DiligenceChina

As a New Yorker living in Shanghai, I regularly visit the New York Times website to catch up on what’s going on at home and to see their take on world politics. Growing up as a journo-wannabe, I revered the Gray Lady with an unwavering faith that only devout Catholics visiting the Vatican can understand. Then I turned 13 and my attention wandered a bit. Although its reputation has deservedly suffered in the last decade or so, it’s still a daily read for me.

The NYT routinely suspends journalistic integrity and objectivity when approaching China, but the tone of their bias has changed significantly of late. It demonstrates the shift in perception of modern China – one which all overseas investors and ex-pat managers have to take note of.

Up until a few months ago, the NYT’s fiction of choice was that every single Chinese person was a simple but noble peasant, yearning only to be free. Their heroic voices beaten into submission by jackbooted Orwellian cartoon thugs… The fragile flicker of freedom’s candle shining bravely through the oppressive gloom of tyranny, etc. As prosperity began to spread to the consuming masses in big cities, the NYT was forced to follow a thinner trail of oppressive leads further and further into the country-side. I guess the final straw came when Chinese bloggers started uncovering injustices faster and dissecting them in more detail than their stringers could. (While I am no fan of ANYONE’s oppression, I often wondered how they missed the obvious parallels between the plight of China’s disenfranchised masses and the home-grown misery screaming for attention just a couple of miles north of the NYT’s midtown Manhattan HQ).

Howard French is channeling Upton Sinclair (author of the Jungle) this morning, as he paints a bleak picture of Shenzhen’s boomtown factories and slums. Read Chinese Success Story Chokes on Its Own Growth at http://www.nytimes.com/2006/12/19/world/asia/19shenzhen.html?em&ex=1166677200&en=278f08b748216317&ei=5087%0A .
Although the story is rife with inconsistencies and half-truths (wildcat strikes organized by timid masses of cowed migrants; exclusionary hiring tactics among labor shortages), it accurately demonstrates the changing perception of China among the liberal intelligentsia back home. (I used to be a NYC liberal intellectual snob, so it’s ok for me to criticize them. You can’t. Watch it.) The story exposes the dismal working conditions and nightmarish lifestyle of China’s migrant workforce in Shenzhen sweatshops. While the NYT goes a little over the top in making it seem that every single one of the city’s 12 million residents lives in squalor and misery, it does effectively shine a light on an aspect of China’s economic boom that most of us would gladly overlook.

So what? Why should you care? Well, look for China’s evil-caricature-of-choice to switch from greedy bureaucratic fat-cat to greedy industrialist overlord. And if you are reading this, there is a really good chance that YOU may be one of those evil overlords. (Better you hear it from me than from a stranger – who is holding a camera or a subpoena.) Ironically, one of the few things that Beijing Party apparatchiks and Upper East Side marketing executives will ever agree on is that YOU are a contemptible bastard for using upstream suppliers or OEM factories that exploit laborers. Now here’s the tricky part – you will be considered culpable whether or not you are responsible for the slimy practices. SO YOU HAD BETTER KNOW WHERE YOU ARE BUYING THINGS. You need to start doing a new kind of due-diligence on your upstream suppliers and contract factories. If you don’t have a process in place for auditing your supply chain, you had better get one in place pronto.

Some poor Western SOB is going to face a public-opinion perp walk early in 2007 because he chased some cut-rate OEM deal down the wrong blind alley. You’ll be saying “I had no idea what was happening” in English, while the factory manager will be saying, “the waiguoren (foreigner) made me do it” in Mandarin (ok, probably Cantonese or Taiwanese, but you get the idea). Chinese authorities may not have a great sense of humor in many respects, but they absolutely LOVE applying western-inspired regulations exclusively to foreign-invested companies. They think it’s hilarious – and it goes over GREAT in the Chinese blogiverse.

If you don’t get out there and eyeball the factories yourself and ask all the right questions, you will have no one to blame for yourself. Making sure that your supply chain isn’t evil is more than just morally decent – it’s good business. Do your due diligence and make sure you are not in bed with the devil.