Why China’s Hyper-Driven Corporate Culture is Stumbling Overseas

A Chinese Scholar reflects on How a Relentless Work Ethic Stumbles Amid Overseas Protectionism Tightening Compliance and Shifting Generational Attitudes at Home. What is the Solution?

Han Xiaopeng  

 

 

Chinese auto parts giant Xingyu Car Light, already embroiled in a PR crisis over its humiliating treatment of recent college grads and a labor complaint filed with the EU, is in hot water again. Its factory in Serbia was recently exposed for operating under a blatant double standard in labor practices, sparking intense online controversy.

The workplace dynamics described in the reports are stark: local Serbian employees work a strict nine-to-five, clocking out the exact second their shifts end and clinging to local labor protections to the letter. Meanwhile, dispatched Chinese workers endure grueling ten-plus hour days. Once the locals head home, the unfinished quotas and leftover chaos fall squarely on the Chinese staff, who toil deep into the night—sometimes literally shirtless—to pick up the slack.

For me, this is pure déjà vu. When I worked in Mexico, almost every Chinese enterprise expanding overseas operated under this exact playbook.

By law, these companies face strict quotas to hire native citizens. But Mexico’s labor system and unions are notoriously fierce. Local employees are used to working entirely on their own terms: they won’t show up if it’s too hot, won’t show up if it’s too cold, won’t show up if the subway is delayed, and will happily skip a shift if they simply wake up in a bad mood.

A friend of mine, a middle manager at a local auto parts plant, tried to curb this rampant absenteeism by designing a seemingly foolproof incentive scheme. On top of a 300-peso daily wage, workers would get a 10% bonus just for showing up, and another 10% for perfect punctuality. Logically, it should have been an easy win. In reality, the local workforce couldn’t care less; they continued to no-call, no-show anyway. When management tried to issue pink slips, the deeply pro-labor unions and local authorities would swoop in to penalize the company. Left with zero leverage, my friend was left scratching his head, ultimately throwing up his hands in defeat.

When local employees are unmanageable, efficiency plummets, and delivery deadlines are non-negotiable, how do you bridge the production gap? The ultimate solution is utterly predictable: dump all the pressure onto the dispatched Chinese staff. Chinese workers who choose to go overseas essentially buy into a grueling “hustle culture.” Driven by the desire to earn more, they are willing to grit their teeth and grind through ten-plus hour days. Without them acting as the ultimate safety net, meeting local production quotas would be flat-out impossible.

However, this model of global expansion—sustained entirely by domestic staff pulling all-nighters and bearing the brunt of the burden—conceals systemic risks that no one dares to speak aloud.

When bidding for overseas contracts, many companies slash their quotes to rock-bottom prices just to squeeze out competitors. Their cost estimations are fundamentally flawed from day one. They never intend to invest the effort required for sophisticated, cross-cultural management. Instead, their entire strategy relies on importing a batch of hardworking, midnight-oil-burning Chinese staff from headquarters, piling on Chinese manpower and hours to squeeze out a razor-thin profit margin. Without this brutal exploitation, calculating costs based on compliant, local labor standards would make the business entirely unviable.

Relying on regulatory gray areas and cutthroat competition to maintain a global presence means that the moment local regulators actually clamp down, years of accumulated assets and market credibility will vanish overnight.

Within this broken system, the ones suffering the most are the Chinese middle managers squeezed from both sides. Their bosses sit in domestic headquarters—some having never even stepped foot abroad—completely oblivious to local legal systems, cultural norms, and workplace paces. Yet, they rigidly enforce KPIs based on extreme domestic overtime standards. Meanwhile, the local subordinates these managers oversee are heavily protected by local laws; they clock out right on time and will report the company to the union at the slightest grievance. Caught in the meat grinder, these middle managers can neither alter the mandates from above nor push the local staff below. Ultimately, their only recourse is to lead their core Chinese team to fill the gap—working themselves to the bone just to keep the operation afloat.

But this path is becoming increasingly unsustainable.

First, domestic generational attitudes have radically shifted. While Millennials (the post-80s and 90s generations) might have been willing to grit their teeth and work themselves to the bone for a high overseas salary, Gen Z views the workplace through an entirely different lens. They are fiercely protective of their personal rights and work-life boundaries. Today’s young workers are asking a glaringly obvious question: Why should Chinese staff be subjected to bottomless, unpaid overtime on the exact same factory floor where local employees enjoy legally protected rest?

At the same time, the regulatory noose around compliance is tightening. Supply chain ESG reviews and corporate compliance audits for publicly traded companies have become incredibly stringent. European automakers and multinational clients are increasingly hyper-sensitive to labor violations. Following the exposure of Xingyu’s Serbian factory scandal, Volkswagen and Mercedes-Benz have already launched formal supply chain compliance reviews. This deals a severe blow to the company’s future in overseas markets and its upcoming capital market operations. What was once a shadowy, open-secret double standard has transformed into a ticking time bomb, ready to detonate at any moment.

Taking a broader historical perspective, the pitfalls these expanding Chinese enterprises are stumbling into today were warned against long ago in the evolution of industrial capitalism.

During the early industrial era, robber barons and capitalists in their primitive accumulation phase similarly believed that maximizing wealth meant pushing working hours to the absolute limit while depressing wages to the bone. However, they soon faced a brutal economic backlash. When every enterprise frantically suppressed worker compensation, aggregate demand collapsed. The massive volume of goods pumped out by these factories lost its buyers, ultimately rotting away in warehouses as worthless inventory. Squeezing every last penny out of workers was quietly destroying the market foundation of their own products—because a worker stripped of purchasing power is a consumer lost to the economy.

By the early 20th century, industrial giants like Henry were the first to grasp this reality. In 1914, made the groundbreaking move to abruptly double his factory workers’ daily wage to $5 while shortening their workweeks. ’s logic was crystal clear: if his own workers couldn’t af a Model T, who was left to buy them? By controlling costs through lean production and economies of scale, while ensuring his workforce received decent pay and guaranteed rest, gave his employees the consumption power to buy cars and take family vacations. This single move catalyzed a virtuous cycle across the entire industrial sector.

Conversely, the stubborn capitalists who clung to hyper-exploitation faced a devastating reckoning during the Great Depression of 1929. That crisis proved, in catastrophic fashion, that starvation wages lead to a shortfall in social purchasing power, triggering a deflationary spiral. It was only after enduring the severe trauma of global economic collapse—and decades of relentless labor struggles—that the Western industrial sector finally reached a consensus. They gradually institutionalized the eight-hour workday, the two-day weekend, paid leave, and social safety nets—establishing the foundational baseline for the healthy survival of modern industrial capital.

Viewed from a broader perspective of human societal evolution, the rise of consumer culture is about far more than the fluctuation of economic data. It is a revolution of dignity—a profound elevation of status for ordinary people.

For millennia, the role of the ordinary laborer has been passive and subservient: slaves in antiquity, serfs in the feudal era, and sweated laborers in the early waves of industrialization. They spent their lives toiling for bare-minimum survival, while culture, art, institutions, and rules were entirely monopolized by a tiny elite. As mere labor power, ordinary people possessed absolutely no voice and no power of choice.

But when industrial civilization ushered humanity into an era of immense material abundance, ordinary people finally acquired a subversive new identity: the consumer.

As consumers, ordinary people ceased to be mere instruments of production waiting to be selected. Instead, they gained the autonomy to cast a vote of approval with the cash in their pockets. This transfer of power has profoundly driven major social advancements. Take the American civil rights movement: Black music—like jazz, blues, and rock—initially circulated only in the impoverished American South and was completely dismissed by the cultural elite. However, when the ordinary working class gained disposable income and purchasing power in the 20th century, coupled with the popularization of vinyl records, everyday consumers embraced Black culture and swept it into the mainstream. This fundamentally reshaped the social image and public recognition of Black Americans, ultimately winning unprecedented empathy and historic momentum for the civil rights struggle.

The elevation of women’s status follows a similar trajectory, largely leveraging the economic leverage bestowed upon ordinary people by consumer culture. It has even birthed the famous industry joke about the unspoken hierarchy of consumer purchasing power: women > children > dogs > men > tech nerds. For the men complaining that their market status is inferior to women’s: if you want to change the hierarchy, you might as well start spending more.

When ordinary people acquire the capacity to consume, they escape the fate of being cold cost lines on a corporate ledger. They evolve into social subjects with aesthetics, taste, and moral standards. Their preferences dictate which technologies flourish, which arts become popular, and which enterprises rise or fall. Therefore, enabling factory workers, farmers, and every ordinary citizen to consume with dignity is not just the key to stimulating GDP—it is the foundational prerequisite for elevating the social standing and human dignity of hundreds of millions.

In fact, we don’t even need to look abroad for proof. Pang Dong Lai, the regional Chinese retail chain that has achieved legendary status in recent years, serves as the perfect real-world case study.

Why does Pang Dong Lai enjoy such a cult following among vast numbers of ordinary workers? Why is the entire internet cheering for a supermarket chain? The fundamental reason is simple: it treats its employees as living, breathing human beings, putting the dignity of the laborer above all else.

When selecting suppliers, Pang Dong Lai blacklists companies that exploit their workforce. Founder Yu Dong Lai once bluntly stated that he does not believe an enterprise reliant on squeezing its employees can ever produce a quality product. Meanwhile, in a retail industry notorious for low wages, high turnover, and ruthless labor cost-cutting, Pang Dong Lai distributes the vast majority of its profits directly to frontline staff. It offers salaries that dwarf local competitors, mandates time off, and has even established a unique “Grievance Award” to financially compensate employees who suffer unjust treatment or difficult customers.

The result? Far from being dragged down by high labor costs, Pang Dong Lai has ignited a profound sense of ownership and unparalleled service quality among its staff. Consumers from all over China catch flights and wait in hours-long lines just to spend money there, fueling astonishing profitability and building a formidable reputational moat. With a tangible commercial miracle, Pang Dong Lai has proven to the world that treating employees well, providing decent pay, and guaranteeing time off does not destroy profit margins. Instead, it is the bedrock of a world-class brand. Only when you treat your employees as treasures will they treat your customers as treasures—and only then will consumers treasure your brand.

 

 

 Today, the world has long left behind the era of scarcity and undercapacity, entering a new phase of hyper-abundance and overcapacity. In this landscape, merely manufacturing a product is no longer a competitive advantage. The most critical, scarce resource has become consumption capacity—the ability and willingness to buy. Purchasing power is far more than just fuel to keep factories running; in global geopolitics, a robust domestic consumer base is a country’s ultimate leverage. Why does Donald Trump frequently wield tariffs as a weapon and throw his weight around? The vast US consumer market—the largest in the world—is his ultimate bargaining chip.

With a massive domestic market composed of hundreds of millions of middle-class consumers, enterprises could earn sustainable profits right at their doorsteps, completely eliminating the need to grovel and slash prices for overseas orders. A massive domestic engine would become a nation’s most formidable geopolitical leverage. High-quality resources and companies worldwide would crave entry into this market, and the global cultural industry would naturally pivot to cater to its tastes. By then, we could completely break free from the trap of trading grueling internal attrition for meager profits, and the global expansion of Chinese culture would follow organically.

So, why have we been trapped for so long in a vicious cycle of overemphasizing production while starving consumption? Why can’t local governments and enterprises curb the impulse to blindly expand capacity and engage in cutthroat price wars?

A major root cause lies in our long-standing local tax structure, which is heavily dominated by the Value-Added Tax (VAT). Because VAT is levied at the production stage, it creates a powerful structural distortion: if local governments want to increase fiscal revenue, they must continuously build industrial parks, court manufacturing projects, and boost production capacity. When factories mushroom overnight across the country, far exceeding actual consumer demand, brutal, hyper-destructive price wars inevitably erupt.

To fundamentally reverse this distorted system, we must reform the tax incentive mechanism and shift the policy focus from purely subsidizing production to aggressively cultivating consumption. A critical solution is to implement tax-sharing mechanisms between production hubs and consumption destinations. We cannot leave tax revenues entirely on the manufacturing side; a significant portion must follow the consumer. Only when consumption brings tangible fiscal returns to local treasuries will local governments be truly motivated to improve the employment environment, enhance social safety nets, and foster a comfortable consumer atmosphere, rather than stubbornly dumping capital into building more redundant factories.

This tax reform must be executed systematically. While introducing or expanding consumption-based taxes, the overall VAT burden must be proportionally reduced to resolutely avoid adding extra tax burdens to businesses and citizens. In today’s digital economy, tracking the geographic flow of consumption to implement cross-regional tax sharing faces zero technical hurdles. If the fundamental orientation of the tax system does not change, it will be impossible to alter the behavioral patterns of local governments and enterprises, and abandoning this toxic price-war culture will remain nothing but empty talk.

It is precisely this inertia of prioritizing factories over families that has led to our current predicament: hyper-competition on the supply side and stagnation on the demand side. When laborers cannot earn adequate salaries and are deprived of rest, massive consumption potential is suffocated in the cradle. Unable to break open the domestic market and earn reasonable profits at home, companies are forced to frantically rush overseas to snatch up low-priced contracts. To fulfill those underbid contracts, they have no choice but to suppress selling prices and force Chinese employees into grueling overtime to hold the line. This, in turn, provokes foreign tariff barriers, anti-dumping investigations, and ESG compliance crackdowns—forming a vicious cycle where everyone loses.

In fact, the Chinese central government has long explicitly laid out core directives to protect laborers’ legitimate rights, promote high-quality development, expand domestic demand, and fulfill the people’s aspirations for a better life. At the highest strategic level, ensuring decent work, raising labor remuneration, and implementing paid leave systems—thereby boosting consumption to drive the domestic economic cycle—have always been the strategic cornerstones of building a resilient new development paradigm. This is not just a practical necessity for upgrading our economic structure; it is the very core of human-centric development, ensuring that ordinary workers finally share in the fruits of growth.

Only when we ensure that every worker is fairly compensated, legally protected, and given the time to actually live their lives will our massive domestic market unlock its true potential. When citizens have both disposable income and the leisure time to spend it, the social standing of the ordinary Chinese person will rise, and the international prestige of both China and its industries will naturally follow.

About the Author

Han Xiaopeng received his Ph.D. from the Zhou Enlai School of Government at Nankai University. He previously taught at​ the Confucius Institute of the National Autonomous University of Mexico (UNAM).