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As a real estate developer, Vanke works in a sector rife with problems associated with paying wages in arrears. The Chinese government and media have focussed on this issue a great deal over the last couple of years, with the former trying hard to ensure that migrant workers receive pay owing (particularly in the lead up to Lunar New Year). Vanke therefore finds itself dealing with numerous construction companies where such problems means it is now responsible for every worker on its construction sites.
In December 2003, Vanke’s project management and finance departments sent out notices to each construction company to request that construction workers be paid all wages in full. In January 2004, project management, finance, auditing and the legal departments jointly developed and implemented polices and regulations to prevent problems of back pay. Vanke asked construction companies to sign agreements stipulating that if wages weren’t paid in full and on time, Vanke had the right cancel the contract and pay construction workers directly by using construction project funds. At the time, Vanke General Manager, Yu Liang, said that although the company didn’t have a direct legal relationship with migrant construction workers, it had a moral responsibility to ensure workers received wages.
Being a good corporate citizen in China’s construction sector will be tough for any company due to the complicated relationships between developers, construction companies and contractors. But it seems Vanke has made a good start.
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