Paying the price

Local factories like to work with workshops in Guangzhou’s urban villages for two main reasons, said Kang Jianmei, the owner of a children’s wear business that works with Shein. They can help process large orders quickly, and — more importantly — they’re cheap.

Cutting costs is especially important for businesses in South China. The region’s once-mighty garment industry is struggling to remain competitive as labor and operating expenses rise. Many fashion brands have moved production to cheaper markets like Vietnam, where factory wages are often less than half of those in China.

But Guangzhou’s workshops have partly shielded themselves from this trend. Rent in the urban villages is dirt-cheap by local standards, and the tiny businesses can often circumvent Chinese regulations. Their staff, however, often pay the price for these cost-cutting measures.

Though the workshops operate in broad daylight, many appear to be part of the gray economy. They not only failed to display a business license, as they’re legally required to do, many also didn’t have signboards indicating their company names.

An interior view of a factory that works as Shein’s direct supplier, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

Workshop owners frequently fill their workforces with family members and temporary workers, who have fewer labor rights than permanent staff members, said Kang. This allows the bosses to avoid making expensive social security payments.

The working environment in the urban villages is often poor. Despite the intense heat and humidity, many of the workshops Sixth Tone visited had no air conditioning and provided only a hanging fan for ventilation. They’re also frequently unsafe, said Huang.

“Unregistered workshops in urban villages are a problem,” he said. “The main reason is the increased risk of fires.”

Guangdong province has seen several deadly fires caused by garment workshops inside urban villages over recent years, including a 2014 blaze in the city of Puning that killed 11 people. Local officials — who used to adopt a laissez-faire approach to regulating Guangzhou’s large informal economy — have begun shutting down a growing number of workshops, citing government bans on the mixed use of residential buildings.

A view of a street in Tangbu West Village, Guangdong province, July 2021. Wu Peiyue for Sixth Tone