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Yue Yuen Resumes Production at Dongguan Factory After Strike

Yue Yuen Industrial Holdings Ltd. (551), a maker of shoes for clients including Adidas AG and Nike Inc., said production at its Dongguan factory has resumed fully after being disrupted by a strike that began April 14.

“All operations have returned to normal,” George Liu, a Hong Kong-based spokesman for the manufacturer, said today by phone. All of the workers at the factory, which has about 45,000 employees, have returned to work, he said.

Employees in Dongguan, in southern China’s Guangdong province, struck over benefits and pay for about 10 days. The stoppage cost Yue Yuen about $27 million, including lost profit and additional air-freight costs, the Hong Kong-based company said April 25. The settlement for the dispute will raise employee costs by about $31 million this year, it said.

Production resumed after China’s human resources ministry ordered Yue Yuen to rectify benefit payments to workers, who demanded more pay and employer contributions to social-security accounts. Yue Yuen didn’t “truthfully report” social-security payments it was making for employees at its factories in Dongguan, Li Zhong, a spokesman at the Ministry of Human Resources and Social Security, said April 25.

Yue Yuen rose 1.5 percent to HK$23.80 at the midday trading break in Hong Kong, trimming its loss this year to 8.1 percent. Its parent Pou Chen Corp. climbed 1.4 percent in Taipei trading.

The strike began after a worker checked the balance on his social-security account and found the company had been underpaying its contribution.

Yue Yuen will make contributions to cover the missing payments, the exact amount of which hasn’t yet been determined, the company said in a statement last week. This is in addition to adjusting future benefit payments and giving each worker an additional 230 yuan ($37) a month living allowance, it said.

The work stoppage led Adidas to move some future production away from the Yue Yuen factory.

China will step up implementation and supervision of the nation’s social-benefits law and improve the auditing of payments, the human resources ministry’s Li said last week.

To contact the reporter on this story: Stephanie Wong in Hong Kong at swong139@bloomberg.net

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net Terje Langeland, Lena Lee

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