Reuters: New strike hits Honda parts supplier in China

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher.

By Alison Leung

July 15, 2010

FOSHAN China (Reuters) - A strike has broken out at a south China factory supplying parts for Japan's Honda Motor, the latest in a string of stoppages by Chinese workers demanding a bigger piece of the country's economic wealth.

The strike, at Atsumitec Co. in the city of Foshan, began on Monday, with about 90 of the plant's 200 workers stopping work to demand a nearly 60 percent pay increase, said a worker who declined to be identified.

On Wednesday, nearly all of the remaining Chinese employees joined the stoppage in response to a threat from factory management to fire the strikers, the worker added.

"The Japanese managers just threatened and humiliated us Chinese," he said.

A Honda spokeswoman in Tokyo said the factory supplied gear sticks to the car maker's local plants, and said the workers had been on strike since July 12.

She said the action has not yet had any impact on Honda's car-making operations in China, some of which were affected last month by strikes at other parts makers.

The new strike marks the end of a couple of weeks of relative calm for foreign-run Chinese factories. Stoppages by workers demanding pay increases had disrupted operations for several weeks in May and June.

"I'm not surprised to see another strike breaking out," said Geoffrey Crothall of the China Labour Bulletin.

"The increases in minimum wage announced in several places in China this month might be enough to take the edge off of worker discontent, but it's not enough. The basic problems of low pay, long working hours and the lack of effective communication between workers and management are still there."

Various cities in China are raising their minimum wage by 20 percent, but multinationals typically pay above this threshold.


The strikers are demanding Atsumitec increase their monthly wages to 1,540 yuan (about $227) from 900 yuan (about $130), the worker said.

"We are taking into consideration the average salaries in Foshan and at other autoparts factories in the area," he said, adding that the 1,540 yuan per month was less than the wages paid at some of the other plants.

The factory supplies parts to Dongfeng Honda, a tie-up with Dongfeng Motor Group Co and Guangqi Honda, Honda's joint venture with Guangzhou Automobile, the worker said.

The plant has enough inventory to last through Friday, meaning that the car assembly plants would run out of parts if the strike continued through the weekend, he said.

The labor action follows a turbulent period in June, which saw hundreds of workers at foreign-owned factories, many in the affluent Pearl River Delta, walk out to demand better pay.

The strikes highlight how just-in-time manufacturing, now highly popular among western manufacturers, can put companies at risk because it allows little margin for error when supply chains get disrupted.


The work stoppages are a symptom of a broader trend that many investors will have to consider: a Chinese workforce becoming more assertive and selective, and sometimes inclined to protest by strikes, slow-downs and, most often, quitting.

"The chance of more strikes increases the more successful the previous strikes are. There's been more and more communication between workers and advocacy groups," said Duncan Innes-Ker, Beijing-based China analyst for the Economist Intelligence Unit.

"The workers have networks to exchange information even when there has been a state media blackout. The example set in one place tends to encourage others."

The wave of current unrest hit a peak in June, but reports tapered off at the end of the month. The last reported stoppage, at Japanese-owned Tianjin Mitsumi Electric Co, ended on July 3.

China's domestic media have been largely mute about the strikes, apparently due to state censorship. But Xinhua has issued reports about the unrest on its English-language service.

Labour costs in China have been rising, partly encouraged by a government that wants to turn farmers and workers into more confident consumers, even as it tries to keep a lid on strikes.

Earlier strikes disrupted production at auto makers Toyota and Honda, and have laid bare the rising demands of China's 150 million migrant workers, especially younger ones wanting to secure a foothold in urban areas.

(Additional reporting by Ben Blanchard and Emma Graham-Harrison in Beijing and Chang-Ran Kim in Tokyo; Writing by Doug Young; Editing by Don Durfee and Ron Popeski)
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