Golden Dreams in Cambodia, ‘Nation of Gold’

Female employees at a Chinese garment factory. 

PHNOM PENH (Imaging Our Mekong)- The air was choking hot; the sun shone brightly. Motorcycles were weaving their way through the busy traffic of vehicles and pedestrians as dust flew around on the outskirts of the Cambodian capital. Row upon row of establishments flashed by, before we came upon an inconspicuous sign with five Chinese characters: ‘Jia Hua Gong Ye Yuan’, or the Jiahua Industrial Park.

At the entrance to the New Oriental Garment Co inside the park, a guard flashed a kind and simple smile, in sharp contrast to often-surly factory guards in China. As he handed us VIP visitor cards, the whir of machines made its way out from the massive workshop. Inside, row after row of women workers were busy on their machines. On the second floor office, some Chinese staff were busy tapping away at the computers that control the operation of the whole factory.

The woman boss, Wang Yi, is from Shanghai. “Kongfu tea? Taiwan coffee? A friend of mine brought it from Taiwan.” Without waiting for our reply, she offered Taiwanese coffee for us.

The scene at this factory reflects the rise and spread of Chinese capital, over the past dozen years, to just about every corner of Cambodia, in line with the rise of China’s economy in the world. At the Jiahua Industrial Park, more than half of the factories are Chinese ones.

Likewise, in the south of this country, the Chinese-built Sihanouk Port Free Trade Zone has just completed. In the virgin forests in the north, living quarters have been put up after tens of thousands of hectares of forests have been turned into rubber plantations.

The cooperation partner of this huge project is Hu Jinlin, who hails from Wenzhou, Zhejiang province. His businesses range from trading in electrical appliances to the construction of power plants. “After this, I’ll retire,” he said proudly.

Estimates given by Chinese investors show that more than 3,000 Chinese capital companies are operating in Cambodia, bringing in more than 500 million U.S. dollars in investments to this South-east Asian country in 2007.

Signs of greater Chinese presence are not hard to find. Signs written in Mandarin can be found everywhere in Phnom Penh -- in restaurants, gambling dens, supermarkets and colour-photo printing shops.

This is Cambodia, which used to be the ‘Nation of Gold’ in South-east Asia. But starting from the 1970s, internal wars and genocide destroyed major infrastructure and facilities, and brought suffering to almost every family.

After peace was restored after the Paris Peace Accords of 1991 and the United Nations-brokered elections of 1993, the country embarked on the path of reconstruction. While many Chinese saw the memory of death, mines, wars and poverty in Cambodia, a few farsighted business people saw the prospects for development that they believed offered limitless business opportunities in this country.

Ren Ruisheng of Hong Kong arrived in war-torn Cambodia in 1993, with 200,000 U.S. dollars. After 15 years, he is chief executive officer of Phnom Penh United Commercial Bank, which has total assets of 100 million U.S. dollars.

Chinese Cambodian Li Mingyang expects to follow Ren Ruisheng’s example. As a reporter for a Chinese-language newspaper, he earns a bit more than 500 dollars each month. In his off hours, he operates a fund, controlling about 1.2 million dollars. His aim is to grow his assets to 50 million dollars in five years. “I will open my own bank and retire in ten years,” he said.

Chinese interests in Cambodia have gotten a boost from encouragement by Cambodian officials over the years. In 1997, Premier Hun Sen visited China at the head of a huge Cambodian People’s Party delegation and reaffirmed the friendly relations between the two countries. This boosted the confidence of Chinese business people, who soon came to the country in endless streams.

Zhong Ren (not his real name), a lawyer, is one of those successful businessmen. He lives in a million-dollar villa covering 750 square metres of land, with a staff of five or six. A deluxe imported cross-country vehicle sits in his backyard. He has swiftly completed the transformation from someone who returned to China from Cambodia in the 1980s to an ambitious opportunist. After the conflict ended in Cambodia, the then 40-year-old Zhong came to the country, leaving his wife and son in China. Fully using his bilingual skills, he began to provide legal services to Chinese companies in Cambodia. Thirteen years later, he has become one of the most famous lawyers in Phnom Penh.

Qi Bing and his wife Wang Yi are among those who are still struggling. After graduating from university, they worked for a state-owned trading company and represented it in Phnom Penh. When the firm went bankrupt in 2003, Wang took it over. Five years later, they had a 1,500-person workforce producing clothes exported to Europe and the United States. Qi Bing shuttles between Phnom Penh and Hong Kong. Wang Yi, seated on a table above the workshop, keeps track of production output and other information relating to the manufacturing process.

But there are also many Chinese whose attempts to do well in Cambodia did not yield good results. For instance, more than 20 Chinese workers in Phnom Penh were deceived by the Chinese labour companies and at one point, they cried their hearts out in the rain outside the Chinese embassy in Cambodia. But others may only have themselves to blame. Some gambled away the money they brought to Cambodia, wasting their fortunes instead of making investments. In the end, many were in such dire straits that they couldn’t even afford to buy air tickets to go home.

At the same time, Cambodia has also been a paradise for adventurers. Liao Yongxing, a 33-year-old graduate of the Hong Kong University of Technology, came to Cambodia with a dream. While most of his schoolmates are office workers, he is a boss with 1,500 workers.

He attributed his success to what he calls the good investment environment in Cambodia: cheaper labour than China’s and Vietnam’s, tax reductions and exemptions, duty-free importation of raw materials and construction equipment, and the absence of quota restrictions in exports to Europe and the United States.

But what perplexes Liao, he says, is neither language nor the corruption of officials but the presence of independent trade unions and frequent strikes, an expression of democracy.

LABOUR LESSONS

Cambodia, a poor developing country, has what appears to be the perfect system for protecting the rights and interests of labourers in South-east Asia. In the 1990s, the Labour Law promulgated in the country allowed workers to form trade unions of their own accord, free from the control by political parties. This law is more stringent than that of China’s with regard to workers’ rights and benefits. A worker enjoys 16 days of holidays after working for more than a year. Factories cannot dismiss workers at will. The law also increases overtime pay. If a factory violates any of the labour laws, trade unions come out, threatening to wage strikes or claim huge compensation.

Not long after the factory of Liao was set up, workers organized four trade unions, the smallest one being made up of several dozen people and the biggest one with nearly 300 workers. Soon, the trade union representatives demonstrated their strength in negotiations with regard to overtime pay, usual pay and welfare and benefits. In short, they have given this young boss quite a headache.

Bosses coming from the Chinese mainland are far from used to this situation. “We were on the alert at the very beginning,” said the deputy general manager of the Ningbo Hongmei Import and Export Co. “We adopted a hostile attitude toward the trade unions and tried to nip them in the bud.” No sooner had the factory started operation in 2005 than posters began to spread on the shop floor. The management acted promptly, dismissing the union leaders.

This step had an unexpected consequence. The workers went on a strike and the factory was forced to stop operations for a week.

While many people are well educated, believe in democracy and freedom and view workers a vulnerable sector, they exclude trade unions from this belief.
Wang Yi was quite tired of the trade union leaders at his factory at the beginning, thinking that they liked to make trouble.

But later on, he learned to live with them. “Now we’re on good terms,” he said.

This is a path all the Chinese bosses traverse. “To run a factory here, you must be aware that labour and management are interdependent rather than in a relationship between enemies,” said Li Weiming, manager of the Jiahua Industrial Park.

But there are trade union representatives who seek personal gain and take advantage of their clout in negotiations for salaries and benefits. “They might raise some conditions and strike a deal with you: if you do not want to raise wages for all the workers, then give us 10,000 U.S. dollars.”

LESSONS FROM CAMBODIA

Cambodian Chinese Li Weiming takes great pride in Cambodia’s labour laws, and supports the new labour contract law passed in China. “The profits of Chinese enterprises have always come from the deduction of workers’ wages and welfare benefits, which Cambodia had also experienced. We may say that China is more than ten years behind Cambodia in protecting the rights and interests of labourers.”

What he says is proven by the working conditions and behaviour of overseers sent here from China. This is a group of people who represent neither the management nor the workers. These mechanics are skillful, earning more than the local people and they never participate in trade unions. In reality, they cannot enjoy many of the rights and benefits enjoyed by Cambodian workers.

In recent years, as minimum hourly wages have risen in the United States, some Taiwanese garment manufacturers based in Saipan have moved to Cambodia. Many of them have shop floor directors coming from north-east China. After handing over their passports to their employers, they eat and live in the factories and work 16 hours a day. They are not allowed out of the factory during weekdays, and have to go out in groups on weekends. They do not have overtime pay. They receive as pocket money a bit more than 100 dollars. The bosses hold on to the rest of their wages, which they do not get until the yearend or when they return home.

“In these factories, only local workers have human rights,” said Li Weiming.

This mode of management is universal in Chinese enterprises, including in the factory run by Wang Yi, where shop floor directors cannot go out of the factory at will and their passports are kept by the boss.” “We are mainly afraid that they will lose them outside,” Qi Bing explained.

But in contrast, Cambodian workers may opt to rent space in dormitories inside the factory or outside, and they have a choice of working overtime or not. The spare time is at their own disposal. They are poor but free.

OLD HABITS AND HIDDEN RULES

Just as the shop floor directors cannot shake off their “special treatment” in poor but free Cambodia, business people from the Chinese mainland cannot do away with the distinct ways of doing things in China.

Power is the passport some Chinese business people carry. Take a look at the brochures of Chinese capital enterprises or advertisements and one would see the group photos of Chinese bosses with Cambodian officials and military officers. When former Chinese president Jiang Zemin visited Cambodia in November 2000, the Chinese embassy organised a large number of Chinese business people to greet him at the airport. During his meeting with Hun Sen, a Chinese businessman stood by Hun Sen to pose for photos. Soon, the picture appeared in the brochure of the company.

Objectively speaking, it is quite normal for some business people to seek the protection by powerful people. While Cambodia is in a period of peace, corruption and hoodwinking continue, despite stringent crackdowns. Even projects with Chinese government aid have had rough sailing. If one wants to enter the Office of the Premier, he could be subject to extortion. One day, a police officer came to the Phnom Penh office of Xinhua news agency, took out a document on official letterhead, and demanded a donation of two boxes of beer. “I gave him a bottle of red wine of equal value and he signed the receipt,” a staff member recalled.

Some Chinese business people have the big-power mentality, without knowing the Cambodian market, policies and laws. Some blindly cooperate sign contracts, without knowing that they had been had, losing hundreds of thousands or even millions of dollars.

In the office of lawyer Zhong Ren is a huge stack of documents. He painfully recalled that a few years ago, a Chinese company cooperated with a local company in opening a restaurant. The contract provided that the Chinese party cannot replace managers. Without checking carefully, the Chinese party put their hand to the instrument. Two years later, the Chinese side sent a new manager and the Cambodian side sued it for breach of contract. In the end, the restaurant was taken over by the Cambodian side, he says.

“These people do not have much money in hand and their strength is far from being enough. They are eager to speculate and get away with the money (they) scooped,” Hu Jinlin said.”But the real victims are the Chinese business people who do down-to-earth trading and run factories. It is unfair for them.”

Private enterprise bosses are seeking power in an alien land while those from some state-owned enterprises, used to the perks they enjoy at home, try to build and decorate luxurious offices even before the factories start operation, doing things like buying high-grade floor paints worth more than 10 dollars per square metre. Said Wang Yi: “The floor tiles here in my office are only a couple of dollars a square meter.”

In open, free Cambodia, the integrity of Chinese business people is subject to an acid test. After 1999, Cambodia has been eager to attract foreign capital. When Chinese business people came on study tours, local officials would come out with a stack of materials to greet them. Some high-ranking officials even came out in person to receive them. Some business people were boastful, eager to win projects and thinking this would bring them cooperation partners. But when they return to Cambodia and fail to find any cooperation partners, their commitment become empty words. An increase in such incidents have  put local officials on the alert – they have become very cautious of business people whose track records are not proven.

In management, there is a world apart between companies from the Chinese mainland and companies from Hong Kong and Macau. “Companies from the Chinese mainland mainly rely on experience, resorting to extensive management that is low in efficiency. They do not have plans for receiving orders, they are sometimes full in hand and sometimes empty handed,” said Wang Yi.

Wang Yi is also most resentful of the way Chinese shop floor directors, who are supposed to look after quality, always say “almost” when referring to meeting standards. Once, she recalled that when a Cambodian woman worker asked a shop floor director about a piece of cloth, he replied, “almost” or just about right. But when the woman worker, worried, took the cloth to the production manager, he replied: “It’s not just right.”

ADAPTING TO MORE FREEDOM

The Jinjie Recreational Centre, its huge neon lights shining beautifully at night, lies just opposite to the Royal Palace of Cambodia.

On March 2, a Sunday, its waiting hall was very busy. Eighty to ninety percent of the gamblers were Chinese. Chinese manned the casino, from its technical room to the card distribution table. A big bus stopped at the gate, a tourist group from Hong Kong alighted and entered the hall. Their guide shouted: “Come back here (outside) in an hour.” All the people then disappeared into the casino.

The Jinjie Recreational Centre, the largest of its kind in Phnom Penh, has scores of gambling dens of all sizes. “There have been too many gambling houses here,” commented Hu Jinlin. Sitting in his own shop, he pointed across street, saying: “See! That is another one.” The gambling houses here mainly cater to foreign tourists, and Cambodians are not allowed to enter them.

Frequent visitors to the gambling houses are not only Chinese business people and entrepreneurs, but Chinese shop floor directors whose monthly pay is usually 400 to 500 dollars. “I don’t understand why a shop floor director can be very industrious at home, but once he comes here, seem to lose all control, caring about nothing. They go to gambling houses to play electronic games and to take drugs,” said Wang Yi.

A Hong Kong businessman said jokingly that Chinese seem to be too used to living in an environment of strong government control, accustomed to having something like a father that closely watches them. Once they come to an environment where there is more freedom, most of them realise that they are free from the usual limits and feel capable of doing just about everything, except manslaughter and arson, but are not sure how to deal with this newfound freedom.

Adapting to freedom requires a certain kind of ability. One needs his brain to opt for what kind of life. Hu Jinlin and many other successful business people are satisfied with their how they restrain themselves – he goes to the gambling houses to keep clients company. But not all the Chinese bosses and workers have this discipline.

Wang Yi knows of a junior boss who got so hooked on gambling that he lost his factory. He had recruited more than 100 workers, and two Chinese shop floor directors lent him a hand in management. But not long afterward, he became addicted to gambling. “You could not get hold of him when you phone him before 10 in the morning and after five in the afternoon. He had gone to the gambling house or to karaoke,” he said. The factory shut down in less than one year, and the boss spirited away the machines and went back to China. This man is now wanted by Cambodian police.

Wang Yi and his wife Qi Bing are very strict with gambling. Whenever a worker is found to have gambled, he receives a warning. A second offence leads to dismissal. “I talk with a few young men coming from China every month, asking them whether they have been to gambling houses,” she said.

NEW ORIENTATION

Among Chinese business people, Zhong Ren should be the luckiest one. He started from scratch and has now become a successful man in just 10 years. He said of his partners and friends who went to Europe and the United States: “They will work hard all their lives. But I live in a big house here and there are people serving me in my meals and laundry, and even in opening and closing the door. Isn’t that comfortable?”

He lives in a villa and on Sundays, drives his wife to the riverside to fish. His daughter studies in a university in Australia. He has also begun to show concern for social development, donating to schools to support poorer students. Having been a reporter for many years in China, Zhong also showed great displeasure with the quality of reports in the local Chinese newspapers. “I really want to lecture them on writing news, features and interviews.”

Speaking about bad habits that Chinese business people bring from China, he explained: “There is a big gap to bridge between the new generation of Chinese business people and the old generation of Cambodian Chinese. The older generation people are industrious and live simply, earning their living the hard way. But the new generation of business people is very ambitious, very typical ‘business animals’ who care only about profit margins and are eager to become overnight successes. They like to work alone, just like a plate of loose sand, lacking social responsibility and a sense of ethics.”

In the Jiahua Industrial Park, Li Weiming has gotten used to the coming and going of Chinese enterprises. “Chinese enterprises survive when they adapt to the local policies and laws. Otherwise, they have to pack up and go home.” Even successful Chinese enterprises have to learn from countries like Cambodia in management and the value of human rights.

STRINGING THEM TOGETHER

In order to have Chinese business people work more cohesively, the Chinese embassy changed what was called the ‘Chinese capital enterprise friendship association’ into the China Chamber of Commerce more than 10 years ago. In the words of Zhong Ren, “they are like pearls that scattered everywhere and there is a need to string them together”. The Hong Kong and Macau Chamber of Commerce here was set up in 1998. Much earlier, local Cambodian Chinese had set up a Council of Cambodian Chinese and Overseas Chinese. Zhong Ren hopes that the Chamber of Commerce could organise more activities so that Chinese business people can change their concept of values and ways of behaviour.

At present, the three big chambers of commerce often organise luncheons and encourage their members to take active part in public welfare and charity activities, such as financing poor students and their families. The most active group is the Hong Kong and Macau Chamber of Commerce, which has its own gazette to facilitate communication among members. When they learned about the snowstorm disaster in South China in 2008, the three chambers of commerce organised donations from their members. The Hong Kong and Macau Chamber of Commerce donated nearly 200,000 dollars to victims of the disaster.

In fact, Many Hong Kong and Macau business people have taken roots here in Cambodia. Banker Ren Ruisheng, president of the Hong Kong and Macau chamber, has long been regarded as a lord while the vice-presidents of the chamber all have their own villas. Their children go to local Chinese schools. Council member Liao Yongxing married a Cambodian of Chinese descent.

But business people from the Chinese mainland think otherwise. Wang Yi, for instance, does not have plans of settling in Cambodia for good. Neither does her husband, Qi Bing. “I’m now 40 years old. After another ten years, I will retire and return to China.”

Hu Jinlin, who is over 50, also hopes to return to his hometown of Wenzhou after retirement. He is regarded as a successful man, but has his own regrets. Thirty-two years ago, he sold hardware on the streets of Liushi in Wenzhou. By his stall was a boy called Nan Cunhui, who did shoe repairs then but is today the chairman of the board of the famous Zhengtai Group. His path was quite different from Hu’s, who opted to go to Shanghai and then to Xinjiang and then to Cambodia. Even if his business has now spread to the whole of Indochina, he still feels that he is wandering about, far from home.

With the rising prices in China and the appreciation of the renminbi, endless streams of business people continue to come Cambodia on familiarisation tours.

On the morning of Mar. 4, 2008, a reporter from ‘South China Weekend’ newspaper who was in town met a couple from Shenzhen in the Jiahua Industrial Park who had come to invest in a factory producing underwear. “The labour price is over 25 percent cheaper than at home,” said the husband, a South Korean with ambitious plans. A new dream is brewing here. “When my business starts, come and help give us a boost in publicity,” the couple quipped to the journalist. (END/IPS/LL/JS/08)

(*Li Liang is a senior reporter with ‘Southern Weekly’ newspaper in China, which also published this story in 2008 as part of the Imaging Our Mekong media fellowship programme 2007-08 cycle.)