[asia-apec 1595] Report from China: Producing for Adidas and Nike

[Aaron James]

Attached below is a report from Alice Kwan, of the Hong Kong Christian
Industrial Committee (HKCIC), on labour conditions in China, in factories
producing for Adidas and Nike. Kwan discusses the situation for Chinese
garment and footwear workers, the impact of company codes, highlights
important aspects of Chinese labor legislation and profiles seven companies
producing for Adidas and/or Nike. 


April 25, 2000
Report from China: Producing for Adidas and Nike
by Alice Kwan

Introduction

China is a so-called 'socialist' country which is supposed to protect the
working class all the way, but sweatshops are prevalently found in cities
all over the country. Since Deng Xiaoping's open-door policy was launched
in 1979, thousands of factories have been established (with foreign
investments) in the Chinese mainland. In 1999, there were about 20 million
workers in these factories. A large number of the products are exported to
the US, Europe and all over the world every year. This brings billions of
dollars of trade to China and makes the economic and political elites
richer and richer. However, workers are always losers in this game and get
very little in reward for their effort.

Lives in sweatshops producing for TNCs   

It is no longer news to reveal that workers in China producing for TNCs are
working in sweatshop conditions. Most of them are young women workers who
come from peasant families, and are aged 18-25. In order to improve living
conditions in rural areas, most of them are forced to work 14 hours
(08:00-12:00; 13:00-18:00; 19:00-00:00) a day, seven days a week in the
factories. Until they get the first month's wage in the second month
(average wage: RMB 300-700 ) they do not know if their hard work is
properly rewarded. Although they work all day long, their wages are not
enough for their own livelihoods, let alone sending money home. Besides
employers often refuse to join social insurance schemes for workers. Wage
arrears are not unusual, and some workers have not been paid wages for six
months or more. Overtime work is always underrated. Even worse, most of
them are forced to work in dangerous conditions. According to a local
newspaper, there are at least 50,000 fingers amputated in industrial
accidents in China every year. A few factories ridiculously set the safety
standard as losing not more than two fingers a month . In violation of
laws, windows in many factories are barred and gates are locked during work
time. Neglect of occupational health and safety measures threatens the
workers' lives everyday. They have nearly no leisure time at all. Some of
them only enjoy one day-off per month - on payday. In some factories, for
management and security reasons, factory workers are not allowed to go
outside in the lunchtime or evening. To a certain extent, they are
imprisoned. Furthermore, unlawful fines and punishment are practiced in
many factories, for example talking in production lines, not switching off
the lights in dormitories, not queuing up for canteens, and so on. More
importantly, independent organizing is totally illegal. In extreme cases,
workers are only allowed to go to toilets three times a day for not longer
than two minutes each time. To prevent workers stealing materials, body
searches are conducted whenever workers step out of the factories. Women
workers are even checked manually by male guards. Obviously, labor rights
in China are not respected. 

Are Codes of Conduct a panacea? 

In the wave of consumer campaigns in the North, TNCs cannot escape from the
spotlight. They are forced to bear responsibilities for sweatshops in the
South. In order to please the consumers, TNCs developed codes of conduct.
For some people, the establishment of a code is the final victory. However,
such a victory is hollow. Because of the loose monitoring and poor
implementation of codes, workers in the South producing for TNCs are still
working in very deprived conditions. Most workers in China do not know what
a code of conduct is. Even where there is a code, workers are still forced
to work extremely long hours and receive very low wages. 

Most TNC's codes are very similarly focused on working conditions (i.e.
working hours, forced overtime, wages, forced labor, and child labor). Not
many mention the right of independent organizing and the right to
collective bargaining. Both are fundamental and indispensable labor rights.
If workers have these rights and can practice them freely, all complaints
about working conditions can be resolved through the collective bargaining
mechanism. It is paramount for workers to have the freedom to organize
themselves. Codes do not help much! On the contrary, TNCs sometimes shift
our attention to the working conditions rather than the organizing rights.
Surely, it is relatively easy for TNCs to achieve these guarantees on
working conditions. Consumers are also easily satisfied with the tiny
improvement of working conditions and welcome the apparent merits of TNCs.
But, the organizing rights of workers are then forgotten.

Some TNCs put the rights of organizing and collective bargaining in their
Codes. But when their orders come to China, they say, "Well. We would like
our suppliers to comply with our Code, and allow workers to have the right
to organize. However, labor organizing is very sensitive in China. We
cannot violate their laws. We are so sorry." It is just a device to wash
their hands of workers' rights and not keep their promises as stipulated in
the Code. 

Most companies appoint social auditors, labor and human rights NGOs, or
church groups to conduct so-called 'independent monitoring'. It is worth
investigating how independent and effective such monitoring is, especially
for social auditors who make big money in the process. Where does their
credibility come from? Are they endorsed by workers? Independent monitoring
without worker involvement is not acceptable.  How frequent can
"independent" outsiders investigate a factory? Nobody realizes the
situation better than workers do. They should be involved in the
monitoring. It is so important to utilize their investigations and comments.

Worker education should be promoted Based on our fieldwork in China, we
found that most workers do not know about either the Chinese Labor Laws nor
companies' codes of conduct. The Chinese Labor Law is highly recommended
for providing comprehensive protection of workers' rights. It is more
progressive than those of many developed countries. For example, workers
should not work longer than 40 hours a week; overtime should not exceed 36
hours a month; workers are legally entitled to social insurance for
retirement, illness or injury, industrial injury or occupational illness,
unemployment, and maternity benefits. Poor law enforcement is always
disastrous for Chinese workers.   

In order to empower workers for labor organizing and code monitoring, it is
essential to educate them about their basic rights. Unless they are
educated about national labor standards, workers cannot practice their
rights or express their demands effectively. For sure, workers education is
not welcomed by TNCs and their subcontractors. It does not fit in with
their game of manipulation. For instance, the Labor Rights in China (LARIC)
was invited to take part in the pilot scheme of the UK-based code of
conduct called the Ethical Trading Initiative (ETI). The project foundered
because the subcontracted factory management rejected worker education.
Managers were only willing to open their factory for monitoring, which in
fact was merely a visit. The impact of such a visit on working conditions
is negligible.  Demand for workers' education is a difficult and long
struggle but it is the burning issue of the moment in China. 

Codes of Conduct -- a charade manipulated by TNCs It is true that the
establishment of codes of conduct was not solely introduced by the TNCs. In
the very beginning, TNCs were not always winners and surely did not have
overwhelming advantages over the trade unions and NGOs. On the contrary,
the latter have kept attacking the TNCs by reporting sweatshops in the
South under guarantees of Codes. In the jumble of speed, money, human
resources, and media collaboration with TNCs, however, NGOs now find their
struggles are harder and harder. TNCs can easily spend millions of dollars
to exaggerate their 'good deeds' through different media and pay social
auditing companies handsomely to conduct research inside known good
factories. On the other hand, NGOs are exhausted tracing the locations of
tens of thousands of subcontractors all over the world, made particularly
difficult by the TNCs that change their subcontractors at anytime. Without
doubt, NGOs are in the adverse situation unless we overcome the
manipulation of the TNCs in the game.   

What is the breakthrough? 

As mentioned before, struggles for labor rights struggles should include
workers. They should be empowered to organize themselves and fight for
their rights directly with management. Worker education is one of the
essential tools. It should be included in the codes and monitoring systems
in China as the top priority. Obviously, it is not a single matter related
to workers in China but workers all over the world. 

In the face of the struggles with giant TNCs, it is urgent to call for
international solidarity among the working class, NGOs, and trade unions in
the North and the South. It is true that NGOs in the South shifted much
attention onto codes in the recent few years. However, codes are not our
aims in reality. We have to create our own agenda and no longer follow the
existing game manipulated by the TNCs. TNCs can shift their production from
one city to another and one country to another. Victory can only be
achieved by promoting international solidarity across the borders. For
example, workers in different countries should be informed about the
consumer campaigns in the North and the labor movements in other
countriesin the South. They should have a legal right to organize
themselves. Moreover, trade unions and NGOs in the North and South should
be linked closely in order to facilitate information exchange, networking,
and solidarity movements for workers' rights. Certainly, the consumer
campaigns in the North in the past years exerted pressure on the TNCs for
the improvement of sweatshop conditions in the South. However, pressure
from outside is not enough for the struggles. Workers must also organize
themselves to stand up and fight for their rights in the workplace. With
the powerful consumer campaigns, worker education and worker involvement in
monitoring the codes should be added to our demands. 

The ultimate elimination of sweatshops in the world can surely be sped up
by empowering workers to organize. 
     
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According to Chinese Labor Law:

1.Working hours in China are 40 hours per week (supposed 8 hr/ day and 5
days/ wk)

2. Working days are Monday through Friday When working on Saturday and
Sunday the workers have to be paid overtime rates. In reality however, most
of the management will tell the workers that they will only be paid the
rate for overtime when they work in the evening. This means that when the
workers work from 8 am until 9 pm on a Saturday they will get overtime rate
pay from 6 pm until 9 pm. However, this is against the law. 

3. Overtime should not exceed 36 hours per month. But most factories fail
to comply with the law. Workers are forced to work overtime. When they
refuse to work overtime, they will be fined and warned.  The rate that has
to be paid for overtime is 150% of  the normal wage on a weekday evening,
200% on the weekends, and 300% on a  public holiday. However, most workers
are not fully compensated according to the law. Some of them mentioned:
"the management tells us that we are piece rate workers and no overtime
bonus should be paid."

4. The minimum wage varies in different cities and provinces. Generally,
from RMB 300-450 (1USD= 8.2 RMB). It is important to note that this is the
wage for the normal working hours. Hence, when we look at the wages the
workers actually get for 14 hours a day and 7 days a week; with about
700-800 RMB a month, the workers are underpaid.

Noted during the research:

·	Although most of the factories withhold between 20 days and one and a
half months wages from workers as a deposit to reduce the turnover rate,
this is illegal. From the factory profiles it becomes clear that penalty
systems (fines) are used, a lot of unreasonable fines can be found in our
notes. The employer has to sign a labor contract with the workers and give
them a copy. In fact, copies were not provided to the workers. 

·	Almost none of the factories provide social security cover, such as
pensions, or coverage for illness or injury; industrial injury or
occupational illness; unemployment; or maternity leave. They are
indifferent about the law and the safety of the workers. Once workers are
injured or sometimes even die in industrial accidents, it proves to be very
difficult to get the compensation.

·	Some workers complained that the quality of the food and the dormitories
offered by the factories is very poor. Some of the workers cannot find
alternatives and live outside the factories however, because of their
limited wages.

·	Most workers do not know about codes of conduct. Regarding independent
monitoring, workers mentioned that there were many outsiders/foreigners
visiting the workplace but no one was talking to the workers themselves. 

·	There is no independent trade union in China. All the trade unions have
to be affiliated to the official trade union, the All China Federation of
Trade Unions (ACFTU), which is controlled by the ruling party. Most of the
profiled factories are privately owned. Most have no trade union in the
plant. If any union is present, most workers do not know about it or claim
that the trade union functions as a social welfare department, organizing
events like singing contests and picnics.  

·	Although some of these factories have many nice facilities (for example,
a basketball court, karaoke room, or library), workers claim that they have
no time to utilize them due to the long working hours.    

·	Most of the workers employed in these factories are young migrant women.
This is due to gender roles in Chinese families and because employers think
female employees are more submissive and easier to control (for example,
they believe that women can be more easily  forced to work overtime and are
unlikely to protest against the management. Most of the dormitories offered
by the factories are located next to the factories, making it difficult for
workers to refuse overtime.) 


--------------------------
Aaron James
Canada Asia Pacific Resource Network
c/o 170 - 111 Victoria Drive 
Vancouver, British Columbia  V5L 4C4
phone (work): 604-255-7346
phone (home): 604-602-1626
fax: 604-255-0971
www.caprn.bc.ca