Strikes Against Multinational Companies

SWOT Threat: Strikes Against Multinational Companies
As the supply of labor decreases and the demand increases, China's finite supply of cheap labor is diminishing. Additionally, new laws created by the Chinese government mean that workers have more rights to strike. Those strikes have been waged against multinationals with the government's blessing. According to the Economist,

"This suggests three things. China is reluctant to get heavy-handed with workers in big-brand firms that attract global media attention. But, second, China is becoming more relaxed about spooking foreign investors. Indeed, if workers are upset, better that they blame foreign bosses then local ones. In the wake of the financial crisis, the party has concluded, correctly, that foreign investors need China more than it needs them. Third, and most important, the government may believe that the new bolshiness of its workers is in keeping with its professed aim of "re balancing" the economy. And it would be right."

Part of this re balancing includes paying workers more so that they consumer more goods at home reverses having an economy that relies mostly on foreign investments. An increase in spending would mean that Chinese workers also spend more money on foreign goods and services, which would increase jobs abroad.

Over the short term, an increase in strikes make Chinese employees more expensive than foreign employees, so foreign investment wouldn't have the same impact when spent in China.

Source: Economist Magazine, July 31st 2010, page 9. "The rising power of the Chinese worker"