Samsung factory strike in India disrupts production for second day amid wage dispute

Samsung Electronics' production at a key plant in southern India was disrupted for a second day by hundreds of employees striking for higher wages on Tuesday, as top executives sought to resolve a rare episode of labour unrest.

South Korea-based Samsung, India's biggest consumer electronics company, counts the country as a key growth market, competing with the likes of LG Electronics to make everything from televisions and refrigerators to smartphones.

The strike-hit plant in Sriperumbudur, the smaller of Samsung's two Indian factories, employs around 1,800 people and makes electronic products rather than smartphones.

But it still contributes 20% to 30% of Samsung's annual $12 billion revenue in India, said two sources with direct knowledge of the matter, speaking on condition of anonymity.

Posters saying "Indefinite Strike" went up outside the factory near the city of Chennai, where hundreds of workers in company uniforms set up tents to shade themselves from the heat.

Union leader E. Muthukumar told Reuters "the strike will continue for a third day" on Wednesday.

About half of the factory's daily production was affected when many workers stayed away on Monday, and the protesters continue to press their demands for higher wages, better hours and most importantly want Samsung to recognise the formation of a union backed by the Centre of Indian Trade Unions group.

Shares in Samsung closed 1.9% lower in Seoul, versus the benchmark KOSPI's 0.5% fall.

Samsung's Southwest Asia CEO, JB Park, and other senior executives are visiting the factory to find a resolution, people with direct knowledge of the situation said. Park oversees the India market for Samsung from Gurugram, near New Delhi.

Samsung did not respond to a request for comment. Muthukumar said no settlement had been reached during the discussions on Tuesday with Samsung management.

Tamil Nadu labour secretary Veera Raghava Rao said that negotiations between workers and management are ongoing, but there is no indication yet when the matter will be resolved.

A spokesperson for Samsung India said on Monday that it actively engaged with workers "to address any grievances they may have and comply with all laws and regulations".

Around 800 workers signed a register outside the factory to record their protest.

The strike comes ahead of India's festive season when consumers buy gifts or items for personal use, lured by discounts offered by manufacturers.

"A strike at this point puts a spanner in Samsung’s production ramp-up ahead of the all-important festive season sales beginning October," said Prabhu Ram, a vice president at Cybermedia Research.

In South Korea, the 36,500 members of Samsung Electronics' biggest worker union who have been demanding higher wages and benefits, held a strike for several days in July and August.

In late July, however, Samsung said the action did not disrupt production there.

In India, its workers are demanding equal remuneration for those with the same length of experience, according to at least half a dozen employees who spoke on condition of anonymity.

"If they (Samsung) had given us a living wage and treated us with respect, we wouldn't have thought of joining a union," said one worker outside the factory, who declined to be named fearing reprisal from the company.

Their concerns were backed by some Indian political leaders who attended Tuesday's protest.

One poster outside the factory exhorted state labour officials not to support management, advising instead: "Discuss and solve demands from the labour union with union officials."