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Sony worker revolt spotlights China exit hazards

Workers at Sony's Guangzhou plant spend their day outside in the yard.

GUANGZHOU -- Workers at a Sony plant here are staging a major strike in response to the electronics giant's sale of the facility, drawing attention to the challenges Japanese corporations face not just in doing business but also in pulling out of operations in China.

The incident began when Sony announced on Nov. 7 that it was selling its camera components factory in this Guangdong Province city to a Chinese company for about $95 million. Sony was forced to make the tough call to offload the plant, which began operating in 2005 and currently employs some 4,000 people, amid the economic slowdown in China. The Tokyo-based electronics maker seemed to handle the situation reasonably, given all employees were to keep their jobs under the new owner.

Yet the workers were up in arms the next day. "Don't sell the factory to a Chinese company without any explanation!" they said to supervisors. "If you don't want a protest, pay us!"

They began blocking the entrance to the factory on Nov. 10, delaying outbound shipments. With the deadline for the goods fast approaching, the police finally showed up on Nov. 15 to break up the situation. Several were injured, and 11 employees who led the protests were arrested.

But the problem is far from over. On Nov. 16, the workers raised a banner on the factory gates that read, "We are not machines or slaves. Don't sell us. We have dignity and human rights." They show up everyday but were still refusing to work as of Tuesday, passing their time instead in the cafeteria or the yard. All production has halted. Police remain on the lookout nearby for any signs of unrest.

Many workers admit they are taking such extreme measures in hopes of a payout. "I was surprised when I heard Sony was pulling out," a 26-year-old female employee said. "But one of the leaders said if I joined the strike, I would receive a lot of compensation because Sony is a big, famous company. I don't really understand, but I decided to join." She said firmly that she will not return to the production line until she is paid.

"A number of Japanese corporations have prioritized reaching a quick resolution to problems by offering massive compensation" even when they were not at fault, said IBJ Consulting's Akihiro Maekawa, an expert on labor issues in China. Many businesses would rather pay up than have their employees continue making a racket.

Workers are aware of this, so they use social media to exchange information on past cases. "They get information on which companies paid how much in compensation under what circumstances, among other things, and they use that to negotiate," Maekawa said.

Sony has legally done nothing wrong with its recently announced sale. Article 33 of China's Labor Contract Law stipulates that "the labor contract shall not be affected" by a change to the employer's name, legal representative, leader or investors. Because the factory employees will simply continue working under a new employer, Sony does not owe them any financial compensation. Many are watching how it handles an issue that has troubled many Japanese companies in the past.

Observers will also keep an eye on the Chinese reaction. Beijing needs to provide a fair business environment to foreign businesses as it shifts its focus from quantity to quality of production to reach the next stage in its industrial development. But in reality, the odds are still stacked against certain players. Authorities at least must recognize that such forceful tactics as the Sony strike will further cool foreign investment in China.

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