“Working conditions have become more relevant than wages”

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The term Corporate Social Responsibility (CSR) is used frequently, but what is it really about? The credibility of many companies is at stake here, especially when it comes to manufacturing in China. discussed these issues with a CSR expert who collects valuable data in Chinese factories and validates them. In Heshan, where we met up with him, Professor Nick Lin-Hi runs a research project in cooperation with KTC.

Prof. Dr. Nick Lin-Hi speaks with women in the factory
Prof. Dr. Nick Lin-Hi looks closely at the working conditions in China.

This is a local manufacturer of high-end garments that produces apparel for technical brands such as Black Yak, Mammut, Helly Hansen, Rapha, Musto, Mountain Force and many more. Lin-Hi’s thesis: CSR is not just an ethical value, it also enhances productivity and quality. Professor Lin-Hi, how would you describe the connection between CSR and productivity on the basis of your findings from Chinese production plants?

Professor Nick Lin-Hi: First of all, there is some truth that applies to all industries and all cultures: Employees soon realize whether they are just viewed as a disposable workforce or whether an employer really cares about their needs. Staff generally react positively when the management takes on and displays responsibility towards them. In return, employees are normally willing to give something back to the company: commitment, motivation, trust, achievement and more. This insight is not new, but it has a new dimension when it comes to China.

That’s what we would like to discuss with you: Which are the specifically Chinese circumstances in this context?

The most important difference to Western countries is the dynamic change, both economically and socially. Just two decades ago, China was not much more than an emerging country with little economic power. For workers, the main goal was to see their basic needs satisfied. At that point money was basically the one source of motivation for employees.

"Factory workers can basically choose their employer"

As a result of rapid changes in both economy and society, this attitude has changed. Once a workforce has secured basic standards, other goals become important, such as workplace attractivity, leisure time and other quality-driven aspects. Chinese workers have gained greater awareness of these issues. Due to the tremendous economic growth and the demographic evolution, the country’s industry hubs have workforce shortages. Factory workers can basically choose their employer.

Worker in the KTC-factory.
The smile does not conceal the hard work. A good atmosphere in the workplace has become more and more important in Chinese factories which are often described as “sweat shops”. The smile does not conceal the hard work. A good atmosphere in the workplace has become more and more important in Chinese factories which are often described as “sweat shops”.
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What are the main sources of motivation for Chinese factory workers, besides salary?

My research shows that factory workers want to be proud of their employer. They want to work for a company which has a positive image, which they can recommend to family and friends. What is more, employees appreciate feeling that their work is valued. They don’t want to be seen just as a number or an asset.

Emotionally bound employees pay back with better performance

More and more people are selecting their future employers according to such criteria. They are reflecting on why they should work for one company instead of another. Responding to this is a challenge to the companies, but one that is worth the effort: Motivated and loyal employees perform better.

That still sounds a bit abstract. What can employers actually do to make Chinese employees feel more comfortable in their workplace?

Healthcare, decent accommodation, good food and workplace air-conditioning are all important factors. In addition, certain rights need to be respected, such as the right to talk to each other whilst working or to use a cell phone. The times when superiors could forbid Chinese workers these things are long gone. Companies have to accept this new reality.

How important are other benefits such as flexible working time, overtime or more vacation?

Here, too, there are changes in attitude. The immaterial benefits that companies offer are becoming increasingly important. To be sure, fulfilling such demands represents a challenge for companies. I feel that we only see improvements here in the long run.

As in Western factories, shift work is a crucial factor. Greater flexibility is only possible if there are more multi-skilled workers available, who are able to step in at different stages of the production process. The availability of such employees is critical to allow more flexibility – this highlights the importance of better staff training. For companies, it is important to know which different methods are available to accomplish this. That is why I work with KTC and conduct research on two key questions: How will the world of labor look like in the future? And what can we do to shape it?

We should not pretend, though, that these factors are more important than money, right?

No, that is not my intention. Priorities are about to change, though. In fact, I have empirical evidence that proves this. In the course of my research, I looked at whether increased wages compensate for poor working conditions. The results speak for themselves: Employees see a good working atmosphere as more important than a salary increase. My research shows that companies in China without these factors in place will face increasing trouble with human resources in the long term.

How do you collect your information? Are the gates of all factories in China open to you?

No, unfortunately, they are not. We badly need more transparency – there is not enough of it. Factory gates often remain closed.

Why is this?

I believe that many factory owners are scared. They are terrified of new approaches and the need to change things. Chinese factories still have traditional patterns of thinking in place, which consider staff as a mere production factor.

As long as this attitude continues to be predominant, it will remain a challenge to convince managements of the benefits of CSR. As a result, their way of thinking makes it difficult to get better access to many of these factories. What’s more, in many cases working conditions are not as good as communicated to the external world. Of course, no company wants this to become public knowledge.

Why is KTC is different? Did they reinvent the social wheel?

I cannot think of any other manufacturing company in southeastern China which can compare with KTC when it comes to transparency. This factory has nothing to hide and can, therefore, afford to open up their production facilities. Social responsibility is part of the company’s corporate philosophy. KTC has understood that economic success and good working conditions are not contradictory, but a productive symbiosis.

About the expert

Dr. Nick Lin-Hi is professor for economy and ethics at the University of Vechta, Germany. For more than a decade, the 35-year-old has been researching and publishing on social responsibility in companies. In 2010, he was awarded Germany’s Max Weber prize for Business Ethics (BDI). Lin-Hi is working with KTC on a research project which gives him a unique insight into production facilities in the Far East. 

Markus Huber Author: Markus Huber