Relative treatment of workers in Mexico vs China: implications for location decisions

Abstract

Purpose

The purpose of this paper is to help managers of multinational corporations (MNCs) in making location decisions by providing a relative comparison of the labor laws and their enforcement in Mexican and Chinese export processing zones (EPZ).

Design/methodology/approach

By examining the relevant literature, the authors were able to identify differences and similarities among the two EPZs.

Findings

China is easier for MNCs to conduct business in because of the current lack of enforcement of the labor laws and the retention rate of workers is higher relative to Mexico. Also, wages in China are lower than in the Maquiladoras while at the same time the education level is higher in China than in Mexico.

Research limitations/implications

This study was conducted across a broad range of industries at a certain point in time. Researcher might be interested in identifying differences on a sector‐by‐sector basis. In addition, it would be possible to conduct a longitudinal study for both countries to examine the trends in enforcement activities and effect on FDI investments.

Practical implications

The research addresses the labor laws and treatment of worker in the Maquiladoras of Mexico and the special economic zones of China. By law, treating workers fairly and providing a safe environment is a priority in both countries. However, laws are often not enforced. A MNC that is interested in retaining employees and long‐term productivity has varied opportunities to provide incentives to ensure its success.

Originality/value

This research is the first study to compare the Mexican and Chinese EPZ in terms of labor laws and their enforcement.

Citation

Hess, S. and Prasad, S. (2007), "Relative treatment of workers in Mexico vs China: implications for location decisions", International Journal of Commerce and Management, Vol. 17 No. 3, pp. 183-193. https://doi.org/10.1108/10569210710833608