SCDigest Editorial Staff
| SCDigest Says: |
 As wages rise, many manufacturers will look to Western China or other Asian country such as Vietnam or the Philippines for even lower wages, which could have an impact on China’s economic growth and employment.
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The rapid rise in manufacturing wages in China took a brief respite with the start of the global recession in 2008, but as China’s stimulus fed expansion quickly took hold, once again wages are on the rise – as well as labor activism.
What does it all mean? That is difficult to say, but the seeming general acquiescence of the Chinese government to the moves suggest it’s long planned strategy for competing other than by low wages is advancing to its next phase.
The symbol for this changing dynamic is clearly the current strike at Honda’s massive transmission plant in Foshan, China, in the Guangdong province, involving nearly 2000 mostly young workers who have been on strike since May 21. The strike has shut down auto production at Honda’s four Chinese assembly facilities for now.
While word today is that a resolution to the labor conflict may be over, that is happened at all is telling.
Strikes are now allowed in China, by custom, but it is not clear if there are any actual laws banning strike activities.
The strike highlights in part the growing income disparity and inconsistency in China. Workers at the Honda factory make about $150.00 monthly in US terms, whereas in many other parts of China, similar manufacturing workers take home about twice that per months. At the Honda factory, that $150-200 per month currently requires 10-12 hour days, six days per week.
According to reports today, almost all of the striking workers have agreed to an increase in the total starting wage by about 24 percent to now about $280 per month. However, there were also reports of minor fighting between local police guarding the plant and some of the workers on Monday.
Workers also have complained about a lack of air conditioning in the plant, as well the fact that they are forced to rise at 5:30 a.m. at the worker dormitory for a shift that starts at 7:00 a.m.
The workers additionally get free lodging and subsidized meals in the dormitory – but sleeping with 4-6 per room in bunk beds is not exactly easy living.
As China’s middle class grows, that kind of lifestyle and low wages are meeting increasing resistance – which ultimately will drive costs back into products being manufactured there for export back to developed markets.
What has been highly interesting to most observers there is that the strike is taking place with little interference from the Chinese government, which not only has made no moves to stop the strike effort, but is initially allowed state media to provide high levels of television and Internet coverage of the labor action. That is significant because it obviously sends a message about striking as a tactic to laborers all over the country.
However, after allowing two days of such coverage, over the weekend the reporters and coverage suddenly were gone – with the government perhaps realizing this labor activism thing could quickly spin out of control elsewhere in the country
Though some believe that the government is taken a low posture approach because Honda is a Japanese company, and there is bad will in China towards the Japanese dating back at least to World War II, the Chinese government has to know it is letting something of a cat out of the labor bag no matter what company is experiencing the strike.
This new permissiveness, the New York Times reported this week, “coincides with growing sentiment among some officials and economists that Chinese workers deserve higher wages for their role in the country’s global export machine.”
Role of Unions is Different in China
There are many unions in China, but their role is generally one much different than that found in most developed economies.
The unions are usually state-controlled, and play more of a management role in overseeing workers, not bargaining for higher wages or improved labor conditions. Labor organizing outside the government-controlled All China Federation of Trade Unions and company branches of the ruling Communist Party is illegal.
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Global Supply Chain and Logistics Focus: Our Weekly Feature Article on Topics Related to the Global Supply Chain and Related Logistics News and Issues 
According to the Associated Press, since the law’s passage, sit-ins and other protests are common in the In the Yangtze River Delta region, near Shanghai, though rarely reported in the state controlled media. That’s why the initial extensive coverage of the Honda strike is so interesting.
