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9-day strike at all 4 Honda China factories– Labor Unrest May Signal New Phase in China Economy

Posted by Author on June 1, 2010

By KEITH BRADSHER, The New York Times, May 29, 2010 –

FOSHAN, China — Add another entry to the list of worries for the global economy and financial markets: labor unrest in China.

Rapidly rising industrial wages are beginning to allow China’s workers to share in their country’s rising prosperity. The question is whether these gains can be maintained and even increased without disrupting supply lines to companies around the world, and without discouraging much future investment by Chinese and global companies alike.

The biggest eye-opener for multinationals in China recently has been a nine-day-old strike at a sprawling Honda transmission factory here in Foshan, about 100 miles northwest of Hong Kong.

The strike, which has forced Honda to suspend production at all four of its joint venture assembly plants in China, has shown that Chinese authorities are willing to tolerate work stoppages at least temporarily, even at high-tech operations on which many other factories depend.

Chinese policy makers are trying to let wages rise to create the foundations of an economy driven by domestic demand, without derailing the export machine that has produced the world’s strongest economic growth over the last three decades.

Even before the strike, manufacturers and buyers of low-cost products were already actively seeking alternatives to China, like Vietnam and Cambodia, said Richard Vuylsteke, the president of the American Chamber of Commerce in Hong Kong.

“They’re looking very seriously, and we’re seeing that in apparel and footwear,” he said. “A lot of our members are seeing appreciating wages.”

Honda has been making increasingly generous offers — or perhaps desperate offers — to settle the strike. The company has already offered increases in total compensation of close to 50 percent, according to crumpled-up copies of the offer provided by striking workers.

Roughly half of the 1,900 workers are recent hires from high schools and vocational schools who are paid training rates of just 900 renminbi, or $132, a month, pay slips showed. More experienced workers at the three-year-old factory earn up to 1,500 renminbi, or $220, a month.

Honda’s offer would raise total compensation for trainees to $202 a month, including benefits like a new food allowance; older workers would get slightly smaller raises. The strikers rejected the offer because nearly half of the raises consisted of increases in benefits that might be revoked later. The strikers are demanding an extra 800 renminbi a month, or $117, all in cash.

Takayuki Fujii, a Beijing-based spokesman for Honda, said Saturday evening that negotiations were continuing, but he declined to provide details……. (more detals from The New York Times)

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