Worsening China Factory Strike Threatens Adidas, Nike Sneakers
BEIJING - A wage dispute at a huge
sneaker factory that supplies brands including Adidas and Nike escalated
Wednesday, highlighting the growing problems faced by China’s
manufacturing powerhouse.
Workers at the plant –
owned by the world's largest maker of sneakers, Yue Yuen – earn as
little as $1.67 an hour making shoes that can sell for up to 100 times
as much in the United States.
Tens of thousands of
employees have been off work for a second week, forcing Adidas to switch
production to some of its other suppliers. At least one organizer was
arrested by police and has not been seen for 24 hours, activists told
NBC News Wednesday after a settlement offer was rejected.
At the core of the
dispute is the issue of historic underpayments for social security and
housing fund contributions, but the issue goes far beyond the shoe
plant.
Workers throughout China are
demanding not just higher wages but better social insurance as they face
the prospect of supporting a rapidly aging population.
“The fact that something
as nuanced as social insurance has led to a strike shows just how much
things are changing,” said Kevin Slaten of U.S.-based non-profit China
Labor Watch. “This generation of workers is a lot more aware of its
rights and this problem is not unique to this factory.”
China has enjoyed
decades as the world’s manufacturing powerhouse, but increasing labor
activism and a shortage of migrant workers is pushing up labor costs.
There has been a surge in the number of strikes and worker protests since the Lunar New Year holiday in early February, according to the Hong Kong-based China Labor Bulletin, which manages an online map of disputes. It recorded 202 incidents in the first quarter of 2014, which it said was a 31 percent increase on the same period last year.
“This increase might
partly be explained by greater social media coverage but there does seem
to be a pronounced increase in activism on the ground,” it said on its
website.
The stoppage at Yue
Yuen’s Dongguan plant in Guangdong is already one of China’s biggest.
Workers on Wednesday rejected the Hong Kong-based company’s offer, which
included partial back payments for social security and housing, full
contributions for those benefits starting May 1 and a $37 monthly
cost-of-living allowance.
The workers are
demanding a 30-percent pay raise, a stronger commitment to future
contributions and the right to choose their own workplace
representatives.
"We'll pay what is in the regulations, there should not be any concern on that," Yue Yuen spokesman George Liu told Reuters.
However, there were
signs of an escalation Wednesday when at least one activist helping the
workers was arrested by police. Zhang Zhiru, leader of the Shenzhen
Spring Breeze Labor Disputes Service, hasn’t been seen since his arrest
and his wife has been unable to contact him for 24 hours, another
activist told NBC News.
“There is some uncertainty now on what will happen next” in the dispute, the activist said.
Adidas, the biggest
customer of the factory, said Wednesday that plant owners were in talks
with local officials in a bid to find a solution. The Germany-based
sportswear brand said it had more than 1,000 global suppliers and had
already taken steps to source shoes from other factories.
“We are closely
monitoring the situation and we can confirm that our supplier … is in
discussion with the local government and the trade union federation to
seek ways to address the concerns expressed by the workers,” said
spokeswoman Katja Schreiber in a statement.
“In order to minimize
the impact on our operations, we are currently reallocating some of the
future orders originally allocated to Yue Yuen Dongguan to other
suppliers.”
In a statement, Nike said it was
“aware of and concerned by the events at the Yue Yuen factory,” adding:
“We're continuing to monitor the dialogue between factory management and
the workers, as well as production at the factory.”
A typical worker the plant might earn around $400 a month depending on position and overtime, according to China Labor Watch, which published a report on the facility in 2010. Hours vary in China’s factories, but a 60-hour week is not uncommon.
Hong Kong-based advocacy group Globalization Monitor
said some Yue Yuen workers discovered the factory had been underpaying
social insurance for years. One worker on a $480 monthly salary had been
getting social insurance contributions based on a salary of $288, the
group said.
Another Yue Yuen worker
told the Associated Press that there was a reluctance to accept new
offers because of the scale of the historic underpayments.
"Some have worked there
for more than 10 years, and in this case, they need to pay 20,000 to
30,000 yuan ($3,200 to $4,800)” to make up the difference, said
31-year-old Cui Tiangang, who cuts and glues rubber soles. “It is too
hard for the workers."
The company was not
immediately available to comment on the claims, but it has already
threatened to temporarily shift some production to its other factories
in Vietnam or Indonesia.
However, Slaten said labor disputes were unlikely to cause a manufacturing exodus.
“The infrastructure in
China is very good,” he said, and blue collar workers there are better
educated than their low-wage counterparts elsewhere in south Asia.
Chinese employers also
have the country’s uncompromising security forces on their side, as some
of the Dongguan strikers discovered when they were prevented by police
from marching through the city on April 14, according to a video uploaded to YouTube by China Labor Watch.
“When labor costs are
kept down, protests violently suppressed and workers cannot use
different channels to defend their rights, it creates what companies see
as a stable business environment,” said Slaten. “Local officials
support these businesses because the growth of the local economy is more
important to them than the rights if individual workers.”
Alastair Jamieson reported from London. Reuters and The Associated Press contributed to this report.
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