China risks Apple’s reputation

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Jiang bo says he drove a cement truck for China’s Shenzhen Antuoshan Investment & Development Co for 12 hours every day for seven years without overtime pay.

A national labour contract law implemented on January 1, 2008, was supposed to limit work hours and ensure severance pay.

A week later, the concrete company asked Jiang to sign a contract setting his base salary at 810 yuan ($119) a month, 45 percent less than he usually earned, to avoid additional overtime costs, he says. Jiang refused and was let go without compensation.

“China’s law is supposed to protect migrant workers and the weak, but this is not the case,” said Jiang, an Anhui province native who was awarded 19,620 yuan ($2,871) by an arbitration panel and settled after a second appeal got him 2,000 yuan ($293) more.

“The broth is changed; the medicine isn’t.”

Employers ignoring a law designed to mute labour discontent prompted Chinese workers to file double the number of claims last year with courts and arbiters, the government says. The trend leaves international manufacturers open to potential consumer backlash that may stem from any abuses.

US companies such as Wal-Mart Stores Inc and Nike Inc, which makes about one in every three of its shoes in China, said they’re training suppliers on the rules and inspecting them for compliance.

Beaverton, Oregon-based Nike held workshops with contract factories after the law took effect to ensure they understood its ramifications and Nike’s expectations, said Kate Meyers, a spokeswoman for the sportswear company.

Apple Inc, which relies on Chinese manufacturers for its iPhones and iPod music players, found 45 of the 83 factories it audited last year didn’t pay proper overtime and 23 provided less than minimum wage, according to its 2009 progress report on supplier responsibility. The California-based company required them to adjust practices to ensure correct payments, it said.

Apple has been auditing how its suppliers treat their workforce since 2006, spokesman Steve Dowling said. The number of units audited more than doubled last year from 39, and the company trained more than 400 of its employees to monitor compliance with factory standards, said the report.

Apple also instructed more than 27,000 supplier employees and managers on worker rights and social responsibilities, it said.

Companies such as Dell Inc and Hewlett-Packard Co buy computer keyboards and other components from the Meitai Plastics & Electronics factory in Dongguan city. The plant made employees work 81-hour weeks and also failed to pay overtime, a February report by the Pittsburgh-based National Labour Committee said.

“Conditions are sliding backward because of the worldwide recession,” said Charles Kernaghan, NLC director.

The Electronic Industry Citizenship Coalition, whose members include several Meitai contractors, said in an April 3 statement that corrective actions were to be taken. The plant is making improvements, Meitai spokeswoman Catherine Lien said.

Meitai is not a direct supplier for Texas-based Dell or California-based Hewlett-Packard, spokeswomen for each company said. Both companies asked their direct suppliers to do an investigation and changes are being implemented, they said.

Suppliers have little incentive to abide by the rules, claimed Bama Athreya, executive director of the International Labour Rights Fund in Washington.

“The brand-name companies are not putting more money on the table to make sure that suppliers have incentives to obey labour laws,” she said. “In fact, every year they come back and say, ‘Do it for less’.”

Worker rights abuses have long been an issue for US and European companies that turn to developing nations for cheap labour, slashing prices for consumers. They have attempted to protect themselves by setting codes of conduct for suppliers and instituting audits to measure compliance.

In the 1990s, protests were mounted against Nike after reports claimed its sneakers were being produced by mistreated workers in emerging markets such as Vietnam.

Gap Inc, Abercrombie & Fitch Co and more than 20 other firms were accused in a 2000 lawsuit of running sweatshops that used slave labour in foreign-owned factories in the US territory of Saipan.

The case was settled for $20m, and an independent monitoring system was established on the island, said Dan Newman, a spokesman for Coughlin Stoia Geller Rudman & Robbins LLP, which represented a class of the 30,000 workers who sued.

In April, a factory worker was crushed to death by a machine he was operating at a Guangdong province supplier of cards and other paper goods for Walt Disney Co and its licensees, the company said. The New York Times reported on the incident in a June 22 article, which said investigators found labour and safety violations at the plant.

Disney works with 23,000 factories globally and accounted for five to fifteen percent of production at the Guangdong facility, spokesman Jonathan Friedland said.

China’s new legislation was meant to improve the lot of its 140 million migrant workers, who together would form the world’s eighth- most populous country.

People leaving the countryside for urban factory jobs form the backbone of the nation’s export industry.

As China’s export economy boomed, fuelled by some of the world’s lowest labour costs, working conditions came under the scrutiny of the United Nations, the US government and human rights groups. The abuses included paying employees once a year and hiring “criminal elements” to harass and intimidate them, the US state department said in its 2008 Human Rights Report.

The new law required businesses to recognise, in writing, workers’ rights to fair compensation and benefits, including minimum wages and overtime pay, said Yang Qianwu of the Shenzhen-based Deheng Law Firm, who represented Jiang. The law gave workers the right to sue for damages in civil court.

The US state department “is aware of the enforcement concerns specifically related to China’s new labour laws,” spokesman Andrew Laine said.

“We will also continue to engage with a range of stakeholders to ensure that the global financial crisis is not used as a pretext to weaken labour rights or other human rights,” Laine wrote in an e-mailed response to questions.

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