New strike in China affects supplier to Toyota, Honda

Workers gather outside Honda Lock plant, a supplier of locks to Honda's car-making operations in China, as they resume work in Zhongshan, Guangdong province June 18, 2010.

HONG KONG/BEIJING (Reuters) - A strike has halted production at a Chinese factory owned by Japan's Denso Corp, a car parts maker affiliated with Toyota Motor Corp, in the latest in a string of work stoppages at foreign operations across the country.

A strike at Denso (Guangzhou Nansha) Co Ltd had halted supply of its fuel injection equipment and other products to Toyota, Honda Motor Co and other carmaker clients since Monday, Denso spokeswoman Yoko Suga said.

The stoppage at the plant, located in China's booming Guangdong province, is the most recent in a series of labour disputes. The wage rises demanded by factory workers these strikes would add little to the cost of products made in China, meaning that its role as a manufacturing base appears secure.

But the outbreak of disputes presents a tricky challenge for China's ruling Communist Party, which has vowed to improve incomes but is jittery about protests.

In recent weeks, strikes have broken out at a supplier of locks to Honda, a Toyota Gosei plant which makes parts for Toyota, and Chongqing Brewery Co Ltd., among others. All have since been resolved.

Management of the Denso-owned plant was negotiating with workers over demands for higher wages and better benefits, said Suga. The company has about 1,100 employees.

A spokesman for Honda China said car production at Honda's Chinese car making joint venture was continuing as usual.

A GAC Toyota Motor Co spokesman was not immediately available for comment. GAC Toyota is the Japanese carmaker's Guangzhou joint venture.

China's leaders, who are obsessed with maintaining social stability but also say they can ensure a better life for those at the bottom end of an expanding rich-poor gap, have muted coverage of labour disputes by state media while expressing public support for workers.

WORKER DEMANDS TEST FOR STABILITY

The nation's official trade union warned in a report that worker demands were a test for stability, as China's young rural migrant workers expect improved incomes and rights while they struggle for a foothold in urban society.

The report by the All-China Federation of Trade Unions did not mention the recent outburst of factory strikes initiated by migrant workers demanding higher wages. Yet the study shows that the rising demands of a new generation of workers migrating from Chinese villages are weighing on policymakers.

"The accumulation of these demands and problems has begun to have a negative effect on our country's political and social stability and sustainable economic development," the Chinese-language report said of China's young rural migrants. "This is making concerted resolution of the problems of this new generation of rural migrant workers an urgent issue that concerns the broader outlook of national development."

The study was reported by Chinese media on Tuesday, after appearing on Monday on the trade union federation's website (www.acftu.org) and in its official newspaper, the Workers' Daily.

China's official trade unions come under the control of the ruling Communist Party, and rarely support strikes or confrontations with employers. Many private companies do not have unions, or if they do they are controlled by management. But some union officials have been pressing for more vocal representation of workers, including migrants.

(Additional reporting by Yumiko Nishitani in Tokyo and Fang Yan in Shanghai; Writing by Ben Blanchard; Editing by Miral Fahmy)

(For more business news on Reuters India click in.reuters.com)