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China economy

Eight-day strike at China factory making Michael Kors bags ends as workers’ pension and wage demands met  

South Korea’s Simone Accessories Collection, which once operated five factories in the southern Chinese city, agrees to workers’ demands on pension and housing provident funds

PUBLISHED : Sunday, 18 March, 2018, 8:01am
UPDATED : Sunday, 18 March, 2018, 10:48pm

Chinese factory workers in Guangzhou, who make luxury handbags for the US fashion label Michael Kors, ended an eight-day strike this week after the company agreed to their demands, but activists warn labour disputes on the mainland are likely to increase as workers seek better pay and treatment in line with the country’s economic advancement.

Workers at Panyu Simone, controlled by South Korea’s Simone Accessories Collection, had demanded a guaranteed basic wage of 3,500 yuan (US$552) a month, retroactive compensation for their pension fund, a housing provident fund and other work-related benefits, according to New York-based China Labour Watch. 

“Serving as employees of a foreign-funded enterprise that produces high-grade leather products, we originally felt deeply honoured; however, we earn the lowest wages and must rely on working overtime in order to ensure a basic living wage,” the workers said in an open letter to the factory management, provided by China Labour Watch.

The workers, 70 per cent of whom are women, signed the agreement on March 13 with the factory’s management. The strike had started on March 5.

In an emailed statement, Simone Accessories said it would compensate all the workers at the Guangzhou factory who wanted to participate in the pension fund retroactively from the date of employment, and was in the process of similarly compensating workers their full housing provident fund, adding that it “has strictly complied with local laws and regulations in terms of compensation and wages”.

The company said wages may have dipped below the 3,500 yuan level at the end of last year, but with orders back on track “the wage will not be an issue”.

Michael Kors did not reply to three emails and phone calls seeking comment.

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Simone Accessories, controlled by the South Korean billionaire Kenny Park, also makes designer handbags for more than 10 global fashion houses in six locations including China, Vietnam and Indonesia.

The company has faced labour strikes at its factories in the past. 

In 2012, the British luxury goods maker Burberry stopped making bags at the Guangzhou factory after workers went on a strike complaining about poor working conditions.

According to China Labour Watch, of Simone’s five factories in Guangzhou only one remains open, while production at the others has been moved to low-cost locations in Southeast Asia. 

As China moves up the manufacturing value chain, workers are increasingly demanding better pay and working conditions. 

In the first three months of 2018 alone, 395 strikes have taken place in Chinese provinces including Henan, Shandong and Shaanxi, according to data collected by China Labour Bulletin, a Hong Kong-based labour rights NGO.

Labour activists say that as manufacturers’ relations with Chinese workers gets strained, they are likely to seek cheap labour elsewhere in countries like Bangladesh and Vietnam, leading to more factory closures in the country.

“The situation can only worsen for Chinese workers as more foreign firms are leaving the country,” said Li Qiang, executive director and founder of China Labour Watch.

“With the many ‘invisible burdens’ the manufacturers have such as heavy taxes from local governments and rising rents, the companies tend to transfer the extra costs to workers, and one of the ways is to not to make full payment for their housing provident and pension funds.”