Chinese shoe maker Yue Yuen in talks to resolve worker dispute

HONG KONG, April 8 Tue Apr 8, 2014 6:24am EDT

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HONG KONG, April 8 (Reuters) - Yue Yuen Industrial Holdings Ltd, which makes shoes for global brands including Nike Inc and adidas AG, said on Tuesday it is in talks to resolve a dispute over employee terms and benefits at a factory in southern China.

The demonstration, which began on Saturday, is the latest to highlight a growing trend of industrial activism in China amid a worsening shortage of workers that has shifted the balance of power in labour relations.

About 600 workers took to the street in the southern Chinese manufacturing hub of Dongguan due to a "misunderstanding" over social security benefits and different terms for local and migrant workers, a spokesman for Yue Yuen, the world's largest maker of athletic shoes, told Reuters.

"The misunderstanding has to be clarified by the government, in particular any difference between local and migrant workers when they claim their benefits," the spokesman said.

Yue Yuen, which employs about 60,000 workers in the district, was in talks with local government officials and labour union representatives and hoped to resolve the issue by April 14, the spokesman said.

Adidas said in a statement it was closely monitoring the situation and confirmed its supplier was in talks with local authorities to address workers' concerns.

Nike did not immediately respond to a request for comment.

Last month, a strike at a factory of International Business Machines Corp in the southern boom town of Shenzhen illustrated how significant changes in China's labour market are emboldening workers to take matters into their own hands, raising risks for multinationals, labour experts say.

In November, hundreds of employees stopped work at a Nokia Oyj factory in Dongguan, complaining of changes following Nokia's sale of its mobile phone business to Microsoft Corp.

Yuen Yuen, which listed in Hong Kong in 1992 and has a market value of $5.4 billion, said its business in Dongguan was operating as normal.

Shares of the company closed down 0.4 percent in Hong Kong on Tuesday, lagging a 1 percent gain for the benchmark Hang Seng Index.

Yue Yuen, which also makes shoes for brands Reebok, ASICS, New Balance, Puma, Converse, Salomon and Timberland, has factories in China, Indonesia, Vietnam, the United States, Mexico and elsewhere in Asia. (Reporting By Donny Kwok and Alice Woodhouse; Additional reporting by John Ruwitch in SHANGHAI; Writing by Anne Marie Roantree; Editing by Christopher Cushing)

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