Can You Spare a Yuan?
Research for Online Investors

by John Dalt

5/28/10

Markets have a way of throwing cold water on investors and traders.  Yesterday surprised us to the upside, and while we half expected a down day today, it still casts a pall over the office.

Honda has suspended production at two plants in China after 1,000 workers went on strike May 17.  They want higher pay.  Honda has offered a $52 dollar monthly raise for full time workers.  Two strike leaders were fired, and striking workers were asked to sign a “letter of commitment.”  This letter requires the strikers to comply with regulations and not take any action affecting the company.  The strikers were told “it was deemed an unconditional resignation if the workers failed to sign it.”

A new minimum starting wage was announced May first of $117 per month.  Average monthly pay is $146.48 to $220.  Strikers are demanding pay be increased to a range of $293 to $366 per month.  One worker identified as “Tian” told the China Global Times the company has a strict pay system.  Employees are assessed annually, but it can take 15 years to be promoted to the highest pay level.  This worker (Tian) makes $190 per month after two years.  He has received an increase of less than $15 since starting.

Honda sold 219,514 cars in China in the first four months of this year, up 39% year-over-year.  Honda announced a plan to increase annual production capacity in China to 480,000 cars.  They have entered negotiations with the workers and government to resolve the work stoppage.  You can read the complete story from Global Times about Honda operations in China.

This article offers insight into the inflationary pressures in China.  Workers want to participate in the growing economy.  These wage figures show us the disparity between Chinese workers and U.S. auto plant workers.  United Auto Workers (UAW) workers make as much in two hours as their Chinese counterparts in a month.

We will have a short letter today, as the weekend beckons.  We will be back in the saddle Tuesday morning.

“No one has any idea what’s next …the uncertainty of the business climate in America is frightening, frightening to everybody, and it’s delaying the recovery.  We are on our way to Greece, in the hands of a confused, foolish government”.----Steve Wynn, CEO of Wynn Resorts

Editors Note:  Join your neighbors in the U.S. honoring our nation's fallen heroes this weekend.  It is a small commitment of your time for what they gave.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions. It may contain errors and you should not make investment decisions based solely on what you believe you have read here. Do your own research, it is your money. If you lose it, it is your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed. The editor may have held a position in a security earlier, or in the future.

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