Is a Trend Toward Labor Activism About to Occur in China?

On the heels of the crisis situation involving the world’s largest contract manufacturer Foxconn, there are additional developments that perhaps point to the early stages on labor activism within China’s key manufacturing sectors. 

A Wall Street Journal reporter based in Taipei reported that Hon Hai Precision Industry Co., better known as Foxconn is weighing the possibility of increasing wages for its factory workers in China, although the company denies that this is related to the recent large occurrences of suicide incidents among its workforce. The article notes that there were two Taiwanese and one Chinese newspaper reports noting that Hon Hai Chairmen Terry Gau was considering an increase in minimum-wage levels by 20%. Company spokespersons however have denied the accuracy of these newspaper reports.

Meanwhile, The Financial Times and other financial media have today reported that Japanese automaker Honda has been forced to suspend manufacturing operations in China due to a labor strike at a supplier factory. More than 1800 workers at a Honda transmission factory in Foshan, in southern Guangzhou province, forced that factory to close on Monday of this week.  That forced Honda’s manufacturing facility to suspend operations on Wednesday. The workers are demanding higher wages, and appear to be acting independently, without any active sponsorship from a labor union.  It is noted that labor strikes involving multi-national companies residing in China are very rare, and trade unions in the country do not practice confrontation with employers.

While two incidents do not necessarily imply a trend, they involve well recognized Chinese and multi-national brand names.  I’m wondering aloud whether these are early signs of a pending new wave of labor activism within China.  Are workers beginning to communicate that they will no longer tolerate a low minimum wage while corporate owners reap increased profits as business recovers?

A look back in U.S. and other history notes that eras of labor activism have come when workers have had enough, and band together in activist waves.  We have observed an increasing trend of higher wages within China’s massive coastal manufacturing regions primarily because of population shifts, as former migrant workers refuse to travel to coastal manufacturing zones. These two forces could now be a basis for increased activism.

We certainly trust that China’s governmental authorities will provide a peaceful and appropriate set of mitigation options to workers and corporate concerns.

It would be interesting to note what our Supply Chain Matters readers have observed regarding labor activism within China.

Bob Ferrari

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1. Bob Ferrari says:

   June 3, 2010 at 3:25 pm

   Hello Everyone,

   An update today regarding this Supply Chain Matters on the potential for labor activism within China’s manufacturing sectors.

   New reports today are confirming that Foxconn will grant a 30% wage increase to all of its workers, and we certainly praise them for this action.

   I would also call readers attention to a Financial Times Editorial – Chinese labour is licensed to take its claim, published today and penned by David Pilling. David makes the observation that the Chinese goverment is de-facto allowing these labor unrests to gain visibility. He also makes the statement: “The years of endless supply of cheap labour on which the first three decades of China’s economic lift-off was built are coming to an end.” Worth a read.

   Bob Ferrari
2. Manik Aryapadi says:

   June 7, 2010 at 1:32 pm

   Hello Bob,

   Labor activism is on the rise not only in China, but also in developing countries like India, where Hyundai was hit by a strike at their Chennai factory, which is a major export hub.

   The recession has lead to massive job-cuts in different parts of India, where unions have retaliated with strikes and political activism; this probably means that companies will have to start looking elsewhere for cheaper labor (Vietnam, Indonesia….may be Africa!!)