Wednesday, June 23, 2010

Toyota and Honda face labour action in China

The labour strike in China has spread from Honda to Toyota halting their production, the two biggest Japanese carmakers.

Toyota was affected by strike at one of its suppliers located in Tianjin, near Beijing. The strike has forced Toyota to shut the night shift in its main plant which manufactures the Camry and Yaris.

A series of strikes have been reported at other suppliers for Toyota and Honda.

A key feature of the labour strikes in China in recent weeks is that they are not targeted at western multinational companies' local plants who have relatively better labour practices.

Strikes so far have affected mostly Taiwanese and Japanese companies, both laggards in corporate responsibility. They usually have top down authoritative management styles.

Western automakers however face a different kind of risk. While they may have good industrial relations in their own plants due to better labour policies, their business may suffer due to potential labour unrest at their Chinese business partners. An example is a labour dispute that has broken out at Yanbao, one of the largest BMW dealers in China. Yanbao employees want a pay rise complaining current wages are low.

This means multinational companies now much chose their business partners very carefully and pursuade them to adopt responsible labour practices.

While workers are forcing companies to increase wages, the new Yuan policy is likely to make their exports more expensive. A double whammy.

No comments: