Workers Challenge "Privatization for the Elite"

Since the second half of the 1990s, China has been through waves of privatization of state-owned enterprises (SOEs) in a drive to pave the way for a market economy. Previous issues of CLNT have focused on state workers’ resistance to such cases of privatization such as the recent Tonghua Steel incident. This issue will look at an interesting case where an ordinary worker has been persistently and creatively trying to defend workers’ interests in an SOE where he worked that has been quietly privatized. What is notable about this case is that this worker, Liu Rongli, mobilized his fellow workers to try and set up a workplace union and struggled to force the management to offer company stocks to its workers and for greater management transparency. In this issue, we translate two articles both written by Liu about the corrupt privatization of state assets in China, and about the difficulties involved in unionizing restructured SOEs.

Privatization and the Tonghuasheng Company

What is now Tonghuasheng Company used to be part of a large SOE, the Beijing Forging Factory, which at its peak had 1,500 workers. After going through several reforms, bankruptcies and mergers in the 1990s, it remained under state ownership until 1998 when it became collectively owned. In 2003, Tonghuasheng Company was further restructured and officially became privately owned. The former managers became the new owners.

One central issue of contention is that in the process of privatization, or “change of system” to use the more innocent-sounding Chinese phrase (gaizhi), the former managers transformed state assets – which are supposed to be collectively owned and the fruit of collective labor – into their private assets. This was done quietly and without any consultation with workers. This greatly irritated the workers and Liu Rongli, who has been working there since 1980. Another related issue is the right of workers to participate in management, as they realise that not having the right to know and decide on company affairs they are easily deceived and manipulated and could be effectively dispossessed of the wealth created by their labor.

Early Attempts at Resistance and Becoming Stockholders

There have been several attempts at resistance by workers, beginning shortly after the privatization. In October 2003, workers organized a Staff and Workers’ Representative Congress meeting in which they expressed their anger about the privatization and how the workers were treated. The next Congress meetings were then essentially made vacuous by the management.

It was not until 2005 that real progress began to be made. In May, Liu Rongli persuaded and mobilized his fellow workers, and together they began petitioning the management and local authorities. Under pressure the management conceded, and the workers successfully became stockholders in 2006. The first translated article describes this campaign to become stockholders.