Honda sees Chinese sales plunge by 37 per cent because of strikes
The first work stoppage started on 17 May at a Honda-owned transmission factory in Foshan when workers put down their tools to protest against low wages and a heavy workload.
These “pioneers” set the stage for workers at other Honda plants, but also at Toyota and Nissan. Almost everywhere, industrial action ended with workers getting what they demanded, namely substantial pay raises.
The net effect for Honda has been a 10 per cent drop in sales from a year earlier. This compares with industry-wide growth of 33 per cent in mainland car sales last month.
The Japanese carmaker also saw production fall last month by 37 per cent against an industry-wide decline of 10 per cent.
The resulting lost production of about 20,000 vehicles could cost Honda's mainland business about 12 billion yen (US$ 135 million) in operating profit, JP Morgan analysts led by Kohei Takahashi said this month in a research report.
In the meantime, industrial action continues. Among workers, there is a strong sense they won a major battle against a stronger enemy, Hong Kong media report.
However, such results may not last long if the Chinese government decides not enforce even existing labour laws. Without the backing of the authorities, things might revert to how they were before, said Pattie Walsh, a specialist in employment and labour law in Asia.