June 12th, 2014
A strike at Taiwanese shoe manufacturer Yue Yuen in Dongguan, China, which supplies athletic shoes to the likes of Nike and Adidas, brought the 43,000 employee outfit to a standstill for 10 days in April. Two months on and the factory still does not appear to have returned to full capacity.
It started when an employee checked their wage slip and noticed the company had been underpaying its social security contributions. Tens of thousands of people downed tools and walked out in one of the largest industrial disputes in living memory. But this was strike with a difference.
An account from inside the factory reported on by Reuters claimed that contrary to traditional views of strikes (with management as the bad guys) it was the supervisors who first challenged senior plant leaders over the payment irregularities that precipitated the dispute.
China sees its fair share of strikes, Hong Kong-based workers rights group China Labour Bulletin records at least 319 strikes and labour protests in China since the beginning of 2014, and the Yue Yuen strike isn’t the first to see unusual suspects standing up for workers’ rights.
But at Yue Yuen it was also brands – yes, brands – that got involved on the side of the workers, campaigning for the release of workers’ representatives arrested by Chinese authorities during the protest.
Some brands such as Timberland, proudly featured on Yue Yuen’s website, were quick to disassociate themselves from the disputes at the Dongguan facility. “Timberland products are manufactured in some Yue Yuen locations,” said a Timberland PR. “But not in the locations that were involved in the strikes.”
Others, however, were more proactive. Nike, one of Yue Yen’s larger customers which works with 744 of its factories around the world, said it chose not to move production from Yue Yuen. The company was in “close contact with Yue Yuen management”, but stressed that negotiations were between Yue Yuen, its workers and the government.
Adidas took it a step further. In a statement to the Guardian it said: “Throughout the strike, the Adidas Group was closely monitoring the situation and in touch with our partner Pou Chen Group [the parent company of Yue Yuen]. Pou Chen Group was in direct discussion with the local government and the trade union federation to seek ways to address the concerns expressed by the workers.”
Despite rumours to the contrary, the company said that while some orders were shifted to other suppliers at no point did it consider pulling out of the factory at Dongguan.
On its advocacy on behalf of those involved in the strike, Adidas said: “With respect to the arrest of two workers’ representatives, Mr Zhang and Mr Lin, we were engaged with several labour rights groups in Southern China, to try to determine where they were being detained and offered our support to secure their release. We also wrote to the Dongguan mayoral office, calling for his immediate release.”
Yue Yuen saw its shares drop nearly 5% during the dispute and it claims to have lost around $27m in revenue. Strikers demanded an increase to insurance and housing funds for the 45,000 workers at the plant. Eventually, Yue Yuen said it would increase welfare payments by $31m (paywall).
How brands react to industrial disputes will play an important role in future markets. Consumers demanding more transparency – by wanting to know where and how their clothes are made – will shape brand reaction. And as the labour force changes in China, and becomes more connected via social media, more action on worker rights can be expected.
It’s premature to suggest that industrial action has now led to large-scale revolution. However, what Adidas has proven is that some brands – once the nasty, glittery face of consumerism – are willing to lobby governments and campaign on behalf of workers and their representatives, if they think their quarterly profit and loss results will be affected. Brands want factories to stay open because they need to have their orders filled. So yes, workers do have the power.
This article was first published in The Guardian, 12 June 2014.