UPDATE 2-Yue Yuen counts cost of China shoe strike, says most workers returned

Sat Apr 26, 2014 2:07am EDT

(Adds Yue Yuen statement in paragraph 2)

By John Ruwitch and Donny Kwok

SHANGHAI/HONG KONG, April 26 (Reuters) - Most of the thousands of shoe factory workers who staged one of China's biggest strikes over the past two weeks have returned to work after the company agreed to some of their core demands.

Hong-Kong-listed Yue Yuen Industrial Holdings Ltd - a $5.6 billion manufacturer of footwear for Nike Inc, Adidas and other international leisure brands - said that more than 80 percent of the workers at its Dongguan factory returned to work. Three workers at the vast complex in southern China had on Friday estimated that more than half, maybe as many as 70 percent, of the 40,000-strong workforce had gone back to work.

Labour activists say the strike has been one of China's biggest since market reforms started in the late 1970s, prompting German sportswear firm Adidas to shift some orders to suppliers elsewhere in China. A spokesman for rival Nike said the company was watching the situation closely.

In its statement late on Friday, Yue Yuen estimated the direct cost of the strike at around $27 million.

Workers went on strike on April 14 to protest against what they said were chronically low company contributions to state-mandated social insurance and housing provident fund accounts.

On Friday, a spokesman for the Ministry of Labour and Social Security told reporters in Beijing that Yue Yuen had underpaid its social welfare contributions. "The related department has already ordered the factory to rectify the wrongdoings before April 25," Li Zhong said. "Our ministry will continue to keep a close watch on the progress of the issue."

'NO WRONGDOING'

Several workers in Dongguan reached by telephone said they had returned to work after Yue Yuen offered to back-fill social insurance and housing payments. But workers would be watching carefully for concrete action, said one female, surnamed Liu.

The company had created some pressure for workers to return to their factories by removing electronic card readers used to clock in and out, workers said. "They're making us sign a timesheet once an hour to make sure we're in the factory," said one. Some were signing in, but not working.

Yue Yuen executive director George Liu denied the company had violated any laws or regulations with the insurance payments it had been making. "There is no wrongdoing. We have always been in compliance with the relevant government laws and regulations," he told Reuters.

The strike has made officials nervous, however, and labour activist Zhang Zhiru and a colleague, Lin Dong, were detained this week by state security agents. Zhang was freed after two days, but Lin was still in detention, Zhang told Reuters.

Zhang, who has been assisting workers for a decade, had been working with other activists and lawyers to help Yue Yuen workers organise and press their demands. (Additional reporting by Sui-Lee Wee in Beijing; Editing by Ian Geoghegan)