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Rediff.com  » Business »  Strike at China's Honda plants makes foreign firms wary

Strike at China's Honda plants makes foreign firms wary

June 02, 2010 14:20 IST

Foreign firms that have made huge investments in China to take advantage of its cheap labour resources watched warily as Japanese car major Honda struggled to open its plants even a week after workers resorted to a flash strike.

The workers had taken the step to demand higher wages. The strike was seen as an extraordinary move because protests of the sort are virtually banned in China.

Not many strikes have been reported despite concerns over low wages and poor conditions.

Not all employees reported to work in Honda's four plants even after the second-largest automobile manufacturer in China announced a 24 per cent pay hike.

The company said that while some workers accepted the hike, others were holding on to the hope that they would receive more money. A statement from Honda said it is ready to provide a 366 yuan ($53.80) monthly raise to workers at the company's factory in Foshan, which is half of what they want. Honda workers make 900 to 1,500 yuan ($131 to $219) a month.

The minimum wage in the region is around 900 yuan. "But there are still several dozens of people who refuse to take up the offer and are trying to disrupt work at the factory," the statement said, adding that the company is still negotiating with those who are not satisfied with the offer with help from the local government.

Though some factory lines have resumed production, it has "not resumed to its full capacity," said Honda China's spokesman Zhu Linjie.

Two assembly plants, Guangqi Honda Automobile and Dongfeng Honda Automobile, remained closed due to lack of key components. Official Xinhua News Agency reported that a scuffle broke out between trade union officers and 40 workers on Tuesday, after some workers tried to prevent their colleagues from resuming work. Meanwhile, as Honda grappled with the strike, pressure mounted on US fast food chain KFC to increase the salaries of its staff in dozens of outlets across China.

KFC failed to respond to a Chinese trade union's demand for increasing its employees' salaries, a union chief said here on Wednesday.

A lawyer representing the tertiary workers' union in Shenyang, capital of northeast China's Liaoning Province, had sent a letter to the local branch of Yum! Brands Inc (China division), which owns KFC outlets in Shenyang, demanding a timely increase in workers' wages.

"We urged the company to clarify clauses regarding workers' pay raises in the draft version of the collective labour contract. But we are yet to receive a positive response from the company," Xinhua quoted Feng Hui, head of the Shenyang Municipal Trade Union for Service Industries, as saying.

Feng said that the union asked KFC to define the workers' minimum salary in the contract. The company is obliged to negotiate with the union on the draft contract within 10 days of receiving the lawyer's letter, the union director said.

Li Zhongmin, a public relations manager with Yum! Brands Inc in Shenyang, said that they were required to report any matter with regard to contract changes to the company's China headquarters, which delayed responding to the letter.

"KFC is cautious in making changes to labour contracts. But once the contract is signed, we will fulfill our obligations," Li said.

The two instances were seen as attempts by workers in China to assert themselves. "The price of labour in China has indeed been twisted and very undervalued," Chang Xiuze, a research fellow with the economic institute at the National Development and Reform Commission, had told Xinhua earlier.

According to the All China Federation of Trade Unions, nearly a quarter of Chinese employees have not received a salary increase in five years. As many as 11 provinces in China raised minimum wages this year.

The strike in Honda raised concerns among foreign as well as local firms because most of them bank on cheap migrant labour as well as stringent rules against strikes. According to some, the increasing cost of living in China has led to labourers taking to strikes despite the risk of being punished. However, the Honda strike has showed that workers can not only strike but also sustain it for a while.

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