Global shoemaker sees minor impact from China strike

HONG KONG/DONGGUAN - Yue Yuen Industrial Holdings, which makes shoes for brands including New Balance, Nike and Adidas, said a large-scale strike at one of its major factories in southern China had only had a "minor" impact, with its business orders expected to remain steady.

Yue Yuen, one of the world's largest sports shoe makers, said striking workers at its factory in Guangdong province's Dongguan city had returned to their posts, though time was still needed for the plant to return to full capacity.

Last week, local media reported that some 7,000 workers at a Dongguan unit of Yue Yuen staged a massive protest on wage cuts and enforced redundancies.

"The impact is minor," a Yue Yuen spokesman told Reuters. "Yue Yuen has a production workforce of about 330,000 workers, of which workers (at the factory) accounted for less than 3 percent."

"Our understanding is everything is back to normal but it will take time before (the factory) can return to 100 percent production capability."

But four workers contacted by Reuters at the plant said the strike persisted for almost a week till Wednesday, with only a portion of workers returning to some assembly lines on Thursday.

"We still haven't received any substantial pledges (from the management ... I am back to work today but other workers are still striking," a worker surnamed Chen said by phone from the factory floor.

Weak exports amid uncertainty over the global economy have hit many factories in China's export hub of Guangdong province, putting hundreds of thousands of workers' jobs at risk.

Yue Yuen's spokesman conceded the company was having difficulty raising worker's wages as it had done in the past 3-4 years as operational costs increased, saying there was an "expectation mismatch."

With wages in Guangdong around 20-30 percent higher than other provinces, many manufacturers are looking to relocate facilities to inland provinces and other Asian countries.

China's factory sector shrank the most in 32 months in November on signs of domestic economic weakness, a preliminary PMI survey showed, reviving worries that China may be slipping towards a hard landing.

Despite this, Yue Yuen said its business outlook was still positive.

"We make sports shoes for many brands and our sales have been stable ... we don't expect any major changes (in the business environment) in the coming few months," the spokesman said.

Shares of Yue Yuen were 2 percent lower in late afternoon trade on Thursday, compared with a 0.47 percent gain in the benchmark Hang Seng Index. The stock had fallen about 20 percent so far this year, versus a 22 percent drop in the index.