China's burgeoning automobile industry suffered a jolt as Honda, the second largest car manufacturer in the country, shut down all its four assembly plants after workers went on strike demanding better wages.
The strike set off alarm bells among scores of foreign firms whose investments are the driving force for China's rapid growth, as it is the largest industrial action in modern China ever since it began opening up its economy in a big way in the 1980s.
Strikes are anathema in China, as it transformed itself from a socialist system of the past to a capitalist economy, with the ruling Communist Party retaining a tight control on the government and the armed forces.
The strike is featured as the top story on state-run television and in the print media, giving maximum publicity.
The workers are demanding that their monthly salaries be raised from 1,000 (USD 147) 1,500 yuan (USD 194) to 2,000 (USD 220)-2,500 (USD 367).
Operations at Honda's four auto assembly plants in China ground to a halt after 1,900 workers at the company's parts maker went on strike, official newspaper China Daily reported.
Negotiations were held between executives from all workshops and workers, but "due to vast differences, the two sides failed to reach a deal," according to a company executive.
Government agencies and trade unions are also trying to broker a deal, the report said.
A Foshan government official who was involved in the talks told China Daily that the government has not found any violation of the labour law by the Honda factory management.
The city's minimum wage is 920 yuan (USD 135) per month, but most of the workers are unsatisfied "because of rising consumer prices," he said.
The strike is continuing after negotiations broke down between the management of Honda's parts factory in China and its workers.
Automakers practice just-in-time delivery in parts and components, so the shutting down of one supplier can have a company-wide impact, as is the case with Honda.
As a result, the entire China operations of Honda Motor, Japan's second-largest automaker, have been at a standstill this week, it said.
The strike follows Honda's announcement earlier this week of an aggressive plan to boost production in China, raising annual production capacity at its Guangqi Honda joint venture from 360,000 units to 480,000 vehicles by the latter half of 2011.