Two years ago, Xu Hanping and Gao Jianjun arrived in Shijiazhuang with the clothes on their back and a mission: find a laoban.
They had heard from a friend that a laoban from their same small village in Sichuan Province was working there. They needed to find him. For migrant workers like Xu Hanping and Gao Jianjun a laoban meant a connection to coveted construction jobs, and their only sure shot out of a livelihood of subsistence farming.
Laobans are managers and middlemen. They arrange contracts with employers and then take responsibility for recruiting and overseeing hundreds of temporary workers. Laobans are often connected to their workers by only a few degrees of separation, even hailing from the same village, as in the case of the laoban Xu Hanping and Gao Jianjun were seeking.
The foundation of most migrant workers’ sustenance is their relationship to a laoban.
Xu Hanping and Gao Jianjun were already too late by the time they arrived in Shijiazhuang. Their prospective laoban had already moved on to a new construction project in Beijing. With no money to travel further, they remained in Shijiazhuang falling into one of the most tenuous community structures in urban China: migrant workers with no laoban.
This a community beyond the bottom of the economic pyramid, forced to seek employment day-by-day with no guarantees.
For these migrant workers, jobs are scarce. They congregate at pick-up sites along stretches of road at large intersections outside the city center. With them are the tools of their trade, which they carry as advertisements: a construction worker holding his hammer, a cook wearing a chef’s hat. They wait for the the boxy, well-worn Mitsubishi Delica vans to arrive and jockey to jump inside, as brusque bosses pop their heads out shouting day rates. Most of the workers remain, disappointed, anxious, and uncertain about their ability to earn a wage that day.
Xu Hanping and Gao Jianjun spent four weeks in Shijiazhuang chasing day-to-day work until they had saved enough to purchase the 72 RMB (12 USD) train ticket and continue their search in Beijing.
Over 1,000 miles from their village, they found their laoban.
But they didn’t feel far from home. The laoban had recreated a little slice of Sichuan at their worksite in Beijing. Xu Hanping and Gao Jianjun shared a dormitory room with eight other men from their province, the group spoke exclusively in their local dialect, and the regional specialties cooked up by the workers’ wives were full of spice.
Their laoban was a crucial bridge between home and employment in another important way: he held their wages for safekeeping and sent money back to their families.
Mass migration has strained—but not severed—the traditional family structure in China. While migrant workers like Xu Hanping and Gao Jianjun travel hundreds, even thousands, of miles in search of work, their earnings constantly flow back to their villages of origin. Workers’ families depend on these domestic remittances, which are significantly greater than the income potential in most rural economies.
Often, migrant workers lack the means to move money safely, securely, and inexpensively around the country. In recent years, China’s “Big Four” banks have closed a combined 30,000 branches in poor and rural regions where their families reside. A result of market pressures and an increasing focus on high-margin, low-risk populations, an estimated 64 percent of China’s rural population is “unbanked.”
Informal service providers like laobans fill the gaps left by formal financial institutions.
This reduces the risk of theft for migrants, especially for those like Xu Hanping and Gao Jianjun living in communal dormitories, and adds collateral to the working relationship for the laoban. The arrangement is mutually beneficial, but also lopsided. The worker is perpetually indebted to his laoban and risks exploitation. When issues arise, the worker has no reliable channel for redress.
Xu Hanping and Gao Jianjun don’t have these concerns. Informal money transfer through their laoban fulfills a significant and unmet market need. And they trust him. He provides them steady work, creates a sense of home away from home, and ensures their wages reach their families. They’re sticking with him, come rain or shine.
They know that when the project in Beijing finishes, he will move on. Wherever he goes matters little to Xu Hanping and Gao Jianjun. As long as he provides them steady work, they are ready to follow.
This post is an adapted excerpt from Reboot’s new publication Embracing Informality: Designing Financial Services for China’s Marginalized. The names of the individuals in this article have been changed to protect their identity.