Friday, May 28, 2010

China Unrest: A sign of things to come Honda Strike Becomes a Rallying Point in China

Security guards on Friday at a Honda manufacturing plant in Foshan, Guangdong Province, that was shut after a labor dispute at a parts facility.

FOSHAN, CHINA — A strike at an auto-parts factory owned by Honda in southern China has unexpectedly become a cause célèbre in the nation’s struggle with income inequality, with Chinese media reporting extensively on the workers’ demands and calling on the government to do more to increase wages nationwide.

Strikes have occurred before at Chinese-owned factories and on rare occasions at foreign-owned plants. But the authorities have typically hushed them up and either sought a quick deal or sent in the police.

The 1,900 workers at the Honda factory here have been on strike to demand higher pay since early last week, and on Friday there was no resolution in sight. The resulting shortage of transmissions and engine parts has forced Honda to halt production this week at all four of its assembly plants in China, with one closing on Monday and the other three on Wednesday.

The work stoppage is the clearest sign yet of growing labor unrest in a country that is now the cornerstone of many companies’ global supply chains.

Zheng Qiao, the associate director of the department of employment relations at the China Institute of Industrial Relations in Beijing, said that the strike was a significant development in China’s labor relations history because the workers appeared to be well organized and united.

“The strike at Honda is the largest strike that has ever happened at a single global company in China,” she said, adding that, “such a large-scale, organized strike will force China’s labor union system to change, to adapt to the market economy.”
Workers here have discovered the same weapon that the United Automobile Workers used to become the most powerful industrial union in the United States: shut down a crucial parts factory, and auto assembly plants across the country have to close.

“In terms of shutting down a multinational’s entire operations, I think this is the first” in China, said Geoffrey Crothall, the spokesman for China Labor Bulletin, a labor advocacy group based in Hong Kong.

The official English-language China Daily newspaper ran a lead editorial on Friday that cited the Honda strike as evidence that government inaction on wages may be fueling tensions between workers and employers. The editorial criticized the Ministry of Human Resources and Social Security for not moving faster to draft a promised amendment to current wage regulations because of opposition from employers.

In a move that may fan demands by workers at other factories, Southern Metropolis Daily published on its Web site a list of the workers’ demands. The workers, earn 1,000 to 1,500 renminbi per month, or $150 to $220 -- above minimum wage. They are seeking an increase of 800 renminbi per month.

The workers also demanded another 100 renminbi a month for each year of experience, up to a maximum of 10 years, plus guaranteed raises of 15 percent a year, the newspaper said.

Many Chinese economists have argued in recent years that China has allowed the system of global trade to take advantage of its workers, with multinational companies paying employees here too little. Until recently, however, the Chinese government has been eager to continue attracting foreign investment and has enforced labor peace.

Now, companies from around the world have moved extensive manufacturing operations to China, and cannot easily shift them elsewhere.

The strikes comes amid a growing debate about the rising income gap between the rich and the poor in China. Even though wages have risen in many manufacturing centers, they have failed to keep up with inflation and soaring food and housing prices. And now, with the economy roaring and many of the millions of migrant workers who used to fill multinationals’ factories near the coast finding jobs closer to home in China’s interior, the resulting labor shortage has given workers new leverage to demand higher wages and better conditions.

Strikes at Japanese-owned factories pose a particular dilemma for Chinese authorities because of latent anti-Japanese sentiment that has lingered since the 1930s, when Japanese troops occupied most of coastal China.

That hostility toward Japan has periodically surfaced in large public rallies, including in Guangzhou, near Foshan, several years ago. The Chinese authorities have sought to discourage such rallies, as Chinese nationalism has historically tended to morph into criticism against officials in Beijing for failing to stand up to foreign powers.

The anger at Japan has made it harder for municipal officials to send in the police to break up strikes on behalf of Japanese managers. Japanese executives have said in interviews over the years that they try to be especially responsible employers in China and have not encountered animosity at a personal level.

The Honda parts factory in Foshan is a series of enormous white buildings each covering an area close to the size of an American football field and emblazoned with “Honda” in huge red letters on the side.

A guard at the factory on Friday evening said that the strike had been peaceful, with workers coming and sitting on a double basketball court just inside the gate for several hours each morning before going back to dormitories in nearby neighborhoods.

In a scene more typical of a strike in the United States than China, print and television reporters from Beijing, Shanghai and nearby cities were encamped outside the gate, waiting for news.

China emerged last year as the world’s largest car market, surpassing the United States. Auto parts exports from China to the United States are rising rapidly, but are still mainly lower-tech, bulk products, not transmissions.

Honda made 58,814 vehicles in China in April, an increase of 29 percent over the same month last year.

Three of the Honda assembly plants affected by the strike supply the Chinese market with a wide range of models, while the fourth makes compact cars for export to Europe.

Honda said late Friday that the smallest assembly plant, the one that makes compact cars for export to Europe, would resume limited production on Monday with some remaining parts from inventory.

David Barboza reported from Shanghai. Bao Beibei contributed research.

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