Between May and July of this year a series of high-profile strikes in foreign-owned auto parts plants spread throughout China’s coastal regions. Strikes in China are nothing new, but the recent strike wave was remarkable in at least three respects: the amount of concessions granted to workers; the degree of publicity it initially received in the Chinese media; and the prospects for showcase union reform that it has helped push onto the agenda. Although the strikes were directed primarily at unfair wages, there were some attempts to address the more political question of union representation. Workers that I spoke with who had participated in strikes at Honda factories had clearly been politicized by the events and were well aware of strikes occurring throughout China’s auto industry.
The first and only strike to make headlines in the Chinese press began on May 17th and lasted until June 4th. It took place at Honda’s Nanhai factory in Foshan, Guangdong. The strike was kicked off by two workers from the factory’s assembly division. Well aware of their central position within the production line, these two young workers were quickly joined by the rest of the assembly division and were able to suspend production throughout almost the entire factory.1
Their actions sparked over two weeks of protest which at its height gained the support of some 1,900 workers. The strike eventually stopped production at four Honda assembly plants and went on to inspire at least eleven large-scale strikes in other foreign-owned auto factories.2
Was this strike wave the result of mere spontaneity? Why were the strikes so ubiquitous in the auto industry? And why did they take place in mostly Japanese-owned (or Japanese-invested) factories?
Although the Nanhai Honda strike was uniformly presented as the spark that ignited the fire, according to a report from the Hong Kong Liaison Office of the ITUC/GUF,3
the Nanhai strike was actually a culmination of industrial unrest in related enterprises which began a year earlier in June of 2009.4
Such information is important in showing that much about the Nanhai strike was only slightly unique to the auto industry and was more than just a reaction to the spontaneous decision of two young workers. The strike wave should first be understood within the context of increasing social unrest nationwide since the early 1990s. Between 1993 and the years 2004 and 2005, the Ministry of Public Security recorded an increase from 8,700 incidents of social unrest nationwide to 74,000 and 87,000 incidents respectively.5
Because of the negative implications of such statistics, the Ministry of Public Security stopped publishing them after 2006. In addition, the recent strike wave was concentrated within the Pearl River Delta (the heart of Chinese industry) which has seen a peak of labor unrest since 2003. Although the Pearl River Delta is known for its high percentage of labor disputes handled through legal means, the region is certainly not without its share of protests and strikes. In Shenzhen city alone there were sixty cases of strikes recorded as early as 1993, and 110 cases of specifically large-scale strikes for the year 1999.6
In the larger Guangdong region, one report documented 182 cases of strikes involving over 400 people between 1994 and 1995.7
While the recent strikes are clearly not without precedent, the amount of attention and support from the media went well beyond established protocol. The Nanhai strike began receiving coverage in the Chinese press within the first week of its appearance. Because Nanhai is a transmissions plant, the strike caused production to come to a halt at three assembly plants in Guangzhou on the 25th and one in Wuhan on the 27th. Following the suspension of production at these other Honda factories the Western media began to take notice. The Ministry of Propaganda then issued instructions to pull coverage of the strike on May 28th.8
In spite of this, the local Guangdong media continued to cover the strike up until its conclusion. On May 31st, after 200 thugs affiliated with the local trade union physically assaulted a group of workers, the Nanhai strike turned into a national incident. Letters from the trade union, sympathetic academics, and the striking workers themselves were all published in the mainland press. Meanwhile, all this was transpiring within a climate of outrage over the treatment of workers at Foxconn Technology (a Taiwanese-owned electronics manufacturer with operations in Shenzhen). The Chinese media thus played a key role in presenting the Nanhai strike as not only erupting without precedent but more importantly as a heroic struggle by migrant workers for just compensation and respect. The fact that this was allowed to take place at all reflects a tacit approval by the Central Government in favor of the worker’s demands. In short, it was not so much the Nanhai Honda strike itself but the degree of publicity and support the strike received in the Chinese media that made it truly remarkable.
This is important to note because it was precisely this publicity that lent confidence to other workers in the auto industry and throughout the country at large. Honda’s decision to raise the wages of Nanhai employees by ¥500 per month (around a 33% increase) and the publication of this information in various Guangdong newspapers established a standard by which other Honda workers could measure their own grievances. The proximity of auto parts factories in the Pearl River Delta allows for word of mouth to function as a rudimentary form of communication between enterprises. As a result, copycat strikes erupted throughout the industry. Although the Chinese press was ordered to stop reporting subsequent strikes, Hong Kong and Western media were able to provide information on these strikes for the various Chinese internet forums which sprang up in response to the struggle. In this way, labor unrest was able to spread to at least eleven other factories in the auto industry.
I went down to the Pearl River Delta toward the end of July, after the last reported strike had ended. In addition to meeting with workers and various labor NGOs, I was able to spend a day walking around the industrial district of Xiaolan. Xiaolan is the manufacturing town in Zhongshan where the Honda Lock workers went on strike. Gated factory complexes, many employing over 10,000 workers, ran endlessly along the industrial district’s main strip. About a third of the vehicles I saw on the road were shipping trucks. And I was told that workers who are not native to Xiaolan—and therefore have no residence permit—make up sixty percent of the population.
From June 9th to June 18th, Honda Lock workers in Xiaolan went on strike in defiance of management. Like Nanhai Honda, Honda Lock was one of the few strikes where workers demanded the reelection of union officials. Unlike the Nanhai strike however, management decided to take a hard-line stance and workers were forced to retreat from many of their original demands. After six days of struggle and three days of waiting,9
workers at Honda Lock finally settled for a meager ¥200 pay increase and an ¥80 housing subsidy per month. This puts Honda Lock on a par with only the Toyota Gosei strike in Tianjin in the minimal amount of concessions won. The strike was described to me rather candidly by one worker as “a failure.” Demands for union reelections were never seriously addressed, as they were at Nanhai. Instead, workers were told that “the company has no authority over such matters.” This seems incredibly two-faced being that Honda Lock is a joint venture with thirty percent ownership held by the Xiaolan government! On the other hand, that is precisely why the strike had so much difficulty succeeding.
Such attempts to voice more overt political demands are in need of some clarification. As far as we know, calls to restructure enterprise-level unions were put forth at Nanhai Honda, Honda Lock, and Denso. However, this was misinterpreted by many foreign journalists as calls for fully independent unions. There is an important distinction here. The only legal union in China is the All China Federation of Trade Unions (ACFTU). Though nominally an independent union, in reality the ACFTU acts as a quasi-governmental organization. Enterprise-level unions are very often chaired by CCP cadre and (or) management. However, the right of workers to reelect enterprise union officials is protected under Chinese labor law. As Anita Chan pointed out in her article on the strikes, there is a significant difference between demanding a restructuring of the factory union and the right to establish a union independent of the ACFTU.10
Workers who expressed this demand therefore were acting within the purview of their legal rights. Unfortunately, such demands constitute much less of a political challenge than what was presented in the foreign press.
Another area in need of clarification is the question of why the strike wave was largely confined to Japanese-owned enterprises. Though some commentators speculated that this was related to some lingering resentment toward the Japanese,11
in actuality the strikes had nothing to do with nationalism. A better explanation is that auto industry workers simply became more aware of their bargaining power as a result of the victory at Nanhai. This then emboldened workers affiliated with Honda to push for similar demands.
A second possible explanation is that strikes occurring in Japanese factories received unbalanced coverage in the media and, in reality, were proportionally somewhat less than they appeared to be. Journalists have better access to information from Japanese firms than they do from either Chinese firms or the local Communist Party. In addition, many newspapers would be more interested in Chinese labor unrest within the formidable Japanese auto industry than within some other sector. It is thus possible that the strike wave was much bigger than what was reported. This point is supported by the findings of the ITUC/GUF report as well as the numerous hints of unrest taking place outside the auto industry that were scattered throughout Western newspapers. Though it seems safe to say that the majority of disputes did occur in Japanese-owned auto parts plants, the strike wave was by no means exclusive to this grouping.
Finally, Japanese lean production techniques certainly played a role in the ability of workers to force demands on management.12
Lean production is a cost-cutting strategy based primarily on just-in-time delivery of parts and the subcontracting of low-tiered workers. An assembly worker I spoke with from the Nanhai Honda factory was very conscious of not only the importance of factory interns in saving labor costs to the company but also the pivotal role of his assembly division within production. “The whole factory looked to us for leadership; cause when we stop, they stop,” he recalled. Though workers seemed unaware that lean production techniques are a trade mark of the Japanese auto industry, some obviously understand that certain ways of organizing production are more vulnerable to disruption than others. This knowledge no doubt strengthened workers’ confidence in their own bargaining power and may be another reason why so many Japanese auto parts factories were targeted.
On the whole, the strike wave of May, June, and July was an overwhelming success. Despite minimal concessions awarded to Honda Lock and Toyota Gosei, all other factories for which there is information won considerable pay increases. Not only that but pay increases increasingly rose from the ¥500 won at Nanhai Honda, to the ¥800-¥900 won at Denso, to the high of ¥980-¥1420 awarded to Atsumitec workers. Although demands to restructure factory unions largely fell on deaf ears, workers from Nanhai Honda went ahead with reelections of their union chairman on September 1st.13
In addition, the strikes seem to have given those in favor of union reform the upper hand in Guangdong province.14
While the latter may mean little to rank-and-file workers, it is a testament to the threat autonomous worker’s struggles—particularly those within the auto industry—present to the stability of the “communist” regime.
Honda and the Auto Industry in China
Honda moved production to China in 1992. It began as a joint venture in cooperation with the state-owned enterprise Dongfeng Motor. Though initially involved in making motorcycle parts, Honda eventually turned its focus to auto parts production and assembly. As part of China’s attempt to protect domestic industries, the government requires foreign firms investing in the auto assembly sector to establish 50-50 joint ventures with Chinese firms. This however does not apply to firms involved in component parts production.15
Over time, this led to a situation where Honda shifted a huge percentage of its auto parts production to China and to Guangdong province in particular. Though now promoted as a profit maximizing strategy, Honda today has the highest percentage of core parts coming from locally sourced suppliers—many of them Honda subsidiaries—of any foreign automobile enterprise operating in China.16
Having so many factories concentrated in one region needless to say makes Honda more vulnerable to large-scale industrial unrest. This may be another reason why strikes in Honda factories were so pervasive.
A second area of vulnerability which workers were able to take advantage of is the technical division of labor between factories. As witnessed at Nanhai Honda, Fengfu Honda, Denso, and NHK Spring (all component parts factories) the downing of tools brought production to a halt at affiliated assembly plants. Because of the way the Japanese auto industry is structured, component parts are supplied directly to assembly factories on a regular, if not daily, basis. There are no storage warehouses for parts to sit in and lay idle. Such techniques are known as “just-in-time” delivery systems (JIT). They were pioneered by Toyota in the 1980s. Though saving on production costs, they are also highly vulnerable to disruption at the point of supply and shipping. During the strike wave, Chinese workers learned quickly how disruptions of this kind attract media attention and enhance their bargaining power.
Both the local sourcing of component parts and JIT delivery systems are integral to the Japanese auto industry’s strategy of increasing output while keeping down labor costs. These are known as “lean production techniques.” As mentioned earlier, an important aspect of lean production is the subcontracting of workers from lower tiers of production. This means separating the workforce into essentially two groups—skilled and well paid core workers on the one hand and unskilled, underpaid, and temporary base laborers on the other. In China, this strategy was broadly adopted within the auto industry during the late 1980s and early 1990s.17
Although designed to improve flexibility without laying off elderly workers, this subcontracting system creates a hierarchy of labor which is incredibly effective at undermining worker’s solidarity. During the Nanhai strike, Honda management made repeated attempts to divide interns from formal workers by appealing to the acute grievances of the interns. At one point students from the interns’ schools were even sent to the factory to convince interns, who constituted one third of the workforce, to settle for management’s offer.18
Fortunately, at Nanhai such attempts were unsuccessful.
According to some analysts, a tiered labor system within the Japanese auto industry in China is becoming increasingly harder to maintain.19
In order to sustain current rates of productivity, firms are being forced to cut into the relative security of core workers, pushing them into the lower tiers and deskilling them in the process. While this obviously lessens the bargaining power of labor within the market, it also helps to dismantle workforce hierarchies and therefore should increase worker solidarity. This trend may have been in evidence at Honda Lock where workers were primarily unskilled. On the one hand, Honda Lock was very effective in taking a hard-line position against employees seen as replaceable. On the other hand, workers showed a fair degree of solidarity and were infuriated by management’s repeated attempts to hire strike breakers and force workers to chose between a pitiful ¥100 wage increase or being fired.
Although the central concern of the strikes was to secure higher wages and bonuses, Chinese autoworkers—and assembly workers in particular—are generally paid a reasonable wage. Working conditions in auto assembly plants are also decent, though this is less true of component parts factories. In recent years however autoworker salaries have slightly decreased while wages in other manufacturing sectors have increased.20
This seems to suggest that the strike wave had more to do with maintaining respectable wages relative to other industries than to material want in an absolute sense. With that being said, it is important to note that only one of the factories that went on strike was an assembly plant,21
all other factories were component parts suppliers and affiliates. This would suggest that grievances among workers from auto parts factories—where work is likely to be less skilled, less well paid, and conditions less satisfactory—are generally greater than those of workers from assembly plants.
While Honda and Toyota suffered tremendous profit losses thanks to the strikes, in this instance Chinese autoworker demands for increased wages inadvertently converged with the aims of the central government. The CCP’s 12th Fifth Year Plan (2011-2015), scheduled to be passed this fall, recognizes the importance of raising wages as a share of GDP. If China’s economy continues to grow at current levels of investment, her production capacity will eventually outstrip global demand. Thus, it is necessary for China to move from an export driven economy to a more balanced model based on greater domestic consumption. Wages will play a key role in helping to increase this consumption. Following the resolution of the Nanhai strike, both the Shenzhen government and the Beijing Municipal Government announced they were raising local minimum wage by ten percent and twenty percent respectively.22
Since January of this year, over half of China’s provinces have declared similar increases in the minimum wage. Thus, while workers were in no way manipulated by the CCP to go on strike, their calls for partaking in a greater share of the wealth were no doubt met with sympathy by certain factions within the government.
The Chinese economy is fueled by the sweat of cheap migrant labor. These laborers are generally born and raised in the countryside where income from agriculture can barely support a family. As a result, they move to the cities to look for work. However, as formal residents of the countryside they cannot enjoy the social welfare benefits awarded to urban residents. They are thus effectively an underclass and are often treated as such by people from the city. Migrant workers in China currently number over 210 million.23
Statistics from 2005 indicate that migrant labor comprised 57.5 percent of the Chinese industrial sector and 37 percent of the service sector for that year.24
In the Pearl River Delta however this percentage is much higher.
Migrants in the Pearl River Delta divide into roughly three categories. Around ten percent are actually urban workers, often former employees of the State Owned Enterprises. These migrants tend to be older, skilled workers and have usually received a decent education. The other ninety percent of migrant workers are from the countryside—thirty percent being farmers and sixty percent being former students. It is often suggested that because migrant workers from the countryside own farmland and plan to return to it in the future they are less likely to get involved in serious and protracted labor disputes in the cities. While this generalization may be true of older migrant workers who know how to farm, it is certainly not the case with former students from the countryside. Young workers, fresh out of high school and vocational college, form the majority of migrants in the Pearl River Delta. These workers not only lack the skills to engage in agriculture, but are often unable to be supported by the family farm. In addition, they see a farmer’s life as a considerable step backward in light of the education they have received. Former student workers thus form a peculiar group whose long-term interests are bound to the city yet who are unable to obtain the social benefits of urban residents.25
It was precisely this group of workers that showed its teeth so ferociously during the strike wave.
During my visit to the Pearl River Delta I had the chance to sit down with a migrant worker who had participated in negotiations at Honda Lock. Originally working in the paint division, the man had resigned from his position at Honda on the second day of negotiations out of fear for the safety of his family. As his kids ran around just a few feet away, he told me the story of how the strike proceeded and the brief role he played in negotiations.
In many ways Mr. Chen26
is not typical of the majority of workers at Honda Lock. Though he grew up in the Hunan countryside, Mr. Chen had been working in the Pearl River Delta since 1992. He was older than most of his coworkers, having already married and had kids. Prior to quitting his job, he had been employed in the paint division at Honda Lock. As a skilled worker, Mr. Chen enjoyed considerable respect within the factory. He received decent pay and was well treated. Because of the respect shown him, when the strike broke out he was chosen to represent his division in negotiations. This however caused problems for him almost immediately, as he now became identified as a “leader.” His phone was tapped and management tried on several occasions to either intimidate him or buy him off. Fed up with negotiations and fearing for his safety, Mr. Chen resigned from of his position at Honda and moved his wife and kids to a different town.
A few days after quitting his job, Mr. Chen was contacted by a stranger pretending to be an old childhood friend. Speaking in Hunanese dialect, the stranger insisted on meeting up for a beer. Although Mr. Chen refused, the man later approached him on the street and forced him to a restaurant where a lawyer representing Honda Lock was waiting. As Mr. Chen related the story, over dinner he was offered five years pay and a promotion if he would return to Honda and convince workers to settle for a ¥100 pay increase. He refused.
Mr. Chen’s involvement with the strike was fairly short-lived. He told me he had originally struck because he thought wages were unfair. However, he became frustrated during negotiations when management refused to budge from their low offer and many workers were demanding wages higher than what he thought the company could reasonably afford. Mr. Chen mentioned that after receiving word of the strike at Nanhai, he got together with others to calculate worker’s wages as a percentage of company income. The Honda Lock workers were later able to use this information as a reference when they began negotiations with management.
My conversation with Mr. Chen also shed some light on the structure of “workers representative councils” and their role within negotiations. Because all strikes in China are essentially wildcat strikes, firms operating in China have developed certain procedures to take when confronted with the need to bargain collectively with workers. At Honda Lock, management requested each of the eleven divisions to write down their demands and elect a representative to present them. Mr. Chen had been a worker in the paint division and was chosen as one such representative. Prior to the first round of negotiations, the eleven representatives were told they had thirty minutes to discuss worker’s demands, narrow them down to a short list, and present the list back to each division for approval. After all demands were approved, the eleven-member “workers representative council” was invited to begin talks with management.
One thing that stands out immediately is the degree to which management was directing the process of negotiations. Although the structure of the “workers council” was fairly democratic and seems to have adequately represented worker’s demands, neither the organization nor the procedure was the result of workers’ self-initiative. Much of Mr. Chen’s description was verified by a different worker I spoke with as being true of the situation at Nanhai Honda as well. This would suggest that it might take some time before Chinese workers grasp the liberating potential of a radical labor movement self-organized from below.27
A Workers Movement in China?
The right to strike was removed from the Chinese constitution in 1982 in response to the example set by the Solidarity movement in Poland. Today, eight-teen years later, the same fear still resonates within the government. Though the recent strike wave may have received the sympathy of some circles within the CCP, this is almost certainly because political demands were kept within the established legal framework. The desire to prevent a radical workers movement from developing in China is one of the main concerns behind keeping GDP growth above the eight percent per year mark. It is also behind the growing drive towards union reform.
Over the past few years, the ACFTU has begun shifting its focus from enterprise-level negotiation and arbitration to industry-wide negotiations.28
The recent strike wave has only helped this process further along and it is pushing other changes onto the agenda as well. Proposals to make enterprise unions less financially dependent on employers have been heard coming from several quarters. In addition, there has been discussion of strengthening democratic management of enterprises and in Guangdong even reinstating legal protections for striking workers.29
While this may represent an important break through in reforming the ACFTU, in the long run it will lead only to co-optation and the further stabilization of capital. A true labor movement will be built on the trial and error of the worker’s themselves or it will not be built at all. Let us hope that the recent strikes have served as a process of politicization that will help sow the seeds of a future workers movement.
Nanhai transmissions factory in Foshan, Guangdong.
strike from May 17th to June 4th.
stopped production at four Honda assembly plants:
1 at Zengcheng (Guangzhou), 2 at Huangpu (Guangzhou) on May 25th, 1 at Wuhan on May 27th.30
total of 2,000 workers employed; peak of 1,900 on strike;31
665 workers (1/3rd) are interns.32
strike caused by two Hunanese workers who walked off the job.33
demanded salaries be raised by ¥800 (about 75%), additional year-end bonuses, an agreement that workers would not be punished and would be compensated financially for the strike, plus a restructuring of the factory union.34
received ¥500 (about 33%), plus regular cash bonuses and other demands.35
Fengfu exhaust systems factory in Foshan, Guangdong.
strike from June 7th to evening of June 9th.
stopped production at two Honda assembly plants:
1 at Zengcheng (Guangzhou), 1 at Huangpu (Guangzhou) on June 9th.36
total of around 500 workers employed;37
between 250-300 on strike.38
Xiaolan lock factory in Zhongshan, Guangdong.
strike from June 9th to June 18th.
total of around 1,500 workers employed;39
peak of 1,700 on strike (discrepancy in statistics);40
unskilled, low education, 1/2 women, no dormitories.
strike caused by security guards assaulting workers either for planning industrial unrest41
or for wearing name tag improperly.42
demanded salaries be raised from ¥930 to ¥1600 (¥900 to ¥1700 or 89%43
), this was lowered on May 15th to ¥1200 and housing subsidy of ¥400-500;44
double pay for overtime; punishment for security guards who had assaulted workers; restructuring of the factory union; and agreement that workers would not be punished.45
received ¥200 pay increase and ¥80 housing subsidies.46
partially owned by Honda and Nissan (supplies steering wheels and airbags)
strike from June 17th to June
500 workers on strike50
Toyota Gosei I
Toyota Gosei Starlight Rubber and Plastic Co. (compact car door components and other parts) factory in the Xiqing Economic Development Zone, Tianjin
strike from June 15th to evening of June 15th.51
total of around 800 or 82752
(discrepancy in statistics); 1,000 workers on strike (discrepancy in statistics).54
did not stop production at other plants
demanded salaries be restored to 2009 levels after dropping 50% in early 2010.55
Toyota Gosei II
Toyota Gosei in Dongli Development Zone, Tianjin
strike from June 17th to June 19th.56
total of 1,300 workers employed;57
1,700 workers on strike (discrepancy in statistics).58
demanded salaries be raised from an average of ¥1500 to ¥1800 (about 20%).59
received ¥200 pay increase (about 13%).60
Denso Corporation in Nansha Guangzhou, Guangdong (supplies fuel injection equipment to Toyota and Honda)61
strike from June 21st to June 24th.62
total of 1,100 workers employees;63
300-600 workers on strike;64
stopped production at a GAC Toyota factory in Nansha on June 22nd65
demanded salaries be raised from ¥1,100-¥1,300 to ¥1,800-¥1,900;66
a restructuring of the factory union; dormitory air conditioners; and an agreement that workers would not be punished for the strike.67
received ¥800-¥900 pay increase68
Japan’s NHK Spring
NHK-UNI Spring Co. in Huangpu Guangzhou, Guangdong (supplies suspension springs and stabilizers for Honda, Toyota, Nissan)69
strike from June 22nd to evening of June 24th.70
stopped production at two Guangqi Honda factories and one Nissan factory:
1 at Zengcheng (Guangzhou), 1 at Huangpu (Guangzhou)71
; 1 Nissan at Guangzhou (half production)72
demanded salaries be increased from ¥1200 to ¥1700; and year-end bonuses be increased ¥1200 to ¥6800.73
Honda Assembly plant
strike from June 30th to July 1st.74
Atsumitec Auto Parts
Atsumitec Auto Parts in Nanhai Foshan, Guangdong (supplies gear sticks to Dongfeng Honda and Guangqi Honda)
strike from July 12th to 21st75
total of 200 workers employed;76
170-180 workers on strike77
demanded salaries be raised from ¥1070 to ¥1570;78
an apology from management for its conduct during a confrontation with workers; and an agreement not to lay-off workers for two years.79
caused by management’s firing of 90 workers80
or by managements announcement of changes in worker’s shifts, cutting overtime hours and increasing the work load.81
received a pay increase from ¥980 to ¥1420 (45%), plus two month bonus if plant runs at a profit, and ¥250 monthly living allowance.82
(switches and ignitions keys for Honda, Ford, BMW)
strike from July 21st to evening of July 21st83
total of 700-800 workers employed, 400-500 workers on strike84
demanded salaries be raised from ¥1270 to ¥1770 (40%)85