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Nike CEO says could shift China production over labor strife

Nike Chief Executive Mark Parker speaks during the launch of the Nike Mercurial SuperFly II soccer boot at Battersea Power Station in London
Nike Chief Executive Mark Parker speaks during the launch of the Nike Mercurial SuperFly II soccer boot at Battersea Power Station in London

By Richard Valdmanis

BOSTON (Reuters) - Nike Chief Executive Mark Parker said on Thursday the footwear and athletic apparel company was considering shifting its production within China following a major strike at a supplier's factory.

Thousands of shoe factory workers staged one of China's biggest strikes earlier this month over conditions at Hong Kong-listed Yue Yuen Industrial Holdings Ltd <0551.HK> - a $5.6 billion manufacturer of footwear for Nike Inc , Adidas and other international brands. Most of those workers have since returned to work after the company agreed to some of their demands.

"We didn't move product out in this case, but we're staying close to it. We've been in a position to do that," Parker said on the sidelines of a luncheon at the Boston College Chief Executives Club of Boston.

"We're always considering it."

He said Nike was in "close contact" with Yue Yuen and its workforce to determine if the labor conditions at the factory violate Nike's own workplace standards, but added Nike had not yet "taken a position on that."

He said Nike had a diverse factory base in China that made it possible to shift production relatively easily.

"We want to invest in the partners that are really doing the right thing with the workforce," Parker said. "We have a factory base where we can move product around as we need to make sure that we don't have issues with production."

Yue Yuen workers went on strike in the southern city of Dongguan on April 14 in what activists say was one of China's biggest labor protests since market reforms began in the late 1970s.

They were protesting what they said where chronically low company contributions to social insurance and housing provident fund accounts. By late last week, some 80 percent of the workforce had returned to work, according to Yue Yuen.

In a sign the strike had rattled Chinese authorities, police placed one labor activist in criminal detention, formally accusing him of causing a disturbance after he distributed information online about the factory strike, his manager and father said on Tuesday.

Nike's workplace code of conduct includes a clause protecting worker compensation and benefits: "Contractor's employees are timely paid at least the minimum wage required by a country's law and provided legally mandated benefits." http://nikeinc.com/system/assets/2806/Nike_Code_of_Conduct_original.pdf?

(Reporting by Richard Valdmanis; Editing by Richard Chang)