China’s Immigration Problem

China's Immigration Problem

Illegal aliens are streaming across a porous border for low-paying jobs.

Gady Epstein, 07.01.10, 10:20 AM EDT
Forbes Magazine dated July 1, 2010

Employers have vacancies to fill, the minimum wage is going up, workers are demanding more and the legal burdens of hiring are mounting. So bosses are looking across the border for much cheaper, illegal labor, from a pool of people willing to work for a lot less than the natives.

Arizona? Texas? Try Guangxi and Guangdong. Tens of thousands of illegal aliens from Vietnam and other Southeast Asian nations are crossing into southern China each year to climb the economic ladder, as Chinese and Vietnamese officials grapple with a growing trafficking business across the porous border between the two nations.

Chinese factories certainly aren't discouraging the trend. Recent strikes besetting Honda ( HMC – news – people ) in China, a wave of ten suicides this year (followed by pay raises) at the Silicon Valley-feeding Foxconn factory in Shenzhen and a newly appreciating currency are making factory bosses sweat for their bottom lines. Some may move out for cheaper labor.

Or you can bring the cheaper labor to you. China has busted several criminal rings this year importing Vietnamese workers. In a publicized crackdown on two networks operating in Guangxi, police caught 369 illegal immigrants who were fanning out across southern China to work. Brokers who bring in these workers can earn $200 a head.

Much like America's undocumented workers, the Vietnamese, Cambodian and Burmese workers are ending up in sugarcane fields, garment workshops and construction sites. The jobs pay less than $5 a day, but that's three times the average wage in Vietnam and perhaps half as much as a Chinese worker could demand, including benefits and overtime, in today's more discriminating labor market. The economics of globalization, for decades so potently in favor of the Chinese worker over the developed world, are beginning to hand off Chinese jobs to foreign workers.

“They are hard workers and obedient employees,” Zeng Xiangbiao, a shoe factory owner in Dongguan, told a Chinese reporter in a familiar refrain on immigrant labor. He has more than 200 workers from Cambodia and Laos, a quarter of his workforce. “They could work 15 to 16 hours a day and work for a month without any break. Few of the domestic workers, especially those born in the 1980s and after, could take this.”

picSo far this has risen to the level of a trend but not a crisis. The Chinese labor market can absorb low-paid workers for now, and the Vietnamese labor market doesn't have enough well-paying jobs. Many border crossers also have Chinese ancestry and can speak Cantonese, the dominant language spoken in Guangdong, helping to smooth the road for them. Moreover, China is not in any imminent danger of having the millions of undocumented migrants that bedevil the U.S. The official numbers of those caught remain in the thousands–the Guangxi border patrol reported catching 1,820 illegal crossers and stopping 4,839 more in 2009, according to state media.

How many thousands more don't get stopped? Vi Xuan Mai, deputy director of the labor department in the Vietnamese province of Lang Son, tells FORBES that 5,000 workers cross each year from his province, one of six along the Chinese border. “The trend is increasing,” he says, “but we can't stop it.”

Additional reporting by Lin Yang and Do Minh Thuy.