Made in China

China fever is a recurring illness among Western traders and businessmen: there have been periodic outbreaks since the eighteenth century. The symptoms include an irrational conviction that the number of people in China can be translated directly into the size of the profits of any business established there. Businessmen have dreamed of the fortunes to be made by selling every Chinese housewife a piano, or adding a foot to the shirt tail that each Chinese man was imagined to wear. Very few such fortunes have ever been made, but in the 1980s and 1990s, in the wake of Deng’s economic reforms, hope continued to triumph over experience.

Foreign investors combed through China’s industrial plant, looking for promising joint ventures. Large sums of money were lost in the rush to form partnerships that were meant to open China’s internal market to foreign companies but which usually left the foreign investor bemused, wondering where his money had gone. Still the money poured in: for more than two decades, China soaked up the lion’s share of the world’s overseas investment, an infusion that fuelled a massive building boom and rapid, if uneven, economic growth. China’s major cities were remade and its banks plundered for capital. Speculation was reckless. Local officials grew rich through bribery.

But China’s domestic market was—then at least—the wrong target. Rather than consumers, the best thing China had to offer the foreign investor was cheap, attentive and disciplined producers. The difference in wages between China and the old industrialized world was huge: a worker in Britain earning, say, £1,200 a month could be substituted by a Chinese worker earning the equivalent of £30 a month. The reduction in price offered a startling competitive advantage in the international market, even when transport costs were taken into consideration. China also offered tax concessions, a fairly stable political environment, an apparently inexhaustible supply of workers and local officials who were happy to waive the rules in favour of profits. Goods made in China need not be for China: China could be the factory for the world. Hong Kong businesses were the first to take advantage of this—by 2002, nearly 60,000 Hong Kong factories had moved into Guangdong Province, where they employed 11 million people—but in the 1990s factories in Europe and the United States also began to close their gates and move their production to China. It began with shoes and toys. A little English company called Hornby is a typical example of that movement, and an interesting demonstration of how the manufacture of objects (in this case, model trains) can be so easily separated from the audience that buys them and the culture that invented and nourished them.

The firm was founded in 1907 by Frank Hornby, a butcher’s clerk from Liverpool with a Victorian enthusiasm (he was born in 1863) for engineering and self-improvement. He invented Meccano (the name comes from Mechanics-Made-Easy), construction kits of metal strips and screws from which children could assemble little bridges, cranes, ships and houses. Meccano became one of the most popular boys’ hobbies in Britain and the British Empire, made Hornby a millionaire, and allowed the company to diversify into other branches of model-making. In 1920, Hornby produced its first clockwork train and in 1925 its first electric one—models, which as they developed over the next seventy years, grew in their sophistication and verisimilitude; they looked like the real thing, as observable in British railway stations and emerging from British tunnels, past as well as the present. The livery of their Edwardian carriages was correct, the wheel arrangements of their 1950s locomotives were correct, the pattern of rivets on their boilers faithfully reproduced. None of this was unique: other companies in other countries—especially in Germany and the US—made beautifully accurate model trains. But, like Hornby’s, their models reflected national engineering traditions. A German model looked like a German train, and that was the point because the market was Germany and its fussy German hobbyists, who wanted to see recreated the Rheingold Express, circa 1965. It seemed unlikely that such miniature, intricate and highly culturally specific products could be ‘globalized’ like a soft toy bear or a training shoe. Surely a worker would need to bring to the making of such an object some local knowledge, some understanding of its appeal?

Then in the early 1990s another model train maker called Bachman (originally an American company, now owned in Hong Kong) began to make miniature British locomotives. In the shops, they were priced the same as Hornby’s, though they were made in China. And, as Hornby could not help but notice, the quality was ‘demonstrably better’. Hornby was struggling to survive by this time and made the obvious decision. In 1995, it closed its factory in Margate, Kent, cut the Hornby workforce in Britain from 550 to 110, and moved production to China.

The quality of its models didn’t suffer—if anything, the reverse—and five years later it was able to buy up other model-makers who hadn’t made the move in time. In 2004 the company expanded again by purchasing the leading model train-maker in Spain and the assets of a defunct Italian model-maker. Both countries will in future be supplied from the factory in China. But who owns the factory? Not Hornby.

Like many much bigger and truly international brands—Nike and Reebok, for example—it has become a company that ‘doesn’t do stuff’, that is, it makes nothing. Instead it concentrates on brand management and marketing. It negotiates a price with its Chinese contractor, sends the designs of what it wants made to the contractor at his factory near the town of Dongguan in Guangdong, and waits for the results to arrive in England by container. Hornby has no share in the Dongguan factory although it now depends on it entirely for its products. You might say that the only manufacturing secret that Hornby still truly owns is the name of its Chinese partner. This became clear when, in England, I asked if I could see the Hornby factory, to which Hornby agreed provided that I neither identified the factory nor Hornby’s agent. And so, in the lobby of one of Hong Kong’s smarter hotels, I met my guide, Mr Wang, who worked for the company I now can’t name.

Together we took the ferry to Shenzhen. Across the harbour, the familiar outline of Hong Kong’s skyscrapers was fuzzy and indistinct, shrouded in pollution that had blown down from the factories of the Pearl River Delta. Mr Wang explained that his company had begun as a manufacturer of cheap toys in Hong Kong in 1973, having been founded by a man who later became known as ‘the godfather of the model train industry’ after he went into business with an American partner in the early 1980s. In 1981 the proprietor opened his first factory in Dongguan, but in those days, as Mr Wang said, foreign manufacturers were still competitive. ‘We were supplying components but they were still doing the assembly and the decoration.’ Gradually, Mr Wang’s company grew in its expertise, so that when its foreign clients wanted to move the entire manufacturing process to China, very few mysteries about the techniques of production and assembly remained for the Chinese to unravel. They had moved from components suppliers to makers of finished objects, a move up the value chain made by many other companies in Guangdong.

With seventy major clients, Mr Wang and his colleagues now produce a very large—but necessarily unquantifiable—percentage of the world’s model trains. Rivals in the marketplace they may be, with their different logos and little locomotives, but their stuff is made in the same place by the same workers. ‘Hornby do get a bit anxious about the competition,’ said Mr Wang. ‘But we say we are open to anyone who wants to manufacture here. They try to keep our name a trade secret and they worry about their own trade secrets leaking.’ He said that his company tactfully separated the most obvious rivals into different buildings on their site.

And what about Mr Wang, I wondered. Had he been a Hornby boy himself, tearing the wrapping off a box to discover a miniature Flying Scotsman? Mr Wang shook his head. ‘These are very expensive models. They are not for children, most of the people who buy them are in their forties.’ Mr Wang, it was clear, was in business, not in the business of passion. We got off the ferry and into a people carrier and drove for forty minutes though the familiar pollution—grey smog and black rivers—until we reached a large factory compound. As the gates swung open, Mr Wang pointed out a small Hornby logo on the wall. We parked and he led the way up a broad staircase, indicating another Hornby sign in the stairwell. I found myself wondering if these signs were interchangeable—today (for me) Hornby, tomorrow (for someone else) some other brand, and if Mr Wang was like the ferry captain played by Alec Guinness in The Captain’s Paradise, a man with a wife in Gibraltar and a mistress in Tangiers who switched the pictures in his cabin from one to the other as he steamed across.

I had checked the company out in Hong Kong, to be told that it had several factories but the one that visitors were always shown was Factory Number 6. I asked Mr Wang which factory we were in. ‘Number 6,’ he replied. The factory could produce about 4,000 items a day, he told me. Whether it did depended, among other things, on the electricity supply. The previous year all the factories in the district had suffered day-long power cuts so over the winter the factory had been one of the investors in a village power plant. This year Mr Wang had had only five days guaranteed supply every week from the province but he had made up the rest with two days guaranteed supply from the village. So far, it had worked.

In the workshops, young women in uniform green shirts sat at long tables trimming the surplus from the plastic bodies of miniature carriages and wagons. Further on, more similarly dressed young women were examining a locomotive—a Harry Potter Hogwarts Express—for flaws. (This engine has worked miracles for Hornby’s profits). Mr Wang explained the production process as we passed through the design department where a dozen young men in black T-shirts were rendering the designs into specifications. A model train, Mr Wang said, can have 140 different parts. I passed pallets of Scalextric cars, and young women carefully spraying the white edges on to tiny motorbikes. At another table, they were bent over antique teak rolling stock. Further along, yet more of them were finishing off a British Railways buffet car. ‘Do you know where these go to?’ I asked. ‘America,’ one of them replied. The line supervisor grinned. ‘England,’ she said. The others looked bored. It was a matter of no interest. Why would it be?

Back in Mr Wang’s office, he told me that it was normally against the factory rules for the workers to speak to strangers. I asked if I could visit the workers’ dormitories. Mr Wang politely refused. It was not his department, he said. He had no authority over the dormitories. His demeanour told me my visit was over. I thanked him and left Factory Number 6. Perhaps I had seen the real thing. Or perhaps Factory Number 6 was a sort of Potemkin factory completely unlike the darker reality of Factories Numbers 1 to 5. In industrial China, as a woman I shall call Jane Trevor knows too well, one learns to distrust appearances.