Page 224 - 2017 White Paper
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7 White Paper on the Business Environment in China
volumes ‘collapsed’ between 2007 and 2011, as can be a significant cost to companies who have to
companies there had problems with the quality of their redesign technical aspects of products for each market,
lactic acid, a key building block of PLA” (Toloken 2012a). in addition to standard localization efforts.
Accordingly, “Chinese exports of PLA dropped from In areas which are not considered of importance to
4,400 metric tons in 2007 to 237 metric tons in 2009, and national or strategic security, conformity to standards
remained at those low levels in 2010 and 2011. That has will not only help international companies in China,
boosted Chinese imports of PLA from about 1,200 metric but also Chinese firms, as the costs of development,
tons in 2007 to 4,000 metric tons [in 2011]” (Toloken implementation and troubleshooting will undoubtedly
2012a). decrease when companies are able to rely upon a
(hopefully) global body of existing knowledge.
The plastics industry has also turned to modified
plastics in an attempt to become more sustainable. Similarly, as Chinese design and manufacturing
Current estimates place 75 percent of the Chinese market becomes more sophisticated, domestic industry players
for modified plastics with foreign-invested enterprises. can benefit from global discourse on the topic through
Domestic demand for such materials exceeded 5 million their own participation—legislative or otherwise artificial
tons in 2010 and is forecasted to reach 10.4 million tons manipulation is not likely to improve innovation or
by 2015 (Wood 2011). productivity.
Finally, the emergence of shale gas resources in both Labor Dispatch Laws Take Effect
the United States as well as China have buoyed the outlook
for plastics manufacturers in both nations. According to In an effort to limit companies from taking advantage
a Plastics News-quoted analyst based in Houston, Texas, of labor dispatch, the Chinese government amended the
China is likely to move quickly in capitalizing on newly- Labor Contract Law in 2012 and promulgated the Interim
discovered shale gas reserves “because [the Chinese] Provisions on Labor Dispatch (hereinafter referred to
need new energy sources very fast” (Toloken 2012b). as Interim Provisions) in 2014. The two regulations
restrict what types of positions dispatched staff can
Although new investments valued at more than $16 hold, the proportion of workers in a company that can
billion are expected in the U.S. aimed at exploiting local be comprised of dispatched staff, and how they are
shale gas deposits, “Chinese investment is not likely to returned to their agencies. These measures emphasize
be immediate,” in part due to the fact that “China’s most- that labor dispatch can only be used as a supplementary
studied shale gas fields are generally also located in the employment approach. The Interim Provisions further
far northwest of the country, where it is costly to bring it regulates that the amount of dispatched staff the
to sizable markets either within China or internationally” employer hires shall not exceed 10 percent of the total
(Toloken 2012b). number of its employees. In the event that such amount
exceeds 10 percent before the effective date of the
Beyond energy applications, the gas’ use as a plastic Interim Provisions, namely March 1, 2014, the employer
manufacturing feedstock looks to be gaining popularity must reduce the proportion of dispatched staff to 10
in the United States and is expected to see similar gains percent within two years of the effective date of the
in China as investments and production capacity increase provisions (Xu and Koty 2016).
(Toloken 2012b).
Due to its flexibility and lower cost, labor dispatch
Potential Policy Gains is one of the most popular ways to hire employees in
China. Dispatch agencies offer companies temporary
Continued Adoption of and Participation workers for particular projects or a certain period of time.
in International Standards This is especially beneficial for businesses in seasonal
manufacturing industries or with project-based work,
While domestic innovation and “strong support” for where the amount of labor needed is not consistent
the fruits thereof make sense in many contexts, straying year-round. Although labor dispatch was supposed to
from internationally-developed and -adopted standards be used only for temporary, auxiliary, or substitute jobs,
companies would often employ dispatched workers for
224
volumes ‘collapsed’ between 2007 and 2011, as can be a significant cost to companies who have to
companies there had problems with the quality of their redesign technical aspects of products for each market,
lactic acid, a key building block of PLA” (Toloken 2012a). in addition to standard localization efforts.
Accordingly, “Chinese exports of PLA dropped from In areas which are not considered of importance to
4,400 metric tons in 2007 to 237 metric tons in 2009, and national or strategic security, conformity to standards
remained at those low levels in 2010 and 2011. That has will not only help international companies in China,
boosted Chinese imports of PLA from about 1,200 metric but also Chinese firms, as the costs of development,
tons in 2007 to 4,000 metric tons [in 2011]” (Toloken implementation and troubleshooting will undoubtedly
2012a). decrease when companies are able to rely upon a
(hopefully) global body of existing knowledge.
The plastics industry has also turned to modified
plastics in an attempt to become more sustainable. Similarly, as Chinese design and manufacturing
Current estimates place 75 percent of the Chinese market becomes more sophisticated, domestic industry players
for modified plastics with foreign-invested enterprises. can benefit from global discourse on the topic through
Domestic demand for such materials exceeded 5 million their own participation—legislative or otherwise artificial
tons in 2010 and is forecasted to reach 10.4 million tons manipulation is not likely to improve innovation or
by 2015 (Wood 2011). productivity.
Finally, the emergence of shale gas resources in both Labor Dispatch Laws Take Effect
the United States as well as China have buoyed the outlook
for plastics manufacturers in both nations. According to In an effort to limit companies from taking advantage
a Plastics News-quoted analyst based in Houston, Texas, of labor dispatch, the Chinese government amended the
China is likely to move quickly in capitalizing on newly- Labor Contract Law in 2012 and promulgated the Interim
discovered shale gas reserves “because [the Chinese] Provisions on Labor Dispatch (hereinafter referred to
need new energy sources very fast” (Toloken 2012b). as Interim Provisions) in 2014. The two regulations
restrict what types of positions dispatched staff can
Although new investments valued at more than $16 hold, the proportion of workers in a company that can
billion are expected in the U.S. aimed at exploiting local be comprised of dispatched staff, and how they are
shale gas deposits, “Chinese investment is not likely to returned to their agencies. These measures emphasize
be immediate,” in part due to the fact that “China’s most- that labor dispatch can only be used as a supplementary
studied shale gas fields are generally also located in the employment approach. The Interim Provisions further
far northwest of the country, where it is costly to bring it regulates that the amount of dispatched staff the
to sizable markets either within China or internationally” employer hires shall not exceed 10 percent of the total
(Toloken 2012b). number of its employees. In the event that such amount
exceeds 10 percent before the effective date of the
Beyond energy applications, the gas’ use as a plastic Interim Provisions, namely March 1, 2014, the employer
manufacturing feedstock looks to be gaining popularity must reduce the proportion of dispatched staff to 10
in the United States and is expected to see similar gains percent within two years of the effective date of the
in China as investments and production capacity increase provisions (Xu and Koty 2016).
(Toloken 2012b).
Due to its flexibility and lower cost, labor dispatch
Potential Policy Gains is one of the most popular ways to hire employees in
China. Dispatch agencies offer companies temporary
Continued Adoption of and Participation workers for particular projects or a certain period of time.
in International Standards This is especially beneficial for businesses in seasonal
manufacturing industries or with project-based work,
While domestic innovation and “strong support” for where the amount of labor needed is not consistent
the fruits thereof make sense in many contexts, straying year-round. Although labor dispatch was supposed to
from internationally-developed and -adopted standards be used only for temporary, auxiliary, or substitute jobs,
companies would often employ dispatched workers for
224
