Thousands of Textile Factory Workers Enter 4th Week of Strike in Xianyang City Against Unfair Contracts Imposed after Buy-out by

Over six thousand workers, the great majority of them women, have been on strike at the Tianwang Textile Factory in Xianyang City, Shaanxi Province, since 14 September in a determined show of protest against attempts by the factory’s new majority shareholder – China Resources, a mainland-invested company listed in Hong Kong, New York and London – to force them to sign unfair labour contracts after the factory’s recent change of ownership. The striking workers have halted all production at the factory for the past three weeks and are maintaining a 24-hour vigil, in rotating shifts of around 200 workers at a time, on either side of the factory’s main gate. Banners hanging from the factory gate declare: “We want to survive”, “Protect workers’ rights” and “Give us back the funds we worked hard for”. Workers with loud-hailers are leading their fellow protestors in singing songs and chanting slogans throughout the day.

The new owner of the Tianwang factory, China Resources (Holdings) Co. Ltd (Hua Run Jituan), has demanded that all the workers accept a one-off severance payment equivalent to one month’s basic salary for each year of service in the factory, after which an unknown number of the workers would be re-employed on a “no-seniority” basis (that is, their previous years of service will no longer be recognized) – and at substantially lower wage levels than before. In addition, all those re-employed by the factory would have to serve a six-month “probationary work period” during which they would receive only 60 percent of their new salary.

The workers, most of whom have served at the factory for well over ten years, regard this as a thinly disguised ploy by management to reduce their income still further, and as an insult to their professional skills. They are also angry that China Resources, contrary to government regulations, has refused to pay them any compensation for their change of status from state-owned enterprise workers to employees of a privately owned enterprise. Worst of all from the workers’ point of view, their new employer is refusing to pay their future retirement pension and medical insurance premiums once the new contracts have been signed.

Four days into the strike action, at around 10.30pm on 18 September, as many as 1,000 police suddenly appeared in front of the factory gates carrying water cannon and prepared to forcibly disperse the demonstrating workers. But after some of the workers ran back to the Tianwang staff dormitory area and banged on their wash basins to wake everybody up, thousands of other workers and their families came out on to the street to protect the workers stationed by the factory gates. Faced with this united show of resistance, the police officers then retreated without using the water cannon.

Workers’ Discontent over the China Resources’ Sale Agreement

Tianwang Textile Factory, previously a state-owned enterprise known as the Xibei No.7 Cotton Factory, until recently employed about seven thousand workers. Workers at the factory have told China Labour Bulletin that the factory’s total assets are worth 330 million Yuan, but China Resources estimated them as amounting to only 80 million Yuan. The local government’s acceptance of this very low estimate has given rise to widespread suspicion among the Tianwang workers that the factory’s assets were improperly disposed of in the course of the merger with China Resources, which reportedly now owns a 51 per cent share in the factory. According to the workers, one of the new management’s first moves after taking over the factory was to abolish both the official trade union branch (ACFTU) and also the factory’s Party Committee.

Ironically, about three years ago, when the Xibei No. 7 Cotton Factory was reorganized as the Tianwang shareholding company, the workers were pressured by management into buying shares in the factory: each worker was expected to purchase 4,000 Yuan’s worth of shares; cadres had to purchase 8,000 Yuan’s worth of shares; and senior cadres had to buy 16,000 Yuan’s worth. Earlier this year, when the merger with China Resources was about to take place, the workers were then summarily ordered by management to sell their shares back to the company, receiving a premium of around 25 percent on the original share price.

Numerous workers at Tianwang have told CLB that they are extremely unhappy and angry about the way the China Resources sale agreement has been forced on the factory. Indeed, even the factory’s own management originally opposed the sale on the low terms being offered by China Resources: apparently, the municipal government has been obliged to change the factory’s top manager no fewer than three times over the past two years in order to force through the sale agreement. According to the PRC Labour Law and other relevant regulations, the agreement needed to be approved by the factory’s Workers Congress and the company therefore had to call a meeting of the Workers Congress for this purpose. In addition, regulations stated that the vote should be cast by all worker delegates in a secret ballot. In the event, the factory management insisted that the voting be carried out by only a selected minority of the Workers Congress delegates, and moreover by means of a public show of hands. Even then, many of the selected Workers Congress delegates reportedly refused to endorse the sale agreement, but factory managers then locked them all inside the meeting room and informed them that no one would be allowed to leave until the merger with China Resources had been approved. Only after many hours of detention did the delegates finally consent to endorse the sale plan. Subsequently, each Workers Congress delegate was given 100 Yuan in coupons by the company as a reward.

Official Trade Union Disowns Responsibility for Negotiating on Workers’ Behalf

When contacted by China Labour Bulletin, both the Shaanxi provincial trade union authorities and also those at Xianyang municipal level stated that they had no role to play in helping the Tianwang workers resolve their confrontation with China Resources over the unfair and unreasonable terms of the contracts being offered. An official named Zhang Fengying – who concurrently holds the posts of Chairperson of the Shaanxi Provincial Textile Trade Union and Deputy Party Secretary of the Shaanxi Provincial Textile Company – confirmed that she had a meeting with senior local government officials about the strike at Tianwang Textiles. But another cadre at the same provincial trade union office told CLB that the union could not represent the workers in negotiating with China Resources due to “various reasons embedded in the current trade union system.” Meanwhile, the management of China Resources’ branch in Xianyang declined to answer any enquiries by CLB as to whether the company had entered into negotiations with the workers, or whether there was even a trade union branch at the factory with which to negotiate.

Later, a cadre from the Xianyang Municipal Trade Union explained to CLB that the official trade union had not become involved in handling the Tianwang dispute because it had “not received any instruction from the Xianyang Municipal Government and the Municipal Committee” to do so. He also had no idea as to whether a trade union still existed in the factory after the ownership restructuring. Since Tianwang was a subsidiary of the provincial textile company, he said, it was “impossible for Xianyang Municipal Trade Union to get involved with anything under the jurisdiction of the provincial enterprise.” The union official added that the case should instead be handled either by the provincial trade union or by the trade union of its parent company, Shaanxi Textiles. As noted above, however, these bodies have already disowned all responsibility for addressing or representing the Tianwang workers’ complaints.

The striking Tianwang workers three main demands are: 1) that the central government in Beijing should send an inspection team to review the terms of the factory’s merger with China Resources to see if there has been any financial impropriety; 2) that more equitable contracts should be offered to the workforce, with no requirement for a “probationary work period”, preservation of their individual seniority status, compensation for their loss of state-owned enterprise employee status, and continued payment by the company of their pension and medical insurance premiums; and 3) that China Resources should be held responsible both for the losses incurred during the suspension of production and also for the workers’ wages during the period of the strike, since the new contracts offered by the company are in breach of the Labour Law and the Trade Union Law.

The Xianyang city government’s attempt to force through this ownership restructuring of the Tianwang factory has important implications for the entire city. Most of the factories in Xianyang are involved in the textile industry in one way or another, and most of them are slated to undergo similar ownership restructurings in the near future. The Tianwang workers’ strike action is thus a major test case for the Xianyang workers as a whole and represents a major challenge for the local government.

There have reportedly been several similar protests led by workers of other previously state-owned enterprises in Xianyang since July 2004. During the recent ownership restructuring of the city’s Shaanxi No. 2 Woolen Factory, for example, the city government ordered that only workers over the age of 50 would be allowed to retire, while all other workers at the factory had to accept a one-off retrenchment payment involving the loss of all previous benefits and entitlements. As a result, numerous workers at the factory who were just a few months or weeks short of the age of 50 suddenly lost their entire future pension entitlement. In July, more than 2,000 workers from the factory blocked Renmin Road and Lanxi Road in downtown Xianyang in protest against the city government’s rigid and unreasonable enterprise restructuring policies. The government eventually offered the retrenched workers 2,000 temporary jobs in community services at a monthly wage of 380 Yuan each – a measure that sufficed to end the large street-level protests, but without fundamentally solving the workers’ basic livelihood problems and demands.

7 October 2004

For further information, see the following broadcast transcripts in Workers' Views:

Change for Nothing: China Resources (Holdings) Co. Ltd’s Purchase in Xianyang, Shaanxi (II)

Change for Nothing: China Resources (Holdings) Co. Ltd’s Purchase in Xianyang, Shaanxi (I)

7 October 2004

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