Auto Worker Strikes in China: What Did They Win?

Boy Luethje

December 23, 2010

Labor Notes

Last summer's auto worker strikes in South China
reverberated throughout the country and overseas.

As workers in supplier companies for Honda, Toyota, and
other auto multinationals downed tools, the
international business press expressed fear over the
rising power of workers in China.

At the same time, a tragic series of suicides at
Foxconn--the world's largest contract manufacturer of
computers and iPods--exposed the inhumane nature of
low-wage mass production for global brands such as
Apple, HP, and Nokia.

Both events shook unions and the public in China--and
experts thought they could be a watershed moment for
labor relations in the country.

But the workers' activity disappeared from the media
radar almost as quickly as it arrived. What happened?
Workers vs. Boss--and Government

Last May 2,000 workers at a Honda transmission plant in
the Nanhai district of the city of Foshan went on
strike. The trigger was a rise of the legal local
minimum wage from $123 to $147, announced by the city
government May 1 in response to rapidly rising costs of
living. The workers expected a raise in their monthly
wages equal to this amount. Factory management added $24
to the transmission workers' monthly base wage but
reduced their monthly subsidies (for food, housing, and
regular attendance) from $48 to $29. The net gain was
only $5 per month.
The morning of May 17, two workers in the automatic
transmission department halted the assembly line by
pushing the red stop button, normally used for emergency
shutdowns over quality problems. The Japanese plant
manager met with the workers in the cafeteria and
promised to reply to their demands within a week, and
the night shift returned to work. Negotiations among
management, workers, and the factory union (which
existed unbeknownst to many workers) took place during
the following days, accompanied by further work

The company offered various raises in bonuses and
subsidies for different groups of workers, but the
workers insisted on a general raise in the base wage.
The company fired the two workers who had initially
stopped the line. The harsh reactions of management
galvanized the workers.

On May 24, the strike became indefinite, soon affecting
Honda's main assembly plants in Guangzhou and in Wuhan
in central China. Both factories had to stop production
on May 26 and 27, attracting national and international
media and making the strike a public issue in China. The
local government, along with the union and management,
took a more and more aggressive stance, resulting in the
mobilization of a group of about 100 thugs clad in union
uniforms, who confronted the workers physically.

Workers then wrote an open letter that was widely
published in Chinese media and on websites. This unique
document explained the workers' case for social justice
and their demands. At the core was a raise of $128 for
all, plus raises for seniority and annual 15 percent

The demand for seniority pay and guaranteed annual
increases would have meant fundamental changes in the
wage system. Base wages in China are generally very low
(usually not more than half of regular monthly incomes),
so workers have to rely on overtime and bonus payments
awarded for "good behavior" and submission to the boss.

Even more important, the Nanhai workers demanded free
and open elections of union representatives in the
factory. Mediation or Collective Bargaining?

The escalation led to the direct involvement of
Guangzhou Automotive, the Chinese mother company of the
core Honda factories. The CEO--a member of China's
legislative assembly- took charge of negotiations. The
Japanese manager of the transmission plant was replaced
by a Chinese one. A prominent labor law professor from
Beijing was brought in to facilitate mediation.

Thirty elected worker representatives took part in
dramatic negotiations June 4, although only five were
allowed to speak. The company had offered to raise total
monthly pay from $240 to $336--but mostly in bonuses and
benefits. Workers insisted on a raise in base wages,
which would also augment overtime pay.

Under the final deal, the base wage hike and various
other increases added up to $80, well below the initial
demand of $128.

Thus bargaining was narrowed to a deal over extra pay to
calm the workers down. Seniority pay was rejected as
"too complicated" and postponed to further
consultations. A big across-the-board wage raise and the
introduction of seniority pay would have challenged the
dominant system of low base wages and high incentive pay
and provided motivation for workers to stay with the
company and develop their skills.

Honda and Guangzhou Automotive effectively prevented a
precedent for car suppliers in China. Jobs would remain
low-paid and the union would continue to side with
management. Strikes Spread, the Union Takes Charge

But the events at Honda Nanhai triggered a chain
reaction among workers in auto supply and electronics
factories throughout the Pearl River Delta. According to
the Guangzhou Federation of Trade Unions, more than 100
strikes occurred, of which only a small number were
reported in the media. Around Toyota's ultramodern
factory in Guangzhou Nansha, eight of 14 core suppliers
had labor conflicts. And action spread to other areas:
workers in several electronics factories near Shanghai
and at a Toyota supplier in Tianjin struck for several

Most of the strikes in the Delta were settled with
raises similar to Nanhai's, so workers' action
effectively established a kind of pattern bargaining.
Employers also tried to coordinate behind the scenes:
100 representatives from car suppliers gathered in
Guangzhou to discuss wage ceilings.

In the course of this strike wave, some unions began to
show a remarkable change of attitude. When workers
walked out at another Honda parts supplier on June 21,
in the Nansha district of Guangzhou, the local union
stepped in and took over bargaining. In this factory of
several hundred workers a factory union existed, but it
had completely lost the trust of the workers.

As often happens in such cases, higher-level officials
from the city district union were asked to mediate. The
district union refused and suggested that the Labor
Bureau, the local branch of China's Department of Labor,
should take responsibility.

In a statement to media, the chairman of the Guangzhou
Federation of Trade Unions said the union's job was to
be on the side of the workers and that the government,
not the union, should act as a mediator. The union also
turned down the local police when they asked the union
to bring workers' representatives to the police office
to discuss public security issues. (There had been no
violence on the picket line.)

This highly unusual behaviour--the union siding with
workers rather than as an intermediary or on
management's side--changed the workers' attitude toward
the union, and the district union was able to initiate
an election of six workers' representatives for
bargaining. The settlement? $128 per month. Changes in
Labor Relations

The strike movement not only scared multinational
corporations in China, it challenged the system of labor
control. Typically, tacit coalitions between capitalists
and local government rule over conditions inside the
factories. Unions play a role in former state-owned
enterprises and flagship joint ventures, but not in most
private companies. Often, local governments back up
violations of labor law by major investors, as has been
documented in many cases for suppliers to multinationals
such as Wal-Mart, Apple, and Nike.

But under conditions of rapid growth and highly modern
production, the methods of control have become
ineffective. Hundreds of labor conflicts occurred in the
wake of the global economic crisis, affecting millions
of Chinese workers in 2008 and 2009. Following the
recovery, workers are seeking a voice. Workers' wages
have been falling continuously as a share of China's
national income since the 1990s, when the shift toward
capitalism really took off, and the government is now
officially calling for higher wages in order to raise
domestic demand. New Openness

Workers are taking advantage of this situation, since it
gives legitimacy to their struggles. The changing
climate is also reflected in an increasing openness in
the media. For both the Honda strikes and the Foxconn
suicides, the reporting has been unprecedented.

At the same time, contradictions over reforming labor
laws and unions in China are mounting within the
government and the Communist Party. The party leader in
Guangdong openly declared his sympathy with workers'
demands and supports attempts by local unions to play a
role in bargaining. Some provincial and local union
leaders agree.

Although Guangdong has a reputation as the most
capitalist province in China, the provincial government
has issued a directive calling for democratic elections
of factory unions, bargaining rights for workers on the
shop floor, and a greater role for unions in bargaining
at local and provincial levels. Workers could elect
their union representatives and delegates for wage
negotiations in factories. However, the directive
remains unclear over the right to strike. Obviously, the
government is looking towards foreign models of
cooperation between unions, employer associations, and
government, such as in Germany or Singapore, with stable
unions but few strikes.

Such policies of course run into tough opposition from
capitalists in Guangdong, including those from Hong Kong
and Taiwan. Their cronies in local governments are
joining the fight, opposing any kind of democratic
reform in local government or unions. The power of these
local coalitions became visible in Honda Nanhai after
the strike. The chairman of the existing factory union,
who makes $41,600 per year, remains in office, despite
consistent pressure from provincial union leaders.

The struggle for the right to union independence in
China remains an uphill battle. In most other provinces,
authorities take a much tougher stance toward labor
conflicts. The national leadership of the All-China
Federation of Trade Unions has not supported any
substantial steps towards greater independence of unions
from companies or government.

It is the activism of young migrant workers with almost
no experience in workplace organizing that is providing
lessons to the unions--not only in China, but throughout
the industrialized world.

Boy Luethje is a senior fellow at the Institute of Social
Research at the University of Frankfurt in Germany and a
labor educator for German unions, specializing in global
production in China and other developing economies.

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