GE's lawyers talk about their company's experience with labour strife in China. David Hechler reports

China is widely viewed as a tightly-controlled society, which is why this spring's labour strife headlines surprised so many people. A car maker was hit with a series of strikes and an electronics manufacturer was shaken by a string of employee suicides. Chinese Government officials, who usually clamp down on labour unrest and suppress news coverage, allowed employees to criticise the companies for weeks – and state-run media to report what they said.

But lawyers at General Electric (GE) already knew that China's is a challenging labour environment. Two years ago, employees at a GE plant near Shanghai went on strike and even locked their managers inside the building. The dispute received no publicity – unlike this year's strikes at Honda or the turmoil at Foxconn Technology, where nine employees committed suicide (and four tried to) during the first five months of 2010.

The 2008 strike gave GE's lawyers a unique perspective from which to view the current turmoil in the Chinese labour market. Three of the company's in-house lawyers agreed to share their insight into recent events. Mark Nordstrom, based in GE's Connecticut headquarters, is senior counsel for labour and employment law. Grace Han, who emigrated to the US from South Korea as a child, is an Atlanta-based employment lawyer with supervisory responsibilities in China. They work closely with Louise Jing, a Shanghai-based labour counsel who was born in China and holds law degrees from Chinese and Swedish universities.

David Hechler: Tell us about the 2008 strike in China.

Grace Han: It was in a GE plant in the Shanghai area that made light bulbs. We were dealing with the union during the normal contract cycles and about 20 of about 900 employees were unhappy with how they perceived the negotiations for wage increases were going. They blocked entrances. People couldn't leave and couldn't get in, including management.

We instructed people not to get into physical altercations, because we didn't want anyone hurt. We negotiated pretty much around the clock. On the second day, the strikers agreed to let people in and out, and we agreed to continue our talks. Over the next couple of weeks, we negotiated an increase of about 24%, which included a 14% minimum wage increase stipulated by the Shanghai Government. We already paid above the minimum wage. That's why the strike surprised us.

DH: How do Chinese unions function?

Mark Nordstrom: The All-China Federation of Trade Unions (ACFTU) and its affiliated local chapters are the only unions authorised to operate in China. They're very closely aligned with the Government. Unions are viewed in China as part of the Government's way of bringing social harmony to the country. They help the workers resolve issues, but they also have a duty to help management keep the place in order. Employers pay 2% of their employees' wages to the ACFTU for distribution throughout the system. The fact that employers have to pay the unions may make employees sceptical of their allegiance.

When you see actual strikes occurring, it's largely outside the unions, because they're conflicted in any situation like this. While you may find some involvement of the local union leaders, more likely it's individuals who are not part of the union themselves. They're just a group of people who have got together to demand something.

DH: Are your employees following the unrest at Foxconn and Honda?

Louise Jing: The Chinese media have had many reports on the Foxconn cases. People are very interested and talk about that. For the Honda strike, I don't think many people talk about it and I can't find many in the Chinese media talking about it. But for Foxconn, people talk about it every day, because Foxconn is a famous company in China. This is very abnormal – 13 suicide attempts in five months. I think they need to change their culture, including the workload and the payments.

DH: Why do you think Government officials have allowed the Chinese media to cover the unrest now, when they haven't in the past?

LJ: We see these two cases in the whole environment of China. The Chinese Government already realises that the gap between the poor and the rich has become bigger and bigger. We can see that the Government really wants to increase the wages of the workers, especially those with a very low income. Increasing the minimum wage is one of the Government's methods. It's also dropping the regulation of wages. I have been told that this regulation may be released this year, but I'm not sure. I think this regulation also intends to increase the wages of the workers.

MN: One thing that's interesting is that Honda is a Japanese multinational and Foxconn is a Taiwanese multinational. It's interesting that you have strikes against these companies instead of at a US plant or some other non-Asian organisation. You wonder whether it is a cultural thing. In a Japanese company, Chinese workers are not allowed to progress through promotions.

The other obvious thing is that China has been at the lower end of the wage scale for a long time and employees have put up with it. China is all about social engineering and controlling the society in a way that does not allow for unrest. So the Government is willing to play ball with these movements to make sure that workers have better protections, working hours and wages because they don't want to see this unrest spread.

But I think it is spreading. Unfortunately for the Chinese Government, just like in Iran, the world of the internet and the way information travels is unstoppable. The result is that they're reporting more and more of these strikes. I don't know where this goes. China is not predictable.

A version of this article first appeared in Legal Week's US sister title, Corporate Counsel.