AIMEE K. WILES XIAMEN, FUJIAN PROVINCE * Zhirong Guo wheels boxes of film into an export bay in a plant Kodak bought from the Chinese government and will close this year. Kodak also built a plant nearby, in Haicang. The film in these boxes is destined for Hong Kong, Taiwan, Singapore and other Asian markets. Kodak workers in Rochester fear Chinese factories will take their jobs.

By Ben Rand
Democrat and Chronicle

XIAMEN (June 25, 2000) -- Workers in Eastman Kodak Co.'s new film-making factory here get a lesson in the western ways of business every time they open their paychecks.

The plant's 1,200 employees receive only 90 percent of their salaries on a regular basis. They have to earn the remaining 10 percent by collectively meeting a series of stiff environmental and other performance goals every six months.

The unprecedented ''pay-for-performance'' program represents an important building block in the success of Kodak's first new film plant anywhere in more than 30 years. Kodak says the idea is to inspire creativity, hard work and cooperation -- important attributes since many of the workers came from state-owned enterprises where jobs were virtually guaranteed.

A motivated work force is critical as Kodak seeks to build the Xiamen factory into the main supplier of low-cost consumer film for the burgeoning Chinese and Asian photographic markets.

''It is important to us they know their job is not an entitlement,'' said Paul A. Walrath, general manager of the Xiamen factory. ''Kodak is in the business of making money.'"

Hope there, fear here

The company is spending a lot to help employees understand. They received average pay increases when they went to work for Kodak of about 30 percent -- though Walrath acknowledges that many would say they are working twice as hard. Some employees saw their pay as much as triple.

The company also installed state-of-the-art equipment and manufacturing processes and enlisted career engineers from Kodak Park and around the world to help with design, installation, training and start-up.

The investment has paid off handsomely. The plant began operating ahead of schedule in late 1998 and came in under its construction budget of about $600 million. Since opening the plant, Kodak's consumer film has grown into China's best seller.

AIMEE K. WILES XIAMEN * Cai Zhao Wu, 35, feeds his son, Cai Ning Chao, 5, in the living room of the seventh-floor apartment he owns with his wife, Ying Wang Hong, 32. She's an art teacher; he is a deputy manager in the film-packaging division at a plant Kodak took over from the Chinese government in 1998. Under Kodak, Zhao's salary increased 167 percent, enabling the family to buy such luxuries as the TV, leather couches and air-conditioning unit shown here.

The pace of achievement at the plant has surprised veteran Kodakers. Late last month, for instance, the staff at the plant produced marketable batches of consumer film in its first weekend of coating operations. The accomplishment sent cheers up and hugs all around in the site's control room.

Yet not everyone in Kodak is celebrating. The Xiamen factory is the source of some tension in Kodak Park. Executives say workers have told them again and again they expect to lose their jobs to lower-paid counterparts in China.

Kodak says those fears are misplaced. The Xiamen plant will be busy for a long time supplying China and other Asian markets, the company says.

Moreover, it says, the expansion in China is good for Rochester because it is creating new demand for chemicals, film base and other materials made only in Rochester. China is Kodak's 10th largest export market.

Still, the message isn't exactly getting out. ''Everyone has the same question. You hear it everywhere you go,'' said Dave Parr, a 31-year Kodak Park veteran who spent three months in China helping get the factory started.

His colleagues, Parr said, wanted to know why he would voluntarily give away his skill base. A believer in Kodak's strategy in China, Parr told them not to worry.

''There's a lot of fear,'' he said, ''but based on everything I see going on, we're going to be in business in Kodak Park for a long time.''

Raising the bar

Parr's counterparts in China have the same bullish attitude about their own new place of employment.

Kodak built the factory in the Haicang district of Xiamen, a muggy island of about 1.2 million people off China's southern coast. Xiamen is in the Fujian province, an area renowned for tea-making.

The plant includes about 1.4 million square feet and is surrounded by a rocky field of red clay that workers are manually clearing to plant a lawn. By comparison, Kodak Park includes more than 20 million square feet of film manufacturing space.

A giant Kodak time-and-temperature sign would be visible for miles were it not for the haze and pollution. Xiamen has temperatures that are about the same as south Florida's.

Kodak got the chance to build a new site as part of its landmark 1998 alliance with the Chinese government. In that deal, the company agreed to purchase majority stakes in and restructure three state-owned photographic enterprises.

One of those was Xiamen Fuda Co., a moribund firm that produced China's fourth or fifth best-selling film. Kodak paid more taxes in the first six months of operations than Fuda had in the previous 14 years, according to city officials. Kodak is Xiamen's largest taxpayer.

Kodak was allowed by the government to hire only the workers it needed. It gave jobs to about 650 former Fuda employees and then went outside to fill the balance of its work force.

That process allowed Kodak to employ the best of the best -- people such as Cai Zhao Wu, a deputy manager in the film finishing division. Cai had worked for Fuda about eight years before Kodak entered the picture. He is one of the people being groomed to take over once the company's expatriate community goes home starting later this year. Cai said working for Kodak is better because the company is more attuned to the market and more profit-driven than Fuda. It also allows employees to shape the direction of their own workday, he said.

AIMEE K. WILES HAICANG, FUJIAN PROVINCE * In Kodak's new film-sensitizing plant, Liu Songqing, Sun Yiqing and Wu Lizhen fold and fill boxes with Kodak's new professional-grade 120mm PPN160 film. This process will become automated as Kodak sells more of the film.

Kodak has been good on payday, too. Cai makes about 8,000 renminbi a month ($1,000), up from about 3,000 ($375.) That's a pay boost of 167 percent. With that money, Cai and his wife, Wang Hong Ying, an art teacher, bought a new air conditioner, leather furniture, video CD player and television set. They previously purchased a computer and mini-stereo system used frequently by their son, Cai Ning Chao, age 5.

They also have been able to enroll Ning Chao in additional classes. He is studying violin.

The family isn't taking this good fortune for granted. Wang Hong Ying said she worries that older workers at Kodak who used to work for Fuda will not fare well in the future.

''The Kodak company is good for young people,'' she said, ''but older people will suffer under the challenges and the pressure.''

Zhirong Guo has been feeling some of that pressure. The handler got about a 20 percent raise from Kodak, but it only amounts to the equivalent of about $20 a month.

He said he likes working for Kodak because he can count on getting paid -- state-owned companies in China sometimes miss payroll -- yet he worries about keeping up.

Zhirong is concerned that it will be hard to find a new job if he somehow doesn't meet Kodak's performance standards. China has an enormous unemployment problem, with official estimates ranging up to about 150 million people. Put in context, that's about half the population of the United States.

''We have a more stable salary, but now we suffer big pressure of getting laid off,'' Zhirong said. ''If I don't work hard here, I will be laid off. And . . . that's not so pleasant.''

Pressure aside, the employees are enjoying working conditions at the new plant. Cars are barred, but Kodak provides hourly bus service from downtown Xiamen that takes workers over a new six-lane highway.

Pig's tongue and Sprite

The company provides three on-site cafeterias that serve dishes ranging from pig's tongue, bean curds and pork mein pie to fried chicken, chicken wings and white rice.

The workers get fewer choices for drinks -- Sprite or Coca-Cola.

Like their counterparts in Rochester, the employees follow essentially a 40-hour work week and are guaranteed 40 hours of training per year.

All the benefits are nice, but mostly the employees say they like working for a company that has brighter prospects than their previous employers. It makes them feel more energized and empowered.

''In the state-owned enterprise you didn't feel any pressure because the director would tell you what to do,'' said Lu Zhang, a deputy manager of paper finishing and a former employee of Xiamen Fuda. Her salary went up about 300 percent, money she used to buy a new house and improve her son's education.

''In the new way, we're more competitive. We have a hand in the decisions and can improve ourselves.''