Massive China Shoe Factory Strike Rolls On As Offer Falls Flat

[April 15, 2014]  By John Ruwitch and Donny Kwok

DONGGUAN / HONG KONG (Reuters) — Thousands of workers at a giant Chinese shoe factory shrugged off an offer for improved social benefits on Tuesday, prolonging one of the largest strikes in China in recent years amid signs of increased labor activism as the economy slows.

The industrial unrest at Yue Yuen Industrial (Holdings), now stretching to around ten days and sparking sporadic scuffles with police, has centered on issues including unpaid social insurance, improper labor contracts and low wages. Workers have demanded improved social insurance payments, a pay rise and more equitable contracts.

"The factory has been tricking us for 10 years," said a female worker inside a giant industrial campus in Gaobu town run by Yue Yuen in the southern factory hub of Dongguan in the Pearl River Delta. "The Gaobu government, labor bureau, social security bureau and the company were all tricking us together."

A spokesman for Yue Yuen said the firm, which makes shoes for the likes of Nike, Adidas, Reebok, Asics and Converse with a market capitalization of some $5.59 billion, had agreed to an improved "social benefit plan" on Monday, while stressing the business impact had been "mild" so far.

"Basically, the terms that we announced yesterday was after a very thorough internal analysis and calculation and considering all the factors including the affordability from the factory perspective," the spokesman told Reuters by phone.

"The revised plan will be effective from May 1, about a couple of weeks from now."

Despite this, thousands of workers, most out of uniform but with factory lanyards and ID cards around their necks, loitered in and around the leafy industrial estate, lounging on plastic chairs, sitting on curbs, chatting, drinking tea and nibbling nuts, refusing to return to their production lines.

Hundreds of police remained stationed in the area, some with riot shields and German Shepherds on leashes.

SOCIAL INSURANCE DISPUTE

The strike fits a growing pattern of industrial activism that has emerged as China's economy has slowed. A worsening labor shortage has shifted the balance of power in labor relations, while smartphones and social media have helped workers organize and made them more aware than ever of the changing environment, experts say.

A key point of contention at Yue Yuen has been the perceived scamming of workers through inadequate contributions from the firm into a social insurance scheme each month, and the difficulty of cashing in or transferring this money later.

But Yue Yuen's spokesman said: "If we raise the social security payment on the company part, which we are committed to do, it will also be a larger deduction from the employees' monthly checks, so the net they can pay may be lower as a result."

Li Qiang, a labor expert with China Labor Watch, a U.S.-based labor NGO, said the social insurance problem was longstanding and one which workers were no longer willing to tolerate, given improved legal and rights awareness.

"This is a costly lesson to multinationals to not ever ignore the rights of workers," Li told Reuters.

In over 400 factory probes conducted by the group over the past decade, none was found to have bought full mandatory social insurance for workers as stipulated under Chinese law.

Scores of factory hands interviewed by Reuters said thousands, even tens of thousands, remained on strike, including those in other Yue Yuen factories in the region, including Huangjiang town, accounts that matched those of online and social media posts.

An independent labor organization run by labor rights activist Zhang Zhiru, who has been in close touch with Yue Yuen strike organizers, said more than 30,000 workers went on strike on Monday, and even more on Tuesday in as many as six plants.

Online posts by workers have also called on Nike to pressure management to reform the firm's labor union and allow workers to elect their own president.

Yue Yuen says on its website it is "the world's largest branded footwear manufacturer" and made over 300 million pairs of shoes last year, with its production evenly split between China, Indonesia and Vietnam. It notched up net profit of $434.8 million in 2013 off $7.58 billion in revenue.

(Additional reporting by Fiona Li and James Pomfret; writing by James Pomfret; editing by Nick Macfie)

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