China Is a Lousy Partner

Ottawa officials and politicians are encouraging Canadians to do business in China and with Chinese entities. So are other countries. But here's a cautionary tale about the pitfalls of doing business with the "Middle Kingdom."

Canadian Natural Resources Limited has built Phase I of the gigantic oil sands project known as Horizon Oil Sands where it awarded a contract to a subsidiary of Sinopec, SSEC Canada Ltd. (whose parent company is Sinopec Shanghai Engineering Company Ltd.) for the construction of two tank farms comprising eleven storage tanks and the supply of the required labor.
SSEC Canada Ltd. brought in temporary foreign workers into Canada to do the work in 2006 and 2007. On April 24, 2007 an accident on site occurred. Two Chinese workers died and five more were injured, two seriously.

Safety of Chinese workers and laws allegedly ignored
An investigation by Alberta health and safety officials, along with employment standards personnel, ensued and this spring 53 charges were laid in total against the three companies for allegedly unsafe working conditions which led to the fatalities and injuries -- SSEC Canada Ltd., Sinopec Shanghai Engineering Company Ltd., and CNRL, said Barrie Harrison with Alberta Employment and Immigration in Edmonton in a phone interview last week.

Accidents happen all the time but there are two other problems that have arisen since dealing with the Chinese entities. The first is that the court case had to be delayed because of Sinopec and the second issue is that the Chinese workers were not paid by their Chinese employer even though they worked four months before the accident and their quick departure.
"Sinopec now claims that they have no representatives in Canada so we are unable to 'serve' them and the court case was delayed until we can establish who their official representatives are and serve them notice," said Chris Chodan, spokesman for the Alberta Occupational Health and Safety Branch. "The next court appearance is scheduled for 14 September. The court case could actually proceed without Sinopec being present, however."

Chinese didn't pay their workers then sent them home
The issue of non-payment is also preoccupying Alberta and other officials.
Barrie Harrison explained the situation: "There are two issues here. One is the OHS [health and safety' investigation and subsequent charges being laid]. Another is an employment standards investigation that led to the discovery of the 132 Chinese workers not being paid for their work from the date of the OHS incident (April 2007) to July of that year. The Alberta government is in receipt of $3.17 million and is in the midst of tracking the workers and determining a process to get this money back in the hands of workers."
CNRL has fully cooperated by handing over the payment, which has been put into a trust account by the government. CNRL also has had to pay other contractors to tear down, then re-do the work which was stopped after two of the tank structures collapsed, one of which led to the fatalities.

Governments take note of Chinese treatment of workers
Alberta is working with federal immigration authorities to find the workers and the families of all the unpaid workers in order to dispense the back pay and benefits.
This contract was the first time a large group of temporary workers was brought in under one umbrella for one specific job. It has not happened since and the lesson learned is that "employers cannot delegate away safety but had also better be on the site supervising workers," said Chris Chodan.

As several of these matters are now before the courts, CNRL cannot provide any comments at this time, said a company email to me last week.

Diane Francis blogs at National Post.

Comments

[dlo2]

China is deeply challenged when it comes to quality of life standards for workers. Even Chinese officials, if they could speak with impunity would agree to that. Ecologic disaster management as well as the complexities of running China places worker welfare behind a thousand other state concerns. Manufacturing and intellectual outsourcing has further distracted China from its own development of policies and the corruption that seeps through the provinces by officials creates a quagmire of misinformation. Perhaps when China becomes evolves into a quasi democracy, workers in China may find protection in future centuries.

Ottawa needs to get a handle on the landscape of China with eyes wide open.

[altohone]

It's a new brand of communism.­.. I'm sure they divide the money equally at some later date.


But really, it's those in charge who are lousy partners..­. the whole shibang of leaders and businesses.
Banning huffingtonpost and any voices that tell the truth is hardly a cadre I'd want my government encouraging contact with.

[BannedNBoston]

The Canadians wanted trading with established democracies only.
Corrupt democracies and commies would get adjustable tarriffs and quotas.

[Henry]

The relationship between the totalitarian PRC and democratic America are sort of like the relationship between a married christian republican southern governor and an Argentine mistriss: they are headed no where without the radical identity change of one of the partners. That partner turns out to be Canada or the USA. The only way this works is for our standards, wages, and general quality of life all drop. And isn't that progress for you! Don't get me wrong, our investment-bank class will make out like bandits and isn't that fitting?

[mcthfg]

I guess we'd better start buying America back from them.

I bet it is going to cost a lot.