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Foreign Investors Should Be Aware of Labor Strike Tactics in China
Posted on November 29, 2011 by China Briefing
By Vivian Ni

Nov. 29 – Increasing labor costs have become a major concern for foreign companies mulling whether or not to invest in China, but this may not be the only labor-related issue they should be watching out for. As the recent global economic downturn brings about fallingfactory orders, an abundance of young, well-educated and computer-savvy Chinese workers are leading one of the country’s strongest waves of labor unrest and labor disputes, which could cause real damage to companies’ regular day-to-day operations.

Intensified labor unrest
Over a one-week period in mid-November, more than 10,000 workers in Shenzhen and Dongguan – the two leading export hubs inSouth China’s Guangdong Province – went on strike.

Some 7,000 workers demonstrated against an overtime work cut and relocation plans at a Dongguan-based Taiwanese shoe factory owned by Pou Chen which supplies footwear to Nike and Adidas. At another Dongguan-located large-scale shoe factory Yue Yuen Industrial Holdings – a major supplier for the sports brand New Balance – some 8,000 workers helda violent strike, blocking roads and overturning cars, according to a Reuters report.

Strikes have also taken place at the Hong Kong-listed underwear factory Top Form, where hundreds of female workers protested against a pay cut, and at Apple’s major keyboard supplier Jing Mold Electronics Technology, where middle managers complained about working late hours for which they were not properlycompensated.

Geoffrey Crothall, web site editor of China Labor Bulletin (CLB), a Hong Kong-based labor advocacy group, commented that the recent intensification of labor unrest is the “most significant spike in unrest since the summer of 2010.”

The “summer of 2010” Crothall referred to was the time when a string of labor protests – involving over 2,000 workers – occurred at eight companiesacross the country owned by (or supplying) Japanese automakers, including Honda and Toyota.

The strike at Nanhai Honda – which triggered a series of labor protests last year – finally won workers a 33 percent pay-raise during that year, from the original RMB1,544 per month to RMB2,044. Earlier this year, the company took the initiative of offering another raise of RMB611 towards workers’ salaries.Reasons behind strikes
For the time being, the state of the global economy coupled with high inflation (which simply increases livelihood pressures) in China, have been regarded as major contributors to the new wave of labor unrest. However, in general, employers should get more prepared for an increase in labor issues, as a younger generation of workers with a higher education are startingto gain a better sense of their labor rights.

Reduced Western orders
Guangdong Province, China’s export powerhouse, is perhaps most affected by the Western economic woes. The province has witnessed a 9 percent drop in October’s exports, mainly caused by a collapse in orders from debt-ridden European countries, according to Zhu Xiaodan, Guangdong’s acting governor. The flash purchasing managers’index recently compiled by HSBC has also indicated a slowdown in the country’s manufacturing sector.

The reduced overseas orders are forcing employers to cut overtime work hours, which ultimately leads to a pay cut for workers. China’s factory workers – who usually see a low basic salary – often count on the extra pay they can receive through working overtime. According to CLB statistics, theaverage basic monthly wage for an electronics worker is about RMB1,500, but rises to RMB2,500 with overtime.

“Their basic wage is never enough on its own without overtime,” says Crothall.

If the global economy continues to trend downwards, more and more manufacturing workers may face redundancy. A recent estimation by the Federation of Hong Kong Industries said one-third of some 50,000...