The East is Red

Labor disputes have hit local units or suppliers of companies such as Yamaha, Panasonic Corp., and Adidas AG. Yamaha was forced to halt production of motorbikes in Hanoi when 4,000 employees downed tools in March. The workers were given a pay raise to return to work.

“Every day, somewhere in the country, there is a strike,” said Youngmo Yoon, a Vietnam labor specialist for the ILO. “Most are being organized by workers spontaneously.” Many are wildcat stoppages, which lack legal authorization.

For companies that do operate in the country, rising wages will put pressure on profits, said Alan Pham, chief economist for VinaCapital Investment Management, the biggest fund manager in Vietnam. “It all adds to the negative impact on the psychology of the investor,” Pham said.

London-based cable maker Volex Group and Japanese lingerie company Wacoal Holdings were among investors in Vietnam that faced illegal wildcat strikes. Workers are demanding better pay after the highest inflation rate in Asia hurt their purchasing power. Srithai Superware, a Bangkok-based company that makes tableware, this month suspended plans for a $5 million expansion at its plant in southern Vietnam because of economic instability. “In the short term, we have no confidence in the economic situation in Vietnam,” Santi Sakgumjorn, general director of the Vietnamese unit said. The factory has been hindered by rising production costs after two salary increases this year. The company said it will set up a subsidiary in neighboring Laos. Japanese motor maker Minebea chose Cambodia over Vietnam to build a plant for 5,000 workers in a sign growing labor disputes are hurting Vietnam’s appeal as a low-cost alternative to China. “A strike would be trouble,” Yasunari Kuwano, a spokesman at Tokyo-based Minebea, said of the $62 million plant, which will make electric motors for appliances and digital equipment. “Labor is the key focus for us in choosing Cambodia. We need reliable labor.”

Meantime in China itself migrant workers attacked government buildings and overturned police cars in Guangdong's jeans-making hub of Zengcheng and the ceramics center of Chaozhou, two of the latest incidents in a spate of similar outbursts across China over the last month ( riots erupted in nearby Chaozhou after migrant workers complained that a ceramics factory had delayed their wages). Much of Guangdong is not happy: It is dangerously discontent—and what happens here in China's richest, fastest-growing and most populous province often portends the direction of the rest of the country. Public anger is already boiling over in other urban areas this summer by a host of divisive social issues, most notably a yawning wealth gap and rampant inflation, which has pushed up the price of pork—China's favorite meat—by 54 % in a year. Provincial leaders are resorting to a combination of platitudes and brute force. Last month, Shenzhen authorities expelled 800,000 "high-risk" people—mostly migrant laborers.

When Marx wrote the "Communist Manifesto" the working class of England was only 2 million strong. Today China's urban working class is well over 450 million. China has more workers than the United States and Europe combined.