You don't need to turn to Hegel for this, and you won't get anywhere useful with Mao either.

I think it is, but I can't really figure out the translation between the idea of 'alienation' and material reality

You should, however, reread the surrounding text carefully, he spells this out pretty clearly:

Labor’s realization is its objectification. Under these economic conditions this realization of labor appears as loss of realization for the workers; objectification as loss of the object and bondage to it. ... So much does objectification appear as loss of the object that the worker is robbed of the objects most necessary not only for his life but for his work. Indeed, labor itself becomes an object which he can obtain only with the greatest effort and with the most irregular interruptions. So much does the appropriation of the object appear as estrangement that the more objects the worker produces the less he can possess and the more he falls under the sway of his product, capital.