On November 21, more than 2,000 employees of Shanghai Guoli Car Leather Accessories Co., Ltd. (referred to as Guoli Company) went on strike and blocked the road to demand unpaid wages.
Located at 9219 Zhongchun Road, Minhang District, Shanghai, Guoli Company was established in 1996. It primarily produces car leather seat covers and collaborates with car manufacturers such as SAIC Volkswagen, SAIC General Motors, and FAW-Volkswagen. The legal representative of the company is Liu Wenqi, who also serves as a director and legal representative at Shanghai Yuantong Seat Systems Co., Ltd. and Shanghai Longyu Group. Shanghai Yuantong was a supplier of VIP seats for high-speed trains. The company has investments in 13 other companies and has a branch office.
Shanghai Longyu Group, Shanghai Yuantong, and Guoli Company are all part of the same automotive seat production system and are facing similar wage arrears issues.
An employee named Li Xuelong (pseudonym) from Longyu Group told Da Ji Yuan that only Guoli’s employees were demanding unpaid wages this time, and they also wanted to join, but their company had already taken measures against them.
He said, “Our Longyu Group has not stepped forward yet because the company has sent some articulate leaders to suppress the workers.”
According to him, on November 21, over 2,000 Guoli employees went on strike. Some of them blocked the road intersection of Hushong Road and Zhongchun Road from 7 a.m. to 9 a.m. Around 40 police cars arrived at the scene, dispersing the employees eventually, and four employees were arrested.
It was reported that the labor department intervened in mediation in the midst of the situation. However, Li Xuelong believes it won’t have a significant impact.
Da Ji Yuan attempted to contact Guoli Company but there was no answer.
Li Xuelong revealed that their salary consists of base pay, performance bonuses, overtime pay, and a full-attendance award. The base pay was 2,690 yuan, and they used to receive over 5,600 yuan a month. However, the company stopped paying performance bonuses of 2,000 yuan directly and only paid the base salary, but in October, even the base salary was not paid.
He mentioned that the fundamental cause of the labor dispute is that the company is allowing employees to resign automatically to avoid paying compensation.
He added that the best welfare benefit the company previously provided was free meals and accommodation for all employees. However, now they are no longer provided, leaving many employees struggling to make ends meet. Many of them have mortgage and car loans to pay off, relying solely on their wages to survive.
“During the day, the leaders keep urging us to work harder, threatening to let us go if we refuse. The employees are at their breaking point. One employee even said that if the leaders pushed them to work hard again, they would kill them. Of course, I believe it’s just an outburst of frustration,” Li Xuelong stated.
It was revealed that Guoli Company employees had not received their wages for the previous month since November 12, and the factory has been shut down for over half a year.
The situation is similar at Longyu Group, where each employee was informed that due to unprecedented difficulties faced by the company, especially the sudden halt in production from the second half of last year until now, the salary scheduled for November 15 could not be paid on time.
An individual who used to work in the quality assurance department at Guoli told Chinese media that Guoli used to be a top-tier leather seat material company but began to decline gradually from 2021. With the shift in the Chinese car market towards new energy vehicles, many new energy cars started using integrated seats. Consequently, Guoli’s sales to existing clients declined, and they couldn’t secure orders from new energy vehicle manufacturers.
Currently, the Chinese automobile industry is facing severe internal competition, with overcapacity in new energy vehicles leading to low-price dumping, affecting related companies.
As early as April of this year, the Chinese National Development and Reform Commission’s Price Monitoring Center stated that the reduction in car prices was due to oversupply in the market and decreased battery costs.
The center indicated that in 2023, China’s new energy vehicle production reached 9.443 million units, a 30% increase from the previous year. Industry data reveals that in 2024, only BYD, Huawei-owned Wandering Tech, and Li Auto had an increase of 2.3 million vehicles in their planned deliveries, while the market demand predicted an increase of only 2.1 million vehicles. This indicates a long-term state of oversupply in the market.
From January to August this year, Chinese automakers engaging in a “price war” resulted in a cumulative retail loss of ¥138 billion in the new car market, leading to a rupture in the funding chain for car dealers. Recently, the China Automobile Dealers Association submitted an urgent report to the Chinese government.
The report highlighted the widespread losses in new car sales among current automobile dealers, the prevailing situation of operating in a deficit in cash flow, and the escalating risks of the funding chain rupture, making it increasingly difficult for them to survive.