Adidas Shifts Production From Strike-Disrupted China Factory

Sportswear firm Adidas AG is shifting some orders from a factory in south China that has been at the centre of one of the country's biggest labour strikes, underlining a rising challenge for firms doing business in China where an increasingly savvy workforce is pushing harder for its rights.

Thousands of workers at a factory in Dongguan in the Pearl River Delta run by Hong Kong-listed Yue Yuen Industrial Holdings , the world's largest shoe maker, have been on strike for more than 10 days demanding improved social insurance payments, better pay and fairer contracts.

"In order to minimize the impact on our operations, we are currently reallocating some of the future orders originally allocated to Yue Yuen Dongguan to other suppliers," a China-based Adidas spokeswoman said in emailed comments to Reuters.

Adidas has no plans to sever ties with the Dongguan-based plant, and the majority of any new supply would come from within China, the spokeswoman added. "China is, and will continue to be, a strategic sourcing country for us."

Yue Yuen executive director George Liu declined to comment on Adidas' decision or on whether other clients were making similar moves. The plant has around 40,000 employees and also supplies rival leisurewear brands such as Nike Inc. Yue Yuen said it made around 300 million pairs of shoes last year.

"We will not make any comments in regards to our customers," Liu said in an email sent to Reuters on Thursday.

STORE PROTEST

About 20 protesters from labour rights groups in Hong Kong protested at Adidas' local office on Thursday morning, demanding the company work with Yue Yuen to compensate workers and help release those who have been detained. The protesters also went to nearby Adidas, Nike and other stores of brands supplied by Yue Yuen to voice their demands and hand in an open letter.
Earlier this week, a prominent Chinese labour activist went missing after trying to help Yue Yuen workers organize their case. His wife suspects he was detained by state security agents.
China's declining labour force has given workers greater confidence to demand their rights. The country's working age population shrank by almost 6 million in the past two years to 920 million, National Bureau of Statistics data show.

Dozens of workers protested against Wal-Mart Stores Inc in Hunan province after the U.S. grocery chain said last month it was closing a store there - a small, but important case highlighting the growing activism among Chinese workers. 

Reporting by Adam Jourdan in SHANGHAI and Donny Kwok and Grace Li in HONG KONG; Editing by Ian Geoghegan By Reuters

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