China sports shoe maker Yue Yuen hit by factory strike

HONG KONG, March 18 (Reuters) - China’s Yue Yuen Industrial Holdings Ltd, the world’s largest sports shoe maker, said on Wednesday thousands of workers at a factory in the south of the country have gone on strike following changes to production processes.

About 4,000-5,000 staff at Yue Yuen, which supplies footwear for Nike Inc and Adidas AG, were protesting at facilities that produce shoes for international brands, said Jerry Shum, the firm’s Hong Kong-based investor relations director. He didn’t identify the brands supplied by the plant.

The company was in control of the situation and expected it to be resolved in a few days, Shum said. He said the strike, by workers representing about 2-3 percent of Yue Yuen’s staff in China, had no impact on Yue Yuen’s production schedule so far.

“Due to changes in the economic environment, we need to reorganise some of the production,” Shum said. “As a consequence, workers are not very happy to see the change in the production...and that led to some disagreement.”

New York-based China Labor Watch said the workers were demanding an immediate payout of their housing fund following a move to merge two plants. Shum declined to confirm if that was the case.

A Nike official in Hong Kong said she was not aware of the strike. Adidas did not immediately respond to a request for comment.

Last year, tens of thousands of workers at Yue Yuen, which has a market value of $6.5 billion, called off a strike after the footwear maker pledged to meet some of their demands for better benefits.

Major manufacturers have been shifting some of their production away from China to other Asian countries, such as Vietnam and Indonesia, as labour and production costs in the country escalate.

Yue Yuen said the reorganisation of its production process was being driven by the economic environment and it was trying to offer more options to cost-sensitive customers.

“If people are concerned about cost, then they are going to consider other countries as well. It is driven by the economic environment that leads to some changes occurring within China,” Shum said, without elaborating.

Yue Yuen shares were down 0.8 percent on Wednesday, compared with a 1 percent gain in the benchmark Hang Seng Index. (Reporting by Donny Kwok; Editing by Anne Marie Roantree and Kenneth Maxwell)