water somewhere.”

The scene shifts to a TV news reporter outside the plant telling her audience that there have been 11 safety complaints filed against Fuyao so far.

In yet another instance of just how transparent the senior executives are with the documentary team, the Dayton safety director (also American) helps out an employee with an arm injury before confessing: “Everybody at every level will say we want to be really safe. But safe doesn’t pay the bills.”

It is at this juncture – with the safety issues seemingly escalating – that a portion of the workers demand more loudly the plant be represented by the UAW union, Cao’s worst nightmare.

The timing of these calls is particularly bad for the tycoon too. He announces to Chinese staff that Fuyao America made $40 million in losses between January and October 2016 and he has decided to restructure.

He feels his senior US executives have failed him on the union front. “We hired Americans to work as our managers and supervisors. Our expectation was we could trust them. Pay them high wages so they would serve the company. Why didn’t they? I think they are hostile to Chinese. With the new restructuring I believe we will see this plant in profit very soon.”

Fuyao’s two most senior Americans are fired and replaced by new president Jeff Liu, who represents something of a cross-cultural candidate: he has spent 27 years in the US and 26 years in China.

Liu’s first task: to make sure workers’ vote ‘no’ to joining the union. He raises pay by $2 an hour and in a town hall meeting tells staff: “We want to build the best employer in town. But in return: work hard, work longer and our team here can do the same job as China.”

In a meeting with Cao he confides, “Recently we fired a lot of union supporters.”

It’s notable from the footage that many of those talking most volubly about the union are the older generation. This leads Cao to tell Liu: “You guys should hire more excellent people, young people. That’s the culture I want for our company, then we will have a good atmosphere here.” Liu’s tactics pay off: 60% vote not to join the union.

To try and improve the atmosphere the cultural education classes among the Chinese staff continue. However, these also betray a degree of frustration: “There’s a culture in the US where children are showered with encouragement. So everyone who grows up in the US is overconfident. Americans love being flat-tered to death. You will get into trouble if you fight with them. ‘Donkeys like being touched in the direction their hair grows.’ You should touch donkeys in the direction their hair grows or they will kick you. We need to use our wisdom to guide them and help them because we are better than them.”

With this type of tutorial it’s no surprise that some of the Americans are annoyed by how they are being managed. “They refer to us as the foreigners,” says a female worker. “People want to feel like they are in America working. Not when they walk through the door they’ve left America and are in China. They work non-stop. They’re in there all the time, round the clock, 24 hours a day, on Sundays. There have been some days they don’t want us to take a break for lunch because they need X amount of glass out.”

A fellow worker adds: “The Chinese don’t help us out at all. They just walk around and tell the Americans what to do and they don’t tell you why at all. They walk away.”

“To me it’s like they don’t respect you,” says another. “3,000 people have come and gone. Either fired or quit.”

On the other side of the factory, Chinese middle management are complaining about how lazy the Americans are. When one asks “Can’t we force them to do over-time” he is greeted with laughter and a remark about HR. He replies, “But in China, it’s mandatory.”

Wong, the earlier mentioned furnace manager, is one of the few Chinese interviewed in the documentary who offers a more sympathetic analysis of his American co-workers: “There is a need for mutual understanding. I really admire Americans. They can work two jobs. I thought they didn’t have to make any sacrifices, that they lived a comfortable and superior life.”

By 2017 the new strategy is to replace as many ‘inefficient’ Americans as possible with robots – a reaction in part to the union debacle. We see Cao walking through the factory with one of his senior Chinese managers, who points at the production line and tells the boss: “We used to have one person there, now we don’t need one. Next, I’m going to get rid of four workers here. Two for each line. Automation means standardisation… This one is being tested now. We are hoping to cancel four workers by August. I’ll change that into machine work. We can’t get the work done now, they are too slow.”

Reverting to that ‘transparency’ theme the documentary ends with Cao making a sacrifice at a Buddhist temple in Fuqing. With incredible candour – especially for a titan of industry – he delivers the following monologue: “The China of my youth was poor and undeveloped. I feel I was happier then. Now I live in a new era of prosperity and modernity. But I have a sense of loss. I miss the croaking frogs and chirping bugs of my childhood. The wild flowers blooming in the field. In the past few decades I have built so many factories. Have I taken the peace away and destroyed the environment? I don’t know if I am a contributor or a sinner.”

The closing captions point out that Fuyao Glass America made a profit from 2018 onward. This journey from loss to profit seems to have been achieved by switching from American to Chinese senior management; plus by improving the factory’s efficiency by exchanging the more pro-union workers with younger staff and robots.

“Starting wages remain $14 an hour,” reads another end caption, that also points out that Fuyao currently employs 2,200 American and 200 Chinese workers.

But the most chilling of these final captions says nothing about the cultural tensions the documentary has revealed between the Americans and Chinese. Instead it makes a point that both societies face an equal threat from robots gobbling up jobs: “Up to 375 million people globally will need to find new kinds of jobs by 2030 because of automation.”

---

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.