Bloomberg News

China Shoe Factory Strike Extends to Fourth Day at Nike Supplier

April 17, 2014

Workers at Yue Yuen Industrial Holdings Ltd. (551)’s shoe factory in China struck for a fourth day in a dispute over company benefit contributions, crimping output at the maker for brands such as Nike Inc. (NKE:US) and Adidas AG. (ADS)

Some of the workers gave a “positive response” to a planned May 1 increase in company payments to a social insurance system, George Liu, a spokesman for Yue Yuen, said by phone today. Employees should return to work or face actions by the company, he said, without specifying possible actions or giving an estimate of the number of workers on strike.

The labor dispute at Yue Yuen, which also makes shoes for Puma SE, follows strikes at Wal-Mart Stores Inc. and International Business Machines Corp. this year as workers to demand better compensation. Yue Yuen is negotiating with individual workers because it hasn’t been able to confirm who is representing the strikers, said Liu. China Labor Watch, a New York-based advocacy group, estimated strikers at about 30,000 today, the same number as yesterday.

Yue Yuen rose 0.8 percent to HK$26.05 as of 2:42 p.m. in Hong Kong trading, while the benchmark Hang Seng Index climbed 0.31 percent.

Unrest at the factory began April 5 when 600 workers took to the streets around the factory, blocking roads and demanding that the company pay full contributions to social insurance and housing programs, the government-owned Xinhua news agency reported. The strike started on April 14 and more workers joined after negotiations with management failed at the plant, which employs more than 40,000 people, Xinhua said.

Insurance Payments

While all workers at the plant are covered by social insurance, the company has paid less than the legal amount, Xinhua reported, citing an executive at the shoemaker it didn’t identify.

Liu said Yue Yuen has complied with the laws. He said the factory needs to be operating to generate revenue to pay workers and that the company was trying to bring the plant back to order. The situation around the plant is “calmer” today than yesterday, he said.

Adjustment to employee benefits from next month will hurt the Yue Yuen’s financial performance, the company said today in a Hong Kong stock exchange filing, without elaborating. Liu said the company will also make payments in arrear for some workers.

Adidas is closely monitoring the situation, said Katja Schreiber, a spokeswoman for the Herzogenaurach, Germany-based sportswear maker. Yue Yuen is seeking ways to address workers’ concerns, she said.

Greg Rossiter, a spokesman for Nike, today reiterated that the the Beaverton, Oregon-based sporting goods company is monitoring Yue Yuen’s production and the dialog between factory management and workers.

Photos released by China Labor Watch yesterday showed police, some with riot shields or guard dogs, assembled at the factory complex.

Yue Yuen was founded in 1988 by Taiwanese owners and has factories in China, Vietnam and Indonesia, according to its website.

To contact Bloomberg News staff for this story: Stephanie Wong in Hong Kong at swong139@bloomberg.net

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net Dave McCombs


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