This was an example sentence in Practical Chinese Reader 31. Do people actually live in factories, or is there some cultural context I'm missing? In previous chapters, people are constantly visiting factories 《参观工厂》, which I found bizarre. Who would want to visit a factory? Why would they live there?
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yes, it is common for many Asia countries that "lodging" (typically dormitories) is provided by the companies and often these "factories" form cities on their own.
A famous (or maybe better to say notorious) example is Foxconn. From wikipdia:
Many people live at factories in China because many of them are migrants and it's more economical from their point of view to live in factory dormitories. It's also more efficient for them and their employers to have them on-site. Remember, China is crowded, housing is expensive and commuting is a bear. As for who would want to visit a factory, well many people, including vendors who sell parts, materials, and equipment to factories and customers who buy from factories.