Honda Motor Corp yesterday said it was preparing to restart production at its spare parts plant in China after it agreed to pay a higher salary to striking workers.

However, an employee at the Nanhai Honda Auto Parts Manufacturing Co in Foshan in south China's Guangdong Province told Shanghai Daily the standoff was likely to continue as they were still not satisfied with the pay rise.

Honda said that employees were gradually returning to work at the transmissions plant in Foshan and that production had restarted late yesterday afternoon. That might enable a factory that exports Jazz subcompacts to restart operations tomorrow, Honda spokesman Hideto Maehara said.

Zhu Linjie, a spokesman for Honda Motor (China) Investment Co, yesterday said the car maker had ended negotiations - held under the Foshan government's mediation - with striking workers at the parts plant and they were on track to resume production.

A few dozen striking workers at the parts plant said up to 80 workers had been fired for refusing a pay increase. Honda said it could not immediately confirm the dismissals.

An employee told Shanghai Daily by telephone yesterday that Honda offered to increase monthly salary by 366 yuan (US$53.60) but the striking workers are demanding that it be lifted by an industry average of 2,000 yuan to 2,500 yuan from 900 yuan now.

"We are willing to stay with the company but the pay rise is less than our expectations," said the worker who declined to be identified.

Xinhua news agency earlier said, citing a striking worker, that Japanese staff can each earn US$300 a day and their job is to train workers.

The lack of transmissions and engine parts forced Honda to shut output at its four assembly plants in China for most of last week, after nearly 1,000 workers at the its transmission factory walked out from their jobs on May 17.

Honda said the two plants held with Guangzhou Automobile Group would close at least until today, while Dongfeng Honda's factory would remain closed until tomorrow. It is estimated that these ventures were losing a daily output of 3,000 units in China from this walkout.

Including the export plant, Honda, Japan's second-largest auto maker, has the capacity to make 650,000 cars a year in China.

An analyst said employers are benefitting from the lower labor costs in China.

"Car makers have profited from China's booming auto industry," said independent auto analyst Zhong Shi. "It is important to find a balance between the company and benefits for individual workers."