Cooper Tire and Rubber announced last month that it would be taken over by Apollo Tyres of India, making the combined group the seventh-largest such firm in the world.
But thousands of staff at Cooper Chengshan, a joint venture in the eastern Chinese province of Shandong, have walked out in protest, the Xinhua news agency said late Tuesday.
It quoted union leaders saying they wanted to block the huge transaction, which saw Cooper shares leap on the New York stock exchange.
Workers are concerned the Indian company will be unable to repay debt taken on in the highly leveraged acquisition and their interests could be damaged, Xinhua said.
Employees have become increasingly vocal in China with numerous labour disputes occurring in recent years, but the cause of the Cooper Chengshan strike is unusual, with protests normally focusing on pay and current working conditions.
It is the latest incident to hit a foreign joint venture after Chinese workers held an American factory executive hostage for nearly a week in late June over a plan by his US-based medical supply company to lay off 30 workers.
The dispute also comes as China and India have vowed to boost trade. Chinese Premier Li Keqiang visited India in May and promised to open China's market wider to India and forge a "dynamic trade balance" to deepen economic ties and ease political tensions.
Cooper holds 65 percent of the joint venture while China's Chengshan Group has the remaining 35 percent.
"I cannot imagine what the company will become after it is taken over by the Indian company," Cooper Chengshan worker Ma Rufu said, according to Xinhua.
Ma added that Apollo's annual profits were not enough to repay the interest on the debt. "How can our welfare be sustained (after the acquisition)?", Ma said.
Zhang Huaqian, another employee, said: "We shall fight to the end with anyone who allows us to lose our jobs."
Xinhua quoted Yue Chunxue, the director of the Cooper Chengshan labour union, as saying it had been given no information about the deal.
"This is in contempt of Chinese law and disrespect(s) Chinese workers," Yue said, adding the union wanted the deal scrapped.