IBM factory strike shows shifting China labor landscape

A wildcat strike at an IBM factory in southern China illustrates how tectonic shifts under way in the country's labor market are emboldening workers to take matters into their own hands, raising risks for multinationals, Reuters reports. 

More than 1,000 workers walked off the job last week at the factory in Shenzhen, bordering Hong Kong, after managers on March 3 announced the terms of their transfer to new ownership under Chinese PC maker Lenovo Group Ltd.

Lenovo agreed in January to pay $2.3 billion for International Business Machine's low-end server business.

The strike, which continued into Sunday, fits a growing pattern of industrial activism that has emerged as China's economy has slowed.

A worsening labor shortage has shifted the balance of power in labor relations, while smartphones and social media have helped workers organize and made them more aware than ever of the changing environment, experts say.

"Chinese workers, after being exploited for so long, are now more and more aware of their rights and united. They have more of an idea of collective action," said labor lawyer Duan Yi.

A report by the advocacy group China Labour Bulletin last month said it had talled 1,171 strikes and protests from the beginning of June 2011 to the end of December 2013.

Many worker protests during that time in Guangdong province, a manufacturing hub where the IBM server factory is situated, were sparked by the closure, merger or relocation of factories.

In November, hundreds of employees stopped work at a Nokia factory in Dongguan, near Shenzhen, complaining of changes following Nokia's sale of its mobile phone business to U.S. software giant Microsoft Corp.

Lawyer Duan is seeking arbitration for a group of 70 Nokia workers who were laid off at the time.

Last August, 5,000 workers in eastern Shandong Province went on strike to protest Apollo Tyres Ltd's proposed $2.5 billion acquisition of U.S.-based Cooper Tire & Rubber Co. The deal was eventually scuttled and Cooper reported this month that the work stoppage in China had cut operating profit by $29 million in the third quarter.

The labor shortage has pushed up wages, impelled employers to cast a wide net to find employees and enhance benefits to retain staff. Workers have gained leverage.

"Workers know they have greater power," said Geoffrey Crothall, a China labor expert with China Labour Bulletin.

IBM said last week the terms offered to the workers at the International System Technology Company factory in Shenzhen were "comparable in aggregate to what they currently are receiving" and severance packages would be "equitable".

Lenovo has declined to comment.