CHINA: Yue Yuen strike cost estimated at US$27m
The two-week long strike has led to additional costs and loss of profit
The two-week long strike by workers at a Chinese plant operated by footwear manufacturer Yue Yuen is estimated to have cost the company around US$27m.
The Taiwanese company, which supplies shoes to brands including Adidas and Nike, says the interruption to production at its factory in Gaobu, Dongguan has led to additional costs for air freight, loss of profit due to production disruptions, and other fixed costs.
Workers started striking at the company's Gaobu factory on 14 April. Their demands started with calls for back-pay for past unpaid social insurance, but escalated to include a 30% pay rise.
Yue Yuen employs around 45,000 people at its Gaobu factory, and the production volume accounts for around 10% of the company's total.
As of Friday (25 April), more than 80% of the employees based in the facility have returned to work, according to the group.
Last week, Adidas confirmed to just-style that its production facility within Yue Yuen's Dongguan plant, Y6, was fully operational again.
Yue Yuen has agreed to provide employees at the Gaobu plant with an additional living allowance of CNY230 (US$36.79) per month.
This, along with the adjusted social security payment plan announced earlier this month, will increase the company's employee benefit expenses for the year ending 31 December by around $31m.
In addition, Yue Yuen will make post-payment contributions to the employee benefit payments. The exact amount, however, depends on various factors, including the large number of employees and documentation involved.
"Therefore, the contributions cannot be quantified for the time being," the footwear producer added in a statement. "The company will make further announcement regarding the amount of the post-payment contributions in due course."
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