Honda Motor Co <7267.T> made little progress on Tuesday in resuming production at a parts factory in south China after a prolonged and high-profile strike that has highlighted growing labor unrest in the region.

Japan's No.2 automaker said most of the 1,900 workers -- including about 600 interns -- at the wholly owned parts factory had agreed to management's offer for a 24 percent wage hike, with less than 100 holdouts still refusing the terms after violent clashes on Monday.

But as of late Tuesday afternoon, production at the factory, in Foshan, Guangdong province, had yet to resume, while workers inspected equipment and prepared to restart the line, Honda said. The tussle between union members, striking workers and those trying to work within the factory was preventing a smooth transition to operations, Honda spokesman Yoshiyuki Kuroda said.

China has been hit with a string of labor disputes at foreign companies, whose migrant workers have begun to demand better pay and conditions.

Strikes are technically illegal in China, which fears any overt signs of social unrest, but have become more common as employers try to rein in rapidly rising costs, especially in southern China, dubbed the world's workshop.

Honda has been unable to build cars in the country since last week after workers at the parts plant went on strike demanding higher pay. With few transmissions built and inventory running low, Honda said it would probably keep all four local assembly plants idle through Thursday.

The company said it would decide on Thursday what its plans were for June 4.

Analysts said Chinese workers were growing increasingly impatient with the difference between their own wages and those of their foreign co-workers.

People get angry about the huge income discrepancy between Taiwanese or Japanese workers and local Chinese workers, said Zhang Chenhao, a China equities analyst with JLM Pacific Epoch.

This is the second generation of migrant workers, and they want similar jobs and lifestyle as regular employees. (This strike) will be an example for other workers in China. This is quite a significant trend.

CONFLICT

At a dormitory for workers in a nearby village, an 18-year-old intern told Reuters a company representative came by to tell workers not to go to work on Tuesday in case of a repeat of conflicts that flared up the previous day.

On Monday, some striking workers displayed scratches underneath their shirts, saying they were roughed up by union officials who tried to push them out of factory grounds as police and reporters watched.

The Communist Party-backed All China Federation of Labour Unions discourages independent worker activism and generally sides with management.

The parts factory had initially planned to produce manual transmissions through the night shift on Monday, but work was cut short after less than three hours as striking employees disrupted work, Honda said.

On Tuesday morning, about 100-200 angry workers approached the factory gate from inside the compound to appeal to reporters, complaining about being beaten by union members the day before, according to a witness.

The intern at the dormitory, who asked not to be identified due to the sensitivity of the matter, said many workers were not signing the contract yet because they were still angry and wanted to see how the company responded to Monday's violence.

FASTEST GROWING AUTO MARKET

Including a small exports-only factory producing the Jazz subcompact, Honda has capacity to build 650,000 cars a year in China, the world's fastest-growing car market.

The parts factory, which builds manual and automatic transmissions, offered to lift regular workers' monthly starting salary by 366 yuan ($53.59) to 1,910 yuan ($279.6), far above the legal minimum wage is 920 yuan, Honda said.

Interns were offered an increase of 477 yuan per month, from a base ranging from 900 to 1,300 yuan per month, the intern said.

The interns are students who are required by their schools to get work experience, with internships lasting between six months to a year and a half, according to the intern.

Other foreign firms have also been raising wages following criticisms about pay and conditions.

Taiwan's Hon Hai Precision Industry Co Ltd <2317.TW> said last week it plans to raise salaries by about a fifth at its Foxconn International <2038.HK> unit, maker of Apple Inc's iPhone, as it struggles to stop a spate of suicides and quell public anger.

Honda's shares closed down 0.2 percent on Tuesday, in a broader Tokyo market <.N225> down 0.6 percent. ($1=6.830 Yuan) (Reporting by Chang-Ran Kim in TOKYO; Don Durfee and Alison Leung in HONG KONG; Fang Yan in SHANGHAI, and Stefanie McIntyre; Writing by Chang-Ran Kim; Editing by Lincoln Feast and Bill Tarrant)

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