Guanghua Tire Co., Ltd.

A Tire company is one of the word biggest tire manufacturer,, found a JV in China in 1994 with it minority Chinese partner Guanghua Rubber Work. This JV is designed to produce and sell radial tires in the China, A Tire has 75% of its share, Guanghua Rubber has 25%. All the decision makers were from A Tire. After years hard work, in 1999 this JV began to make money. Year 2000 the EBIT rate is the highest in A Tire Asia Region, year 2001 is expected to be better. The president of this JV is very appreciated by A Tire headquarter and his colleagues. But inside this JV, he is facing more and more troubles of the employee relation. The workers demand more pay, said that they had no salary increase since this company start up, only inflation adjustment. The Union Chairperson demand that her pay and other privilege should be equal to the vice president, had serious argument with the president, once both parties were ready to go to the court. These are not enough, the collective bargaining practice has been on trial in China, and Guanghua fortunately was selected to be one of the pilot companies from 1996 while the people in more developed cities like Shanghai, Shenzhen have not heard of it even now. Every year when the bargaining begin, the workers got very excited, after the result was announced, then they got very upset, accuse the bargaining representatives useless, and some of them encourage the Union chairperson to lead them to strike. The president compares the salary and benefit with other companies, and found that Guanghua is good enough, they should not demand more; the workers emotion is instigated by the Union, so he want to subdue the Unions activity to weaken the Union influence. But the fact goes to the opposite, the Union become more and more influential among the workers, now the Union is almost the unique organization to which the worker can trust. There are several suggestions to the president about how to cope with the current situation. One is that he can simply ignore the Union, the Government will protect the foreign investors to develop tax sources. The second is that he must cooperate with the Union because the Union is so influential among the workers. The conflict between the management and the Union is not only the collective bargaining, but also, or more, is the conflict of different ideas. The management lost communication with the workers because the different ideas, so the management must cooperate with the Union. The third one is that the president does not need to worry, the conflict is very natural, the workers should get more interest when the company grows.