Strike at Nike, Adidas China Supplier Halts Output

Striking workers at a Yue Yuen Industrial Holdings Ltd. (551) shoe factory in China halted production for a fifth day in a dispute over company contributions to employees’ social security and housing funds.

The stoppage at the shoemaker for sportswear brands including Nike Inc. (NKE), Adidas AG (ADS) and Asics Corp. continued while Yue Yuen communicates with workers about an offer to increase the social security benefit starting May 1, said George Liu, a spokesman for the Hong Kong-based shoemaker. Monitoring group China Labour Bulletin said on its website strikers at the Dongguan, China facility numbered at least 10,000.

Some of the factory’s more than 40,000 workers began protests earlier this month over what labor advocacy organizations have said were unpaid contributions by the company to a government social security program and a fund to help workers buy homes. China Labour Bulletin cited a worker saying the company may owe employees as much as 1 billion yuan ($161 million) in arrears.

“In the past there was a different view or interpretation of what the basis of the social security payments should be,” Liu said by phone today. “We are meeting some of the employee requests to interpret the wage basis differently.”

He reiterated that the company’s adjusted benefits will be paid starting May 1.

Storming Out

Thousands of workers at the factory in Dongguan, southern China, began storming out of the factory at around 8:50 a.m. today, the official Xinhua News Agency said. Dozens of workers were taken away by police, but no clashes broke out, nor were any people injured, Xinhua reported.

Adidas’ China supplier Pou Chen Group, the parent of Yue Yuen, is in discussions with the local government to resolve the striking workers’ concerns and an investigation will be conducted as soon as the strike ends, Adidas China said in an e-mailed statement today. E-mails to Greg Rossiter, a spokesman for Nike, today were not immediately returned. Adidas and Nike reiterated yesterday that they are monitoring the strike and encouraging dialog between the workers and Yue Yuen management.

The global shoe brands didn’t comment earlier this week on how the output disruption is expected to affect their business and whether they intend to take action with their supplier.

Liu said yesterday that employees who don’t return to work may face actions by the company. He didn’t say what the actions might be.

Yue Yuen rose 0.2 percent this week, closing at HK$26.10 in Hong Kong trading yesterday. Markets in the city were closed today for a holiday.

Yue Yuen was founded in 1988 by Taiwanese owners and has factories in China, Vietnam and Indonesia, according to its website.

To contact the reporter on this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net

To contact the editors responsible for this story: Dave McCombs at dmccombs@bloomberg.net Allen Wan

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