By intern reporter Wang Su

Employee disputes in China are forcing multinationals such as Kraft, General Electric and Casio to bargain with workers and read the fine print on the nation’s new labor law.

Some big companies are struggling with the growing emphasis on labor rights.

A Casio computer factory in Guangzhou, for example, was the scene of a strike by disgruntled workers who took to the streets March 6 with demands for a permanent salary standard.

Other companies are learning that tough issues can be settled through negotiations, although not without travail. Kraft’s recent experience while moving its Chinese corporate headquarters to Shanghai from Beijing is a case in point.

Kraft regional CEO Dai Yuena announced the move January 24 following a 5.3 billion euro purchase of Danone’s biscuit and snack division. Dai cited tax benefits, proximity to talent and customers, as well as more convenient facility management, as reasons for the move.

But the decision upset Kraft’s Beijing workers.

Kraft spokesman Li Lingping told Caijing the company researched the move before notifying employees. After the announcement, employees were told a severance plan would be developed in a few months. But workers said they would have wanted advanced notice, and many balked at the offer to relocate.

Severance Battle

Compensating outgoing employees became a focal point of the negotiations between Kraft and 23-year employee Chen Baoqing, chairman of the labor union for Kraft workers in China.

On March 7, after several rounds of negotiations, the union asked Kraft management for a public apology, a severance-relocation contract, and an agreement that Kraft would keep the Beijing employees at least until both parties reached a consensus.

Mediators from the Beijing Labor Bureau stepped into the fray a week later, and the clashing sides agreed to sign a contract by March 17. But the deadline came and went with neither side budging on the compensation issue.

Kraft said it had paid more than required by law. The union maintained it should have been consulted.

The two sides finally reached an agreement April 11. Kraft and the union applauded the peaceful outcome, in which Kraft agreed to invite more than 100 non-sales workers to Shanghai from Beijing and to help with relocation costs. Those left in Beijing would be offered severance pay.

Chen said the severance issue was a key sticking point. In the end, each payment equaled the entire company’s average monthly salary – 9,440 yuan – which is considerably higher than most individual incomes. The union also won a severance package for those who refused to relocate but would leave the company.

One Kraft employee told Caijing he does not think the severance package was sufficient, but Chen said the compensation “really exceeds standards.”

GE’s Challenge

General Electric (GE) has faced a different sort of labor problem in China.

A U.S. research group called Policy Matters Ohio (PMO) issued a report March 25 describing multiple problems at a GE joint venture with the Xiamen-based company Topstar. The report said workers were unlawfully required to work 64 hours a week with no overtime pay. It also cited ambiguous factory production standards, and that only women under the age of 32 were being hired.

PMO made no bones about its dissatisfaction over a GE decision to move a factory to China, which the company blamed on high U.S. production costs. The report said if GE can afford Chinese costs, it’s because the company fails to respect Chinese law as well as its own company standards.

On April 10, GE shot back with a report saying the joint venture has not violated any labor laws.

Meanwhile, companies including GE and Kraft are now required to follow China’s new labor dispute mediation arbitration law, which took effect May 1.

Shanghai lawyer Chen Luming told Caijing the new labor law does not provide a specific protocol for a Kraft-type headquarters move. But he said companies should value employee relations when making relocation decisions.

Chen thinks most foreign companies in China do, indeed, respect and follow Chinese laws. And if they want to protect their corporate images, they will have to make more adjustments in the future to follow the nation’s new labor law.

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