At the end of 2013, a new list of bankrupt Chinese LED lighting manufacturers was published. Industry sources estimate more than 10,000 people have been impacted by the bankruptcy wave. Frustrated workers and angry investors have hunt down these indebted bosses on their own, provide legal evidence on outstanding accounts receivable and form groups to ask related organizations for help. These people will be unable to enjoy their reunion dinner during the upcoming Chinese Lunar New Year this month.
Many industry leaders spend generous amounts on grafts, but cruelly cut employee wages or delay salary payments. Bosses may also give distributors many discounts, yet unfairly force suppliers to lower prices. A delayed settlement account of more than two months has become common practice in the Chinese LED industry. These leaders also continue to blindly invest even when debt to asset ratio has surpassed warning levels of 48 percent. Yet, privately these company leaders’ continue extravagant lifestyles while piling up debts. Recently, sociologists and economists have proven “the worst mistake in mankind history has been business values of excessive borrowing.” The existence of “outstanding accounts” indicates exploitation, unfairness, extreme disparity between the rich and the poor, and a backward system. The most urgent issue right now is establishing fair trade. Our recommendations as below:
Establish “fair trade” commercial values.
Publish online a “Business Credit Blacklist”, so people with unpaid debt have nowhere to hide.
Establish an industry monitor mechanism. The association or other organizations should stringently check members’ business credits and withhold issuing memberships to companies with bad credit.
Forming comprehensive laws and increasing implementation.
1. Amend Labor Laws and other related regulations so workers salaries are issued on a weekly basis rather than monthly basis. One of the reasons that no large scale worker conflicts due to delayed salaries have broke out in U.S. and UK has been companies issuing salary every Friday.
2. Company Law and related listing regulations should allow parties within the company’s value chain to have the rights to openly elect one representative from distributors and suppliers respectively as board members. They should also publicly elect one union representative as an independent board member. The company founder or partner can also nominate board members, who do not have to be stockholders, to be approved by shareholder’s meeting. The basis for modern company management and sustainable development will only be possible if its foundation is built on respect plus open and fair partnerships.
3. Enterprise Bankruptcy Laws should be amended so insolvent companies will first repay workers unpaid salaries, followed by repaying supplier debts, and lastly returning taxes and other debts. The amendments should be aimed at protecting human rights, reducing poverty, and building a harmonious society.
4. Criminal Law, Economic Contract Law, Trade Union Law and other related regulations should also be amended to meet these demands.
