As Chinese Factory City Seeks Makeover, Workers Making iPhones Leave City

Down the road from one of the biggest factories operated by electronics giant Foxconn, there is a temple, a basketball court and a pool hall run by a man named Jin.

Around lunchtime one summer day, children crowded together on old leather recliners at Jin's place, watching videos on a phone. A few people play majong. Some others huddle at a plastic table, smoking and drinking tea.

But the pool tables - once Jin's big moneymaker - sit empty. Balls rest idle in old metal cookie tins.

"Nobody comes anymore," Jin said, gesturing to the empty room.

That is because fewer Foxconn workers can afford to live in this part of Shenzhen. It is one of the foundational cities in China's economic rise. Now, Shenzhen's leaders are seeking another transformation into a high-tech hub as China's budding version of Silicon Valley.

Older apartments are being converted into sleek, modern units to attract the growing ranks of the Chinese middle class and aspirational young workers. Average rents have jumped from $100 a month to $250 or more - a tough pill for factory workers who often make $600 a month who assemble products including iPhones.

Many Foxconn workers are leaving. They are pushed farther from Shenzhen - just north of Hong Kong - or even abandoning their once-coveted jobs and moving back home.

It's a struggle of old versus new that echoes a broader shift across China. The irony is self-evident: The factory workers who were the backbone of China's stunning industrial growth are now becoming victims of the country's prosperity.

Call them gentrification refugees, flowing out from Shenzhen, Beijing, Shanghai and other big cities.

Increasingly, China's good jobs are clustered in the country's cities. At the same time, rents and property costs are skyrocketing, driven by speculation and lax regulation. Efforts to create more subsidized housing are moving at a glacially slow pace, if at all. The end result is an affordability crisis for much of the country's urban dwellers.

"There's a joke about the new residents," said Cui, whose wife runs a noodle restaurant on the first floor a recently renovated building in Shenzhen. "We joke that the buildings used to be full of factory workers. Now they're full of people who keep dogs as pets."

Cui and his wife Zhao used to live in the building above the restaurant. But rents more than doubled after a renovation - more than they could afford. They were given one month to find a new place to live. (The couple and the pool hall owner Jin only gave one name because they worried about repercussions from Foxconn or their landlords.)

The new residents, too, aren't interested in a noodle restaurant, said Zhao. They have enough money to order delivery from some of the more fancier places nearby.

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Forty years ago, Shenzhen was a fishing village. Then, in 1979, it became China's first "special economic zone," with new rules to encourage free market-style business. Factories and workers flooded in. By the mid-1990s, the city had about 3 million residents. Today, that number is closer to 20 million.

The city's 7 million factory workers were largely relegated to "urban villages," slum neighborhoods scrambled together in the 1990s. These places are now the prime target of developers looking to accommodate the higher-paid tech workers.

"The city wants to attract high-class talent, not migrant workers," said Christopher Balding, an economist who recently left Shenzhen.

Last year, a real estate company, Vanke, announced a sleek multimillion dollar redevelopment of urban villages near Foxconn, which in Shenzhen makes Apple products including iPhones.

Several workers say they were displaced, forced to move with just a month's notice.

In response, some workers released an anonymous letter asking for raises to cover the rising rent costs.

In a statement, Foxconn said that it was aware of the redevelopment projects and "working with the relevant local government agencies to minimize the impact of any resulting rise in rental costs on our employees' cost of living."

Wages were not raised, however. And now, more redevelopment has started.

"It's happening all over," said Geoffrey Crothall, communications director for China Labour Bulletin, a workers' rights group.

When workers move, "it adds to their costs and disrupts their families," he said. Kids have to change schools and parents must find new routes to work. Sometimes, families are forced to split up.

But often, there's no other option.

A woman with an umbrella walks past customers at a fruit juice vendor in Shenzhen, China

That is what worries Yuan Yanhong, who lives a few blocks from Jin's pool hall.

She can't afford a unit in one of the refurbished pink-and-yellow apartment buildings.

Instead, she lives in a rundown two-story home, a concrete shell with corrugated metal roof. Unlike other parts of the neighborhood, the roads around her house aren't paved.

One afternoon, Yanhong, in cutoff jean shorts lined with lace, trimmed her mother's eyebrows outside. Her 3-year-old daughter dashed in and out of the house in Peppa Pig pajamas.

Yanhong has been working for Foxconn for about 10 years, along with her husband. She came here because she knew she could make more money than back home in her village in Henan, about 1,000 miles north of Shenzhen.

Her sparse main room is decorated with laminated signs with pictures of animals, along with the word for them in Chinese and English. On their front door, someone has hung an old garland in the shape of a person, complete with eyes and a smile.

Her husband was asleep upstairs. There is a room in the back for her parents, and her family of four can fit comfortably upstairs.

Living here has been good, she said. There's a senior activity center nearby for her parents. Her father gives people rides on his motorcycle to make a little extra money, and they can store the bike in their living room.

She works six days a week, and she spend most of her free time with her daughter and 5-year-old son. They go on walks nearby, and spend time at the park.

The rumors about a renovation, though, have her on edge. She's heard that developers plan to knock down her little village entirely to make room for a high rise.

"A building would cost a lot more," she said. "A big family can't really afford it."

If she loses her home, she would have to send her children and parents back to Henan, where they would become "left-behind children."

"It's very sad because we don't want to be separated," she said. "We want our kids to grow up as a family."

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In the lobby of one renovated building, 20-somethings clack away on their Mac laptops. A group sits in the corner sorting roses for Valentine's Day, which is celebrated in August in China.

The renovated apartments upstairs are much smaller than the old units used to be. Some are barely bigger than a dorm room, with a tiny kitchen and bathroom. Others have a tiny second bedroom.

In one corner unit, a couple is settling in for the afternoon. The wife is on the floor, playing with her two cats.

She said she fell in love with the building as soon as she saw the brochure with its pretty pictures of neatly appointed rooms for $300 a month.

She has to commute nearly two hours each day to college in Hong Kong, where she studies marketing. She and her husband are so new to Shenzhen that they still haven't figured out their favorite restaurants.

They have not been to Zhao's noodle shop or Jin's pool hall. But maybe they will check it out some time.

Maybe.

Back at pool hall, it is nearly 6 p.m. The pool tables are still unoccupied. He hopes some workers will come later when they get off work.

Maybe.

"These days," Jin said. "very few people come."