There is life after the production lines of Jinjiang. Workers who have left the many sports shoe factories of this Fujian province city have found jobs in a rapidly developing service sector or its red-hot housing market.
Our survey of 155 of these migrant workers suggests China’s transition from an economy led by manufacturing and investment need not be a zero-sum game. In regions where heavy industry dominated, millions of workers are being laid off from state firms and from sectors mired in overcapacity, presenting the central government with a
But some regions, including lower-tier cities such as Jinjiang, are benefiting from a tide of development. This has brought new opportunities that have allowed most of the workers we surveyed to switch career. It has also brought new concerns. Most of the workers are pushing 40; they worry about their lack of skills and the sustainability of their new jobs.
After the factories
At its height in 2011, 7,300 factories in Jinjiang employed 550,000 workers, churning out a fifth of global sportswear for brands such as Adidas. But these factories have struggled in the face of rising costs and competition from other emerging markets — foreign direct investment into Vietnam rose 44.4 per cent last year, for example.
The number of urban factory workers in Fujian province, which lies on China’s south-east coast, fell 22 per cent between 2012 and 2016, while those employed in the service sector increased 26 per cent, according to government data. Services became China’s biggest sectoral employer in 2011 and now accounts for 45 per cent of the workforce, up from less than a third 10 years ago.
At China Straight Talent Market, Jinjiang’s largest labour exchange, job postings from sportswear companies fell 35 per cent last year from 2016.
“There is no future in manufacturing,” said Ding Jian, general manager of Jingjiang Hengliang Trading Co. Over the past six years, his company’s workforce has fallen to less than 400 from as many as 1,500.
Our survey, which covered production line staff who have left Jinjiang sports shoe factories within the past three years, highlights the role played by the service sector in absorbing lost manufacturing jobs. Among respondents to our survey, 98 per cent said they were in full-time employment and 93.4 per cent had found new work within six months of leaving their factory jobs.
Most said they were making more than they did in the shoe factories, with 32.3 per cent saying they earn more than Rmb6,000 ($937) a month, compared with 14.2 per cent who said they were paid that much working in the shoe factories.
Among respondents, half had gone into the service sector, many working as waiters, receptionists and drivers. Some had gone into business for themselves. In 2016, after 20 years on the Jinjiang factory lines, Zeng Jiancheng opened a hot-pot restaurant that is making a profit of Rmb30,000 a month, equivalent to six months of his factory salary.
Consumption is increasing in Jinjiang as manufacturing gives way to services. Twenty shopping malls will be open in Jinjiang by the end of this year, up from five in 2014, according to Linkshop, a consultancy. About 300,000 new passports were issued to Jinjiang residents last year — the local public security bureau said this was the most of any county-level city in China — as they join a large and growing flow of tourists going abroad for the first time.
But not everyone has succeeded. Hu Caihua is making less than he did in the factory, driving for ride-hailing service Didi. He quit his factory job two years ago after business slowed and his salary fell to less than Rmb4,500 a month. But competition in ride-sharing has become crowded, and Mr Hu expects his income to shrink further as Didi charges its drivers more.
Workers are also finding jobs in the housing market. New housing starts in Jinjiang rose 95 per cent last year as buyers stream in from nearby Quanzhou and Xiamen, where they have been priced out. Li Mingkang, 33, lost his job at a shoe factory in 2015 and joined a local contractor. Within two years, he set up his own company and now makes Rmb300,000 a year, more than four times his previous salary. In line with the policy tone set by Beijing, the local government has limited out-of-towners to one property each. Mr Li worries that further restrictions will hit his business.
Among respondents, 61.3 per cent decided to remain in Jinjiang rather than return home. Although the footwear business has suffered, other factories are humming — a quarter of the world’s umbrellas are made in Jinjiang. Our survey found 32 per cent of workers who stayed in town stayed in manufacturing compared with 14 per cent of those who left town.
Many migrant workers, however, have gone home. The China Center for Urban Development, a government think-tank, estimates the migrant population of Jinjiang has fallen to about 1m from 1.3m in 2010. Migrant workers are generally not entitled to services such as healthcare or education without a hukou, or household registration, although the local government has been improving its provision of services.
Zhang Bin left a Jinjiang factory and works in a petrol station in his hometown of Shangrao, in neighbouring Jiangxi province, for Rmb3,000 a month. His wife brings in another Rmb2,000 working in a shop, leaving their household income at roughly half the level it was in Jinjiang. They had to leave because he did not have the hukou to enrol his son in a Jinjiang school.
Our survey found 10.5 per cent of those who returned went into agriculture — taking advantage of growing demand for organic produce in the big cities — while 5.3 per cent have set up online stores on Taobao or WeChat. Fu Yuanli, 28, left Jinjiang two years ago for Qianjiang, Hubei province. She began using WeChat to sell Jinjiang-made socks and underwear and is now making Rmb100,000 a year, double her shoe factory salary.
With 63.9 per cent of respondents saying they lacked the skills necessary to secure well-paid and stable employment, there is appetite for retraining: 61.3 per cent said they intended to take training courses in the coming 12 months compared with 47.7 per cent who have done so in the past year. The most popular courses include construction, management, IT and machine tool operations.
Zhang Junli has retrained as a beautician and is making 50 per cent more giving manicures and pedicures for eight hours a day than she did working 12-hour shifts in the shoe factory.
“I couldn’t picture myself at 50 years old working in a shoe factory but I can see myself running a beauty salon,” she said.
— Sun Yu, Head of Network Research, FT Confidential Research
|FT Confidential Research is an independent research service from the Financial Times, providing in-depth analysis of and statistical insight into China and south-east Asia. Our team of researchers in these key markets combine findings from our proprietary surveys with on-the-ground research to provide predictive analysis for investors.|