A parts supplier for Japan's Toyota Motor Corp. <7203.T> said on Friday it was dealing with its second strike in China this week, the latest in a rash of factory labor disputes across the country.

The chance of more industrial action also loomed over a Honda plant in the southern manufacturing heartland of Guangdong, where workers said there had been no apparent progress despite a Friday deadline for management to present a new pay deal.

Spreading discontent among an estimated 130 million strong army of migrant workers, whose toil has powered China's growth, could undermine the government's legitimacy and erode the nation's competitiveness as a low-cost global factory hub.

Wages only make up around 5 percent of overall manufacturing costs but other inputs like energy and water are also getting more expensive. Some firms are already moving production to cheaper neighbors such as Vietnam and Bangladesh.

China's leaders, who are obsessed by 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 the unrest in state media while expressing public support for workers.


Toyoda Gosei <7282.T> said production had stopped since Thursday afternoon at a plant in the northern port city of Tianjin, where it makes parts like instrument panels.

Workers confirmed the strike was still on. Police vehicles could be seen parked inside the factory's grounds.

A grainy video obtained by Reuters, shot by a worker on his mobile phone inside the factory on Thursday evening, showed scuffles between police and workers, punctuated by screams of The police are coming!.

A separate stoppage halted work at another Toyoda Gosei plant on Tuesday, but that factory is now back at work.

In southwestern Chongqing city, a short strike at Chongqing Brewery Co Ltd <600132.SS> ended on Friday after talks with management, said Danish brewer Carlsberg , a part owner of the plant, though a witness said it was continuing.

Workers feared that a plan by Carlsberg to raise its stake in the firm to nearly 30 percent would threaten their benefits, a local official told Reuters by telephone.

There was not good enough communication to the employees about the agreement, said Carlsberg spokesman Jens Bekke. They were informed, and now they have gone back to work.

China's Communist Party mouthpiece, the People's Daily, this week called for higher workers' incomes to protect stability, while Premier Wen Jiabao called for better treatment of workers.

The sympathetic, if tightly limited, accounts of worker grievances in state media suggest Beijing wants to avoid outright confrontation with the workers and may welcome some concessions.


Relations between Japanese auto firms and their Chinese units and suppliers can be more complicated than those of other foreign investors, which may have contributed to making them some of the main flashpoints for unrest in recent weeks, an expert said.

In our investigations, we consistently found that the most tense relations were with the Japanese and South Korean partners, said Wen Xiaoyi, a researcher at the China Institute of Industrial Relations in Beijing who specializes in labor relations in the automotive sector.

You find the Japanese and South Korean companies are much more involved in managing production at the factories. Also, they don't have a tradition of collective bargaining or give-and-take in their Chinese factories, Wen said.

In Guangdong, workers at the factory which makes locks for Honda Motor <7267.T> downed tools last week but agreed on Tuesday to go back to work until Friday on the understanding management would present them with an improved deal on wages and benefits.

Workers leaving the factory in the Pearl River Delta town of Zhongshan late in the afternoon said there still was no new deal.

Most would not speak to reporters and appeared to shrug off the setback, saying they did not know what was going on.

Some workers, though, were outspoken in their pledges to strike again on Saturday if an offer did not materialize.

We had the sincerity to work for three days and they've just tricked us, said a middle aged female worker from the southern region of Guangxi.

Even the worker representatives haven't been allowed to come out yet, they're (the management) not sincere at all, said another factory girl.

Both Toyota and Honda said the strikes were having no impact on car production.

Honda has also been taking dozens of potential new hires to a training center, possibly hedging against further unrest.

The strike at Honda Lock, which manufactures locks, mirrors and wheel sensors, is the third to hit an auto parts supplier for the giant Japanese carmaker in recent weeks.

Workers at Honda Lock said spreading word of successful strikes at other Honda auto parts suppliers had inspired them to agitate for improved compensation as living costs rise.

Labor relations expert Wen warned more spontaneous unrest could be hard for firms to handle because workers, although unhappy, were afraid of putting themselves forward in negotiations with management for fear of repercussions.

(Additional reporting by Yumiko Nishitani in TOKYO, Fang Yan in SHANGHAI and John Acher in COPENHAGEN; Writing by Ben Blanchard)