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Honda China parts plant restarts, walkout threatened

By Alison Leung

FOSHAN, China (Reuters) - Honda Motor <7267.T> said a key car parts factory in south China resumed full production on Wednesday, ending more than two weeks of disruption after workers downed tools to demand higher wages in a high-profile and sometimes violent strike.

But the resumption did not mark a clean end to the prolonged labor dispute, with part of the workforce agreeing to return only until Friday, when they expect the company to respond to a list of as-yet unmet demands.

Japan's No. 2 automaker has had to suspend vehicle production in the world's biggest and fastest-growing car market since last week after workers at the 1,900-strong wholly owned parts factory, in Foshan, Guangdong province, refused to work until their demands for more pay and other conditions were met.

Although not technically illegal, strikes in China are often seen as a threat to social order and are quickly stamped out. More disputes have been erupting lately between workers resentful of large income disparities and harsh working conditions, and employers trying to rein in rising costs.

On Wednesday, Taiwan's Hon Hai Precision Industry <2317.TW> said it plans to raise workers' salaries by 30 percent at its Foxconn <2038.HK> manufacturing hub in southern China, following a string of suicides there.

In the northern city of Shenyang, a trade union representing workers for U.S. fast food chain KFC said on Wednesday that the company had not responded to demands for a pay hike, according to local media.

FRIDAY DEADLINE

Honda said its four Chinese car factories, with combined annual output capacity of 650,000 units, would remain idled as planned at least through Thursday. The maker of the Accord and Civic models will decide on Thursday whether to restart production on Friday.

Honda has put the politically sensitive negotiations in the hands of local government experts and government-backed union members, some of whom clashed with factory workers on Monday.

Honda spokeswoman Akemi Ando said most of the workers at the parts factory had agreed to come back to work for the company's offer for a 24 percent hike in starting salary. She added that some were still holding out but their numbers were decreasing.

A day earlier, Zeng Qinghong, a member of the National People's Congress and vice chairman of a Honda joint venture partner, Guangzhou Automobile Group, visited the factory to negotiate with the workers on behalf of the company, Honda said. It declined to provide details.

But some workers have agreed only to a temporary return, said one 18-year-old intern from the southern city of Changsha.

"Management told us that they will respond to our demands by Friday. If they don't, we'll go back on strike," said the intern, who added there was a 70 percent chance of another walkout.

About a third of the plant's workforce are interns, who as vocational students typically receive lower wages and fewer benefits than regular employees. Many factories in southern China employ interns, who are required by their schools to complete a stint at manufacturing sites.

INTERNS

Interns at the plant are seeking, among other demands, an 800 yuan ($117.2) monthly salary hike, an annual salary increase of no less than 15 percent, year-end bonuses no less than the preceding year's, salaries during the strike period, and a new chairman to lead a restructured union.

The intern told Reuters that the company had offered to raise wages from 900 yuan per month for interns to between 1,300 and 1,400 yuan. Regular workers will receive 1,900 yuan before deductions for insurance, the intern said. The legal minimum wage is 920 yuan.

Two guards standing outside the factory -- a large complex of tidy, low-rise buildings -- said employees had come back to work as usual on Wednesday morning. A woman working at one of the factory's restaurants also said things had returned to normal inside the plant.

That was a sharp contrast to Monday, when a tussle between angry workers union representatives resulting in several injuries, according to factory employees.

Honda sold about 580,000 cars in China last year, about 17 percent of its global sales. Even as workers at the parts plant went on strike last week, the automaker announced expansion fresh plans to lift production capacity in China to 830,000 units a year as it aims to catch up with rivals including Toyota Motor Corp <7203.T> and Nissan Motor Co <7201.T>.

Shares in Honda closed down 1.9 percent on Wednesday in a , broader market <.N225> down 1.1 percent. ($1=6.827 Yuan) (Additional reporting by Chang-Ran Kim in TOKYO; Don Durfee and Doug Young in HONG KONG; Fang Yan in SHANGHAI; Writing by Chang-Ran Kim; Editing by Lincoln Feast)

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