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Strikes end at two Chinese automotive suppliers

GUANGZHOU/TOKYO (Reuters) - Chinese factory workers at two suppliers for foreign automakers returned to work on Thursday after winning hefty pay rises, ending strikes that again highlighted the carmakers’ vulnerability to their China suppliers.

The strikes at Atsumitec Co, which supplies Honda Motor Co’s China operations, and Japanese electronics maker Omron Corp were the latest in a series by workers demanding a bigger slice of China’s growing economic wealth.

The walkout at Atsumitec, which produces gearsticks for the Honda Accord, ended after workers agreed to a 45-percent pay raise to 1,420 yuan ($210) per month, from a previous 980 yuan, said a worker who took part in the strike.

The agreement followed a meeting with the company’s Japanese managers late on Wednesday, the worker said. Honda confirmed the strike had ended.

“We’re all ready to go back to work now, and everyone is happy with the outcome,” said the worker, who asked not to be identified because of the sensitivity of the situation.

Production at the Guangzhou factory of Omron, which supplies switches and ignition keys to Honda, Ford, BMW and other carmakers, restarted Wednesday at around 0530 GMT, said a spokesman for Omron in Tokyo.

The company agreed to pay an additional 300 yuan per month in salary and benefits, up from a current pay level of 1,270 yuan, said one worker. That’s significantly less than the 40 percent rise strikers were demanding.

The Omron spokesman declined to say what concessions the company had agreed to.

Stoppages at foreign-run factories across China by workers demanding pay increases disrupted operations for several weeks in May and June, but the wave of unrest had tapered off by the end of last month.

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The burst of labor disputes has affected more than a dozen mostly foreign-owned factories, including suppliers to Honda and its bigger rival Toyota, raising questions about the region’s future as a low-cost manufacturing base.

Japanese carmakers have been a particular target of strikers, partly because their lean inventories and heavy reliance on individual suppliers makes them more likely to give in to worker demands than American or European firms.

But Japanese executives, including Honda’s chief executive, have said they do not intend to change their supply chain model in China since more inventory or supply sources would raise the cost structure, hitting their bottom lines.

Analysts said the strikes may also underscore deeper issues, including cultural differences between Japanese managers and their Chinese employees.

“Japanese-invested companies have their own special cultural characteristics,” said Wang Jing, dean of the Labor Relations Department at Capital University of Economics and Business in Beijing.

“Workers have to obey every aspect of the company’s culture. Japanese companies also have much stricter discipline requirements compared with other firms. In some companies the managers are all Japanese, and don’t really understand China’s national conditions. It’s harder for them to communicate with Chinese workers on their demands.”

The string of events highlighting the plight of workers in China began after a number of worker suicides at a massive factory complex in southern China operated by Taiwan’s Hon Hai Precision Industry Co, the world’s biggest electronics parts maker.

Hon Hai and its cellphone-making subsidiary Foxconn International Holdings later doubled salaries for entry-level production line workers, prompting employees at other factories to seek similar pay increases.

Hon Hai said late on Wednesday that it would seek higher product prices from clients in an effort to offset the rising wages at its China plants.

Beijing has been tolerant of such industrial action so far, as the higher salaries fit into its broader economic policy of diversifying China’s economy into one driven by domestic consumption.

Reporting by Hong Kong and Tokyo newsrooms, writing by Kelvin Soh; Editing by Doug Young, Don Durfee and Valerie Lee