Case Study: Vietnam

Chinese Investors and Their Engagement with Labour Law in Vietnam

Dr Do Hai Ha

This case study investigates how Chinese investors have engaged with labour law in Vietnam, and the factors that have influenced this engagement.

Field research was undertaken from January 2020 to June 2021, with a focus on manufacturing sectors including textile, garment, furniture, and tire production. The major field sites were Hồ Chí Minh City, Bình Dương Province, and Tây Ninh Province. Interviews were conducted with a wide range of actors including business and HR managers, workers, union cadres, state officials, legal professionals, and CSR and labour experts. Dr. Do also participated in the activities of a local union and regularly visited workers at their dormitories and met them at weekends. The objective was to understand how Chinese employers interacted with other social actors at the workplace, local (subnational and national) and transnational levels, and how these multi-scalar interactions shaped and were shaped by labour law.

The data indicated that the engagement of Chinese employers with labour law in Vietnam has multiple dimensions. Frequently they ignore, evade and violate legal regulations. But concurrently, there are also attempts to learn and adapt to the new legal environment. Further to this, Chinese companies proactively and strategically deploy legal means to defend and realize their interests. Usually, such deployment involves some levels of misinterpretation and manipulation of the law, and exploitation of its shortcomings.

This case study reveals the importance of political economy forces operating at workplace, local and transnational levels to the engagement of Chinese manufacturers with labour law. One of these forces is local workers’ rights consciousness and resistance efforts (though these are considerably impeded by the absence of independent and effective trade unions). This is, in turn, related to characteristics of the local labour market, such as the shortage of labour and the increasing fragmentation of the workforce. Apart from this, the behaviour of Chinese manufacturers is also driven by specific conditions prevalent in the relevant sectors and global supply chains. Here, CSR mechanisms initiated by brand companies are an important factor to consider. While operating as an important driving force for improving labour law compliance in Chinese firms, these mechanisms are shown to have remarkable shortcomings.

Moreover, national and local governments exercise complex and important influences on the behaviour of Chinese employers. Recent business-friendly legal reforms, lax enforcement of law – a consequence of a strong pro-investment policy, prevalent corruption and institutional incapacity – and tight government control over labour activism has created a space for Chinese (and other) employers to ignore, evade, violate and exploit labour law in Vietnam. Yet, regular concerns about political instability and the persistent – though declining – impact of socialist ideologies simultaneously require state actors to intervene and alleviate capitalist exploitation.

However, labour practices in Chinese firms are not driven merely by structural conditions at local, sectoral and global levels. They are also shaped by Chinese businesspeople who actively respond and act in response to such conditions. In general, their engagement with labour law exhibits a ‘with the law’ consciousness in which law is envisaged as a game with rules and procedures that can be manipulated to secure pre-determined outcomes and facilitate self-interest. Though usually perceiving law as ambiguous, inconsistent, ineffective, and unreasonable, Chinese entrepreneurs also see it as an arena for contest with both opportunities and constraints to play with. As a result, they usually manage to adapt to legal rules and processes (though to varying degrees) in pursuit of self-interest. At the same time, Chinese business managers often seek to exploit shortcomings of labour law and mobilize various resources to secure preferred legal outcomes, protections and privileged treatments. And in so doing, they tended to rely extensively on extralegal means, like guanxi, and illegal means, such as corruption. Put simply, Chinese investors are not passive subjects in their interactions with labour law as well as with related political economy forces.

This case study suggests that a nuanced picture of how Chinese outbound enterprises interact with labour law in the host state requires a combined analysis of political economy conditions at workplace, local, sectoral and global levels and the ways that Chinese businesspeople perceive and act in relation to the law.