Home / Industry / Manufacturing /  Nike Chinese contractor to boost pay in effort to end strike

Shanghai: Yue Yuen Industrial Holdings Ltd, the world’s largest branded shoemaker, offered to raise worker salaries and increase benefits in a fresh bid to end a strike that disrupted output for a sixth day.

The Hong Kong-listed company, a supplier to companies including Adidas AG and Nike Inc. is willing to raise wages in its factories in southern China by 230 yuan ($37) month starting 1 May, spokesman George Liu said in a phone interview on Sunday. It also agreed to bring forward to next month a social-security benefit plan originally scheduled for 2015, Liu said.

Workers have disrupted production in Yue Yuen’s Dongguan factory complex, which employs more than 40,000 people, since 14 April in a dispute over pay, benefits and the right to pick their own union. They were seen coming to the plant, clocking in and then leaving on Sunday. Some employees, who asked not to be identified because they or their family members could lose their jobs, said in interviews that they were still on strike.

The labour dispute adds to number of Chinese manufacturers faced with disruptions as wages rise and workers demand better compensation. Rising costs have also prompted some employers to move production abroad.

Employees interviewed at the factory on Sunday and on 19 April said the company had failed to agree on demands for more pay, a change in contract status and reimbursement for unpaid benefits contributions. Some demanded no punishment for strikers and the right to elect their own union leaders.

More Demands

At least 80% of the workers won’t take the offer, said Xiang Feng, 28, a worker in the factory’s finance department. The company’s plan to raise monthly contributions for social security would make it compulsory for employees to boost their own share of payments, she said.

Workers may end up with a take-home salary almost unchanged or maybe even lower than before, Xiang said.

The strikers expanded demands after an initial dispute over contributions to government-mandated social security and housing benefits for workers. The local government is fully aware and supportive of Yue Yuen’s proposed plan, Liu said.

Monitoring group China Labour Bulletin said on its website strikers at the Dongguan facility numbered at least 10,000, while Yue Yuen said on 16 April that more than 1,000 were striking. Wal-Mart Stores Inc. and International Business Machines Corp. faced strikes earlier this year in China by workers demanding better compensation.

Riot Police

China’s wages are set to increase by 10% or more in 2014, driving more low-cost manufacturers out of the country and boosting consumption, according to analysts at firms including Bank of America Corp.

Nike has produced more shoes in Vietnam than in China since 2010. Adidas said in 2012 it would close the last factory it owned in China.

Police with riot gear and dogs were present outside Yue Yuen’s 1.4 million-square-metre (15 million square-foot) Dongguan complex on Sunday. Dozens of workers were taken away by police last week, the official Xinhua News Agency reported on 17 April, without saying why the workers were taken. No one was injured and there were no clashes, Xinhua reported.

Police have told workers not to congregate around the factory, said three workers who asked not be identified because they or their family members could lose their jobs.

Nike Monitoring

Taiwan-based Pou Chen Group, the shoemaker’s parent company, is in discussions with the local government to resolve the striking workers’ concerns and an investigation will be conducted as soon as the strike ends, Adidas China said in an emailed statement on 18 April.

Nike is aware of and concerned by the events and is continuing to monitor the dialogue between factory management and the workers, as well as production at the factory, the Beaverton, Oregon-based company said by email on 18 April.

Yue Yuen rose 0.2% last trading week, closing at HK$26.10 in Hong Kong trading on 17 April. Markets in the city were closed on Sunday and 18 April for holidays.

The shoemaker, which is also facing a factory disruption in Jiangxi province in eastern China, is working with relevant government agencies to resolve the issue, Liu said. He said he expects operations in Jiangxi will return to normal on Monday.

Yue Yuen, which had 423,000 employees as of 2012, was founded in 1988 by Taiwanese owners and has factories in China, Vietnam and Indonesia, according to its website. Bloomberg

Gregory Turk in Shanghai and Sarah Chen in Beijing also contributed to this story.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout