Shoe Factory Labor Strike is Largest in China in Years

Chinese Trade Group to Mediate Shoe Factory Strike – ABC News. When it comes to getting news about China that is accurate and informative, it is nearly impossible. Because of the bias against overseas news (unless it is a “sensational story”), American media is always two steps behind and very superficial (maybe because they do not want to offend their Chinese Associates?). The BBC News and AlJazeera are usually better when it comes to International news.

So here is the biggest news story that nobody has heard of. Forget Ukraine. Since April 5, 2014, Chinese workers have been striking against the largest shoe manufacturer in the world, Yue Yuen. It is estimated that 40,000 workers have been on strike and over 3,000 have participated as part of a protest march. That is correct – for over two weeks and you have heard not word one.

Chinese workers on strike (40,000 workers)

Who is Yue Yuen?

Yue Yuen is a shoe manufacturer (the largest in the world). It makes shoes for Addidas, Nike, Timberland, Under Armour, Merrell, Salomon, Crocs, Asics, Reebok, Puma, New Balance, Converse and Reebok (Boston Globe story). Yue Yuan makes athletic and casual outdoor shoes as well as sandals. The Taiwanese- owned company employed at total of 460,000 workers in 2011. It has factories in China, Vietnam, Indonesia, Mexico and the U.S.  Yue Yuen operates 3 factories in the Guangdong province, which employs 60,000 workers. The strike is occurring in Dongguan City, a key manufacturing center in China and located 30 kilometers east of Guangzhou (another major city). Yue Yuen made over 300 million pairs of shoes last year making a net profit of $434.8 million in profits on $7.58 billion revenues (40,000 workers strike in Southern China story). Here is another link about the largest shoe manufacturer that you have never heard about from the BBC. You kind of get the feeling that all of our athletic shoes come from the same company. For the most part that is true.

What is the Strike About?

One of the biggest changes in Chinese society since its reform and opening is that the two traditional sources of social welfare, especially for the elderly, have diminished because of privatization and population controls: state-owned enterprises and the children of aging parents. To help, officials passed a social insurance law in 2011, requiring that all employers in the country enroll staff in pensions, medical insurance, worker’s compensation, unemployment, and maternity insurance.

But because of weak oversight of the system, employers often don’t keep up with their obligations. In over 400 factory probes, none had fully complied with the law, according to China Labor Watch, a US-based nonprofit. Protesters in Dongguan, which started this week’s labor unrest, claim the Chinese firm Yue Yuen—famous for having basketball star Michael Jordan visit its factory in 2004— shortchanged workers regarding monthly payments into the social insurance scheme. The company employs about 40,000 people (another source says 60,000).

That is correct, Yue Yuen had not been funding its pension plan nor medical insurance nor worker’s compensation. With employees getting injured and with China’s aging population of workers, that money is needed now. And that is the reason for the strike.

A Yue Yuen spokesman has said the company can pay more for Social Security, but that will mean lower wages for the workers and net earnings for workers would be less than they are now.

I guess the factory workers didn’t take too kindly to the official word, but there has been no violence from protestors. Officials in seven Chinese cities or provinces have been trying to appease the workers by raising the minimum monthly wage (but by my looking at the maps, these cities do not effect Dongguan City or Ghangzhou). But if it did (like nearby Shenzhen), the minimum monthly wage would be $280 (Thousands of Chinese spent their “best years” making Nike shoes and now have no pensions story).

The Strike

The strike has been non-violent as far as the workers have been concerned. There have been well over 20 staff members arrested (much more but unconfirmed) and some who have held up banners have been beaten by the police. The common refrain from the workers is that they have been cheated for years. In a somewhat related story, 12 hospital security guards were sentenced to jail time for staging a protest last year in a dispute about wages and working conditions with Guangzhou Chinese University Hospital. They were jailed to send a message to the present day strikers (Yue Yuen Shoe Factory Workers’ Strike at Dongguan plants continues story). Congratulations China, you make our American capitalists forefathers proud.

The Alternate News Source

In a view different than the traditional news sources comes Bloomberg News. Bloomberg News says that strike just started on April 14th, and that Nike has offered a generous pay increase to the workers of 230 Yuan or $37 per month (it didn’t say whether this was the increase of the minimum monthly wage, I suspect that it is, and it would probably increase the monthly total from $243 to $280 per month). Bloomberg News adds that the company would start paying its Social Security benefits which were slated to start in 2015 to start earlier, like in May. Obviously, Bloomberg does not know why the workers are striking, nor do they care. Bloomberg is only worried that labor costs might be going up in China and that they may have to invest their money into different countries.

Conclusion

Isn’t a strike involving 40,000 workers in the number one manufacturing country in the world newsworthy? Why do we spend so much news on that capsized S. Korean ferry and maybe none on this story or one on China commandeering a Japanese cargo ship in retaliation for a debt they think they are owned from the 1930’s which is a definite mark of China’s new paramilitary stance? Who exactly runs our media service anyway? Randolph Hearst?! My advice: every so often, watch the BBC News, and get a fresh perspective.

As of April 24, 2014, the strike is still going on. Addidas has made noises about moving their production from Dongguan City.

Addendum

It appears that the strike is over as of April 28, 2014. 80% of the workers at Dongguan City have returned to work after Yue Yuen has agreed to increase the minimum monthly wage by $36.78 per month (that would be a total of about $280 per month) , but more importantly Yue Yuen will start to pay into the underfunded programs on May 1st as they were legally required to do over the past 10 years, into the accounts of medical insurance, workman’s compensation and pensions. This was reported in the Wall Street Journal. Reports are that the company lost $27 million due to the strike. Estimated payment into the social programs is estimated to be $200 million Yuan, ($31 Million). Addidas said it plans on finding a new location for the manufacturing of its shoes.