New strike hits Honda parts supplier in China

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 workers striking after management fired about 100 workers, a worker who declined to give his name told Reuters by telephone.

"There are now about 170 workers on strike, almost all the Chinese staff in the factory," he said.

A Honda spokeswoman in Tokyo said the factory supplies 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 per cent, but multinationals typically pay above this threshold.

Hundreds of workers walked off the job last month at foreign-owned factories, many in the affluent Pearl River Delta.

Japan's top automaker, Toyota Motor, was also affected by labour unrest, but is confident it can handle such situations going forward, a China-based executive told China's official news agency.

The report, unrelated to the labour action in Foshan, cited Liu Peng, Toyota Motor (China) Investment Co Ltd, saying the company was confident it could "properly handle labour disputes, which are increasingly being heard as Chinese workers become more vocal about their interests".

"In the long-term, Toyota will also build a platform for better communication between management and employees," Liu was quoted as saying.

The strikes also 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 strikes 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."

Reports of disruptions tapered off at the end of June. 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.