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By Dune Lawrence
March 26 (Bloomberg) -- Kraft Foods Inc., the world's second-largest foodmaker, plans to fire half of the 250 workers at its Beijing headquarters after acquiring operations from Groupe Danone SA and deciding to move the office to Shanghai.
The company, which completed its $7.8 billion purchase of Danone's biscuit unit on Nov. 30, is in talks with a labor union over the move, said Tod Gimbel, Kraft's Singapore-based director of corporate affairs for Asia. Employees had said Kraft violated a new labor law by not consulting them, the Beijing News and Shanghai Daily have reported, citing a labor union.
``We fully believe that we've complied with all aspects of all the laws -- the new law and any other applicable laws,'' Gimbel said in a phone interview today. ``We are in the process, because we've doubled the business and thus the employees, of working on the integration of the businesses. There are lots of moving parts, and some will involve fewer people here or there.''
The spat highlights problems companies in China face in implementing a labor-contract law that took effect Jan. 1. The legislation requires minimum wages and severance pay, limits overtime and introduces a consultation provision for employees in the world's fastest-growing major economy.
``The range of policies and decisions that are subject to this consultation obligation isn't clearly specified,'' said Lester Ross, partner in charge of the Beijing office of law firm WilmerHale. ``So at the outset -- and the law's only been in effect for less than three months -- there can very well be confrontation over whether the company has an obligation to consult.''
Union Formation
The union at Kraft's Beijing offices formed after the maker of Oreo cookies and Maxwell House coffee decided to move, Gimbel said. Workers who lose their jobs or choose not to relocate will get redundancy packages that exceed requirements, he said.
The foodmaker has no plans ``right now'' for layoffs in its sales force or other units in China besides the Beijing headquarters, Gimbel said. Northfield, Illinois-based Kraft has ``thousands'' of employees in China, he said, without providing an exact figure. The company, part-owned by Warren Buffett, entered China in 1984, and now has seven factories in the country.
Kraft's purchase of Danone's biscuit unit last year makes that business its biggest at about 20 percent of sales. Annual per-capita consumption of biscuits in China is about one-ninth of that in the U.S., Shawn Warren, vice president Asia Pacific for Kraft, said on Dec. 3.
To contact the reporter on this story: Dune Lawrence in Beijing at dlawrence6@bloomberg.net
Last Updated: March 26, 2008 06:58 EDTVisit - Share Investor Blog
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