Strikes in China may lead to heavy costs for MNCs

Strikes in China may lead to heavy costs for MNCs

SHANGHAI — A wildcat strike at an IBM factory in southern China illustrates how tectonic shifts under way in the country’s labour market are emboldening workers to take matters into their own hands, raising risks for multinational companies.

MARCH 10

SHANGHAI — A wildcat strike at an IBM factory in southern China illustrates how tectonic shifts under way in the country’s labour market are emboldening workers to take matters into their own hands, raising risks for multinational companies.

More than 1,000 workers walked off the job last week at the factory in Shenzhen, after managers announced on March 3 the terms of their transfer to new ownership under Chinese PC maker Lenovo Group.

Lenovo agreed in January to pay US$2.3 billion (S$2.9 billion) for International Business Machine’s low-end server business.

The workers want higher pay if they switch to working for Lenovo or higher severance packages if they choose to leave.

The strike, still ongoing as of yesterday, fits a growing pattern of industrial activism that has emerged as China’s economy slows. A worsening labour shortage has shifted the balance of power in labour relations, while smartphones and social media have helped workers organise and made them more aware of the changing environment, say experts.

“Chinese workers, after being exploited for so long, are now united and increasingly aware of their rights. They have a better idea of collective action,” said labour lawyer Duan Yi.

A report by the advocacy group China Labour Bulletin last month said it had tallied 1,171 strikes and protests from the beginning of June 2011 to the end of last year.

Many worker protests during that period in Guangdong province — a manufacturing hub where the IBM server factory is situated — were sparked by the closure, merger or relocation of factories.

Last November, hundreds of employees stopped work at a Nokia factory in Dongguan, complaining of changes following the firm’s sale of its mobile-phone business to American software giant Microsoft.

Technology played a part in the strike, which protesters organised through the online chat system QQ and other social media platforms, said a worker in Dongguan.

Mr Duan is seeking arbitration for a group of 70 Nokia workers who were laid off at the time.

Last August, 5,000 workers in Shandong province went on strike to protest against Apollo Tyres’s proposed US$2.5 billion acquisition of US-based Cooper Tire and Rubber. The deal was eventually scuttled and Cooper reported this month that the work stoppage in China had cut operating profit by US$29 million in the third quarter of last year.

IBM said last week the terms offered to workers at the International System Technology Company factory in Shenzhen were comparable in aggregate to what they are currently receiving and severance packages would be equitable.

IBM’s workers had read about prior strikes, including that by Nokia’s workers, and suspected ahead of time that they might have to make a similar stand, said a 28-year-old worker, surnamed Chen, who has worked there for three years. “We were basically prepared and expected in advance that there would not be a good deal,” he said. He declined to allow his full name to be published out of concern that he might face repercussions.

Lenovo has declined to comment on the strike. REUTERS