Factory Riot a Sign of Economic Times

DONGGUAN, China -- About 500 protesters rioted at a toy factory in southern China, flipping over a police car, storming the plant's gates and trashing computers over a pay dispute, an official said Wednesday.

The violence in Dongguan on Tuesday came as many companies in the once-booming city are shutting down or cutting staff amid rising costs, global economic woes and government plans to relocate low-end manufacturers.

Local officials are worried about the plant closures and have endorsed the central government's multibillion-dollar stimulus plan. They have also been urging factories to avoid large layoffs to prevent social upheaval.

The riot was triggered by a disagreement over severance payments to 80 migrant workers among a group of 596 who were laid off this month when their contracts expired, a local propaganda office spokesman said. He would only give his surname, Cai. The 80 laborers claimed that they were senior employees who deserved more severance from the Kai Da toy factory in Dongguan's Zhongtang township, Cai said.

Calls to the factory went unanswered on Wednesday. Hong Kong-listed owner Kader Holdings Company Ltd. said in statement that it has compensated the workers according to China's labor laws.

Kader, which has been making toys for more than 50 years and employs 7,000 people, also stressed that it is financially sound and that production lines at the Dongguan factory were normal Wednesday.

The 80 workers mobilized other unemployed laborers and migrants from their hometowns, forming a crowd of 500 at the factory's front gate on Tuesday evening, Cai said. Another 1,000 people gathered to watch as the protesters turned over a police car, shattered headlights on police motorcycles and pushed their way through the factory gates.

Cai said the crowd broke glass, computers and other equipment in the factory's offices. Ten computers were damaged and several thousand dollars were lost, Kader's statement said, without giving details. The Southern Metropolis Daily newspaper on Wednesday featured a picture of protesters in a large office, where the floor was littered with papers and computer keyboards.

Factories in Guangdong -- one of China's biggest manufacturing hubs -- have been hit hard by a series of factors, including rising costs for labor and raw materials as well the ongoing global financial crisis.

The official China Daily newspaper recently reported that more than 7,000 companies in Guangdong have gone bust or moved elsewhere. Many were in Dongguan, which has long been a popular place for factories churning out shoes, toys and other basic consumer products.

Last month, a huge Dongguan factory that made toys for Mattel Inc. and Hasbro Inc. abruptly shut down, laying off 7,000 people. The workers protested in the streets for days demanding unpaid wages.

The government has been encouraging the low-end manufacturers to move to the interior provinces to make room in Guangdong for high-tech and heavy industries.