For years, and now again with renewed vigor, U.S. companies have claimed that their mere presence in China would help open that society to American values. In effect, we are told that U.S. companies operating in China will also be on the front lines, acting as mini-universities of a sort, doing the heavy lifting in inculcating and spreading respect for human, women's and worker rights and democratic freedoms by their own example.
On one hand, there is no doubt that U.S. companies have a major presence in China. In 1997, of the $45.3 billion in direct foreign investments made in China, investment by U.S. companies was second only to that of Hong Kong. Of the total foreign investment, 62 percent went into funding 14,716 new manufacturing facilities. Today U.S. companies import a full 36 percent of China's total exports worldwide.
On the other hand, can we believe the U.S. corporations when they claim that they have improved human and worker rights conditions in China? Unfortunately, we cannot. Their record all too clearly demonstrates otherwise.
Recent in-depth investigations of 16 factories in China producing car stereos, bikes, shoes, sneakers, clothing, TVs, hats and bags for some of the largest U.S. companies clearly demonstrate that Wal-Mart, Nike, Huffy and others and their contractors in China continue to systematically violate the most fundamental human and worker rights, while paying below subsistence wages. The U.S. companies and their contractors operate with impunity in China, often in open collaboration with repressive and corrupt local government authorities.
Fubu sneakers are made by young women locked in a walled compound with four guard towers at the corners, and paid 23 cents an hour to work 12 hours a day. Local security police keep an eye on the factory.
Take Wal-Mart for example, the largest retailer in the world and the largest importer of goods into the United States. The best estimate is that Wal-Mart uses 1,000 contractors in China, with factories hidden across the country. (We can only estimate this, because Wal-Mart refuses to provide the American people with even a list of the factories the company uses in China to make the goods we purchase--though Wal-Mart does provide the same information to the government of China!)
Recently we discovered Kathie Lee handbags being made for Wal-Mart at the Qin Shi factory, where 1,000 workers were being held under conditions of indentured servitude, forced to work 12 to 14 hours a day, seven days a week, with only one day off a month, while earning an average wage of 3 cents an hour. However, even after months of work, 46 percent of the workers surveyed earned nothing at all--in fact they owed money to the company. The workers were allowed out of the factory for just an hour and a half a day. The workers were fed two dismal meals a day and housed 16 people to one small, crammed dorm room. Many of the workers did not even have enough money to pay for bus fare to leave the factory to look for other work. And when the workers protested being forced to work from 7:30 a.m. to 11:00 p.m., seven days a week, for literally pennies an hour, 800 workers were fired.
How is Wal-Mart's behavior in China spreading respect for human rights?
Nike is another example, with approximately 50 contractors in China, employing more than 110,000 workers. One can see the "swoosh" and "Just Do It" slogan painted on the walls of Nike's contractor's factory, Sewon, right behind the locked metal gate and the iron bars and grates covering the windows. People in the community told us that the young workers are paid 20 cents an hour and work 11 to 12-hour shifts. Also, they explained, they factory will not hire anyone over 25 years of age.
At the Hung Wah factory, young women work from 7:30 a.m. to 10:30 p.m., seven days a week, sewing Nike clothing for an average wage of 22 cents an hour.
At the Keng Tau Handbag company, young women work seven days a week during the busy season sewing Nike bags and backpacks from 8:00 a.m. to 10:00 p.m., receiving just one day off a month. Some workers earned as little as 8 cents an hour. To hide the amount of illegal overtime hours, factory managers told the workers not to punch their time cards for night or Sunday work.
How is Nike's actual behavior in China spreading respect for human rights?
A recruitment ad for the Lizhan factory where New Balance sneakers are made advertised for "Females only, age 18-25." The base wage at the factory is 18 cents an hour, and the workers need permission to leave the factory grounds. Factory and dorms--where 20 women share one small dorm room, sleeping on triple-level bunk beds--are locked down at 9:00 p.m. every night. When workers in the polishing section could no longer stand the grueling overtime hours and low pay and went on strike, they were all fired. Factory management then lectured the remaining workers that they would not tolerate unions, strikes, bad behavior or the raising of grievances.
Far from defending human rights, the record shows that U.S. companies and their contractors in China are actively involved in the systematic denial of worker rights.
How is New Balance's behavior helping to develop respect for human rights in China?
Does it get better with other U.S. companies?
There is no doubt that U.S. companies are in the front lines in China, importing for example 1.2 billion garments a year made in China, as well as shoes, sneakers, toys and sporting goods made in China that will retail in the U.S. for over $39 billion a year. But the fastest growing U.S. imports from China are computers and computer parts, which are increasing by 74 percent each year; phones and other telecommunications equipment which are up 72 percent annually, and electrical goods which are up by 127.6 percent.
But, far from defending human rights, the record shows that U.S. companies and their contractors in China are actively involved in the systematic denial of worker rights. U.S. companies are milking a system that does not allow for dissent and where anyone trying to form an independent union will be fired, arrested and imprisoned for 5 to 8 years without a trial.
Just ask Liu Dingkui about labor rights in China. He was arrested in January 1999 for organizing a demonstration of 500 steelworkers demanding back wages from the state-owned Peijiang Iron and Steel factory in Jiangyou City. He is now serving 1 ½ years in a hard labor camp for "re-education."
Or, ask Zhang Shanguang who was sentenced on December 27, 1998 to 10 years imprisonment for "supplying intelligence to organizations outside China." He had filed stories with foreign radio stations describing widespread labor and peasant unrest in his home county of Shupu. The list goes on.
There are no workers rights in China, and U.S. companies are, unfortunately, a part of the problem.
Nike contractor in Northern China
How the Research Was Done
China is a hot topic these days, as it should be. China is currently the world's seventh largest economy and may well be the world's largest in the next 25 years. What happens in China will have a profound impact in shaping the global economy and determining whether or not fair trade will be linked to respect for human and worker rights and payment of living wages. Yet, despite the vast importance of China's position there is precious little known about the role of U.S. multinational corporations in China, and about conditions in their own and their contractors' factories.
This research project was undertaken to help fill this enormous void. The research for "Made in China" began in March 1999, and will continue into the future. This is just the first of a series of planned reports documenting factory conditions and the struggle of workers in China to win their rights.
The National Labor Committee made two trips to China, in July 1999 and again in January 2000. But the vast majority of the research was done by very brave and dedicated human rights organizations in the region, along with courageous labor rights activists, some of whom are operating inside mainland China. For obvious security reasons, we will not identify the names of our colleagues or their organizations.
Hopefully, this report will provide more than just documentation on factory conditions. We hope that it will also help build an active international solidarity movement in the United States to support the workers' struggle for human and worker rights in China.
Timberland shoes are produced at:
Pou Yuen Factory V
Guangdong Province, China
Timberland shoes made in China. Retail price: $99.99.
As is standard in China's export assembly industry, the women workers are generally from 16 to 25 years of age, at which point they are fired. The companies feel that once the women reach 26 they are "used up" and "exhausted" from the 12-to-14-hour shifts, seven days a week, and they may get pregnant. The companies do not want to pay maternity leave.
Timberland's logo is posted on the wall outside the Pou Yuen Factory #V (Timberland shoes are also being produced at Factory # 3.) Pou Yuen is a giant Taiwanese-owned shoe conglomerate, one of the largest footwear manufacturers in the world, with factories in China, Vietnam, Indonesia and Taiwan. There are more than 100,000 mostly young women workers assembling shoes for Pou Yuen in factories across China.
The Zhongshan City Branch of the Pou Yuen conglomerate in Southern China employs 37,000 workers in at least six factories contained on a "campus" which also includes worker dormitories.
Besides the two factories producing Timberland shoes, other Pou Yuen factories assemble sneakers for New Balance, Reebok, Nike and Clark.
The regular daily shift during the peak season is:
With 1½ hours off for lunch and a half hour for supper, the workers are at the factory 98 hours a week, while being paid for only 80 ½ hours. They work 11 ½ to 12 ½ hours a day, seven days a week.
Timberland sneakers made in China. Retail price: $89.99.
Typically, a woman making Timberland shoes at the Pou Yuen Factory V will be allowed just one or two days off a month.
During the slow season, the women will work 55 to 60 hours a week, 10 hours a day, Monday through Saturday and receive Sunday off.
Forced Overtime Without Pay
All overtime work is mandatory. Failure to work overtime is punished with stiff fines, amounting to a full week's wages.For example, the second time a worker misses the required overtime, she will be fined $10.84 and also lose her attendance bonus for theentire month, which amounts to $6.02. The $16.86 she loses in fines is more than she earns working a full 70-hour workweek. The third time a worker misses overtime, she is immediately fined.
Cheated on Overtime Pay
Every worker reported of being shortchanged on the number of overtime hours actually worked.Pou Yuen management simply under reports the hours. Most workers at Pou Kuen are paid on a piece rate basis, but there are over 500 workers who are paid by the hour. Pou Yuen management arbitrarily sets their daily production quota so high that the workers cannot possibly reach the goal in eight hours. The whole production line must then remain at work, unpaid, for an additional three to four hours each day until the quota is met.
Those working on a piece rate receive no overtime premium for the long extra hours.No matter how many hours a week they work, they are always paid the same standard piece rate.
The average wage in the factory appears to be 22 to 23 cents per hour.For example, for working approximately 70 hours a week, most women earned 580 rmb, or $69.88 a month, or $16.13 a week, which would then equal 22 or 23 cents an hour. (There are 8.3 rmb to $1.00 U.S.)
For working 70 hours a week, workers earn:
In March 2000, seven women at Pou Yuen reported that most of the workers assembling Timberland shoes were then earning 400 to 500 rmb per month, working approximately 55 hours per week. This would put their earnings at between $11.12 and $13.90 a week, or 20 to 25 cents an hour. The lowest wage we saw was 16 cents an hour, $11.12, for working a 69-hour week.
Timberland's Profits up 27.2!
In 1999 Timberland's net profit was up 27.2 percent over the year before, amounting to $75.2 million profit on $917 million in total sales. Last year Timberland manufactured just 20 percent of its footwear (in two factories in the Dominican Republic and Puerto Rico) while outsourcing 56 percent of its shoe production to contractors in China and Taiwan. To handle its large production in China, Timberland has opened an office in the southern city of Zhu Hai. None of Timberland's employees are unionized.In 1999, Sidney Swartz, Chairman of Timberland, paid himself $1,759,356 in total compensation, or about $7,330 a day. In 1999 his son was paid $1,579,423, /or about $6,580 a day; not including millions of dollars in 1999 stock options!
The highest take-home wage for production workers appeared to be 38 cents an hour. At any given time there are up to 280 "trainees" employed at the factory. They earn as little as 12 cents an hour, earning just $6.67 for a 55-hour workweek.
Temperatures of 100-plus degrees Fahrenheit
Besides complaining about the excessively high production goals, the extremely long, forced overtime hours, the exhaustion of working seven days a week and the low wages, the women also reported that during the hot season temperatures in the factory would regularly exceed 100 degrees.
Especially in the technical section, the factory air is thick with dust, and in the adhesive area there is a strong smell of chemicals. Workers handle toxic glues and other solvents without gloves.There is inadequate ventilation in the plant, and noise levels around certain machinery equals that of a New York City express train racing through a station.
The workers were very upset that they had no idea how their wages were calculated and that they varied so much from month to month. The workers have no idea how the various piece rates are set, or what exactly is being deducted from their wages. They are left completely in the dark.
Threatened and Told to Lie to the U.S. Auditors
When U.S. auditors representing Timberland arrive, the visits are announced in advance. Beforehand, the workers are threatened never to criticize factory conditions, and are trained to lie to the auditors. Factory managers follow the auditors around the factory to monitor and intervene in any interviews with the workers. The workers report being very afraid when the monitors arrive.
Living Conditions: 12 to a Room
Seventy percent, or 2,520 of the Timberland workers are housed in two nearby eight-story dormitories, where they are crowded in, 12 people to a small 13 by 20 foot room. There are 32 rooms per floor. More than two dozen workers share one bathroom.
Both the factory and the dorms are under surveillance 24 hours a day by private company security guards.
There is No Independent Union at the Pou Yuen Factory
This is typical of privately owned factories in China. Of course any attempt to form an independent union at the factory would be immediately crushed through firings and arrests. Anyone the Chinese government considered a ringleader in such an organizing effort would be imprisoned without trial for 5 to 8 years, under administrative detention, in a hard labor camp. There are no labor rights in China.
Timberland's Code of Conduct
Even Timberland's weak code of conduct, which allows 14 and 15-year olds to work 12 hour shifts, regularly putting in 60-hour work weeks, while being paid straight time for long overtime hours, is being routinely violated in China. Nor does Timberland's Code of Conduct include respect for the rights of women (who are regularly 80% of the workforce), payment of at least subsistence wages, public disclosure of factory names and locations, or independent verification of factory conditions by local respected independent non-governmental, religious, human and women's rights organizations.
None of the Pou Yuen workers our researchers spoke with had ever seen or even heard of the Timberland Code of Conduct. Not that it would matter very much, since China's own labor laws as well as internationally recognized labor rights standards are routinely and systematically violated at the Pou Yuen factories with complete impunity. That is the real root of the problem.
We are committed to doing business only with partners...
Who choose their employees based on their ability to do the job, not on individual characteristics. [VIOLATED]
FACT: Eighty percent of the workers in the Pou Yuen plant are young women 16 to 25 years of age.At 25 they are fired because they are "used up" and "exhausted" from the 12-to-14-hour shifts, seven days a week, and for fear they may get pregnant, since the company does not want to pay maternity benefits. (Article 62 of China's labor code states: "After childbirth female workers shall be entitled to no less than ninety days of maternity leave with pay."
Who recognize the right for employees to freely associate and bargain collectively " [VIOLATED]
FACT: There is no real union at the Pou Yuen factory, and any attempt to organize an independent union there would be met with firings, beatings, arrests and imprisonment without trial for 5-to-8 years in a hard labor camp. Pou Yuen management has formed a company-controlled "union" to organize recreational activities. There are no labor rights in China.
This environment must be free of harassment, abuse, retribution for grievances " [VIOLATED]
FACT: Workers are threatened by Pou Yuen management not to criticize or openly discuss factory conditions with Timberland's auditors, and are coached to lie. The workers are very frightened when the company's auditors tour the factory.
We will not do business with partners whose employees presence is anything other than voluntary. This specifically prohibits" any forms of forced labor... [VIOLATED]
FACT: All overtime work at Pou Yuen is mandatory. During the peak season workers are at the factory 98 hours a week, while being paid for 80½ hours. Failure to work overtime is punished with the loss of one week's wages. On the third such occasion, the worker is fired. The poverty level wages also drive the women to work overtime.
In addition to compensating for regular work hours, partners must provide compensation to employees for overtime hours at a premium rate " [VIOLATED]
FACT: Because of the excessively high production quotas set by Pou Yuen management, hourly workers are regularly forced to work 3 to 4 overtime hours each day without pay. Nor do piece rate workers receive an overtime premium, despite working 80 hours a week. In fact, most workers report being shortchanged of overtime hours actually worked, which do not appear on their pay stubs.
We will seek partners who do not apply conditional employment practices, such as training wages, pre-employment fees and deposits" [VIOLATED]
FACT: At the Pou Yuen factory there are over 275 "trainees" being paid as little as 12 cents an hour, or $6.67 for a 55-hour work week. Most workers pay approximately $50 to a private local labor service to get a job at Pou Yuen.
We will seek partners whose employees' regular work schedule " is not more than 48 hours per six-day period. Our partners must ensure that employees hours do not regularly exceed 60 hours in a given week, 12 hours in a given day, or more than 6 consecutive days without a day off" [VIOLATED]
FACT: As has been noted, during the busy peak season at the Pou Yuen factory, employees assembling Timberland are forced to work up to 14 hours a day — from 7:30 a.m. to 10:30 p.m. — seven days a week. During this season, they are regularly at the factory 98 hours a week. Timberland workers get one or two Sundays off per month.
We will seek business partners who provide their employees with a safe and healthy work environment " [VIOLATED]
FACT:The temperature in the Pou Yuen factory regularly exceeds 100 degrees Fahrenheit during the hot season. Workers handle toxic glues without gloves. In sections of the factory the air is thick with dust and in other areas the noise levels are deafening.
We seek partners who provide residential environments that are safe and healthy" [VIOLATED]
FACT: Workers sewing Timberland shoes at Pou Yuen are housed 12 to a room measuring less than 13 by 20 feet. More than two dozen workers share one bathroom.
YOU BET WE DO!
We purchase 36% of China's total exports worldwide!
We have the right to demand respect for human and worker rights and fair wages.
Workers make Keds at the Kunshan Sun Hwa factory in China.
Qin Shi Handbag Factory
Guangdong Province, China
There are 1000 workers at the factory; 90% of them young men 16 to 23 years of age; almost all migrants are from rural areas.
Wal-Mart started producing Kathie Lee handbags at the Qin Shi factory in September, 1999. The workers passed us a Qin Shi/Wal-Mart invoice form dated September 2, 1999 which calls for the production of 5,400 Kathie Lee handbags (style #62657 70575) to be delivered no later than October 20, 1999.
Before that Qin Shi produced handbags for Payless carrying the Predictions label. (In 1999, Payless was the eighth largest importer by weight of goods entering the United States. Wal-Mart was, of course, the first. In the latest six-month period available—October 1999 to March 2000-a search of U.S. Customs Department shipping records made available in the PIERS database, show that 53 percent of Wal-Mart's total imports worldwide come from China.)
The daily work shift at the Qin Shi Factory is 12 to 14 hours, seven days a week, 30 days a month. At the end of the day the workers return "home" to a cramped dorm room sharing metal bunk beds with 16 other people. At most, workers are allowed outside of the factory for just one and one half hours a day. Otherwise they are locked in.
Working up to 98 hours a week, it is not easy to find the time to go out. But the workers have another fear as well. Before entering the Qin Shi factory, management confiscates the identification documents of each worker. When someone goes outside, the company also takes away their factory I.D. tag, leaving them with no identification at all. If you are stopped by the local security police you could be detained and deported back to your rural province as an illegal migrant.
When you need to use the bathroom the company again confiscates your factory I.D. and monitors the time you spend. If you are away from your workstation for more than eight minutes you will receive a severe fine.
All new employees are illegally charged a deposit of 80 rmb ($9.64 U.S.) for a three year work contract, along with another 32 rmb ($3.86) for the first 10 days living expenses, which includes two dismal meals a day.
Further deductions from the workers' wages are made for the temporary residency and work permits the workers need, which the factory management intentionally delays applying for for several months. This also leaves the workers trapped and afraid to leave the factory grounds, since without these legal permits they can be deported at any minute.
Qin Shi management also illegally withholds the workers first month's wages, so it is only at the end of the second month that the workers receive, or may receive, their first pay. Because of all of the deductions and fines, many workers earn nothing at all after two months work, and instead, are actually in debt to the company.
Fines for violating any of the strict company rules are severe, a practice made even worse by the fact that armed company security guards can keep 30 percent of any fines they levy against the workers.
The workers making Wal-Mart Kathie Lee handbags report being subjected to body searches, as well as physical and verbal abuse by security guards and quality control supervisors.
The workers are charged 560 rmb ($67.47 U.S.) for dorm and living expenses, which is an enormous amount given that the highest take home wage our researchers found in the factory was just 10 cents an hour. There were others who earned just 36 cents for more than a month's work, earning just 8/100th of a cent an hour. Many workers earned nothing at all and owed money to the company.
Seventy percent of the workers said they lacked money for even the most basic expenses, and were forced, for example, to go without even bread and tea for breakfast. Lacking money and with constraints on their freedom of movement the Qin Shi workers making Kathie Lee handbags were being held in conditions resembling indentured servitude.
In a vicious trap, they did not even have enough money to travel to look for other work.
The Qin Shi factory has such a notorious reputation for cruelty and exploitation that the workers admit they are ashamed to tell anyone where they actually work — to endure such conditions must mean that you are very, very poor and down on your luck.
Wal-Mart carried out an inspection/audit at Qin Shi in early November 1999 and the factory passed with flying colors. The audit was obviously a farce — as will become clear later — and one can only conclude that Wal-Mart simply does not know and does not care what its contractors are doing.
Eventually the workers at Qin Shi could stand no more abuse, and fought back. Eight hundred workers were fired in December, but they did at least win some of their back wages.
A Wal-Mart Production order was carried out of the Qin Shi Handbag Factory by the workers. The production order was signed on September 2, 1999 by Yu Lin Chen and Su Chun Wong.
The Qin Shi Handbag Factory was to produce 5,400 Kathie Lee handbags, style #62557 70575 with a delivery date of October 20, 1999. The invoice notes that Wal-Mart will accept no late deliveries.
Kathie Lee Handbags
Label: "A portion of the proceeds from the sale of this item will be donated to various children's charities."
Working for Wal-Mart in China"For Nothing
10 cents an hour is the highest wages
Nearly half the workers surveyed (46%) actually owed the company money after a month's work!
The pay records below were drawn from a sample of 24 workers from the Qin Shi Handbag Factory in Zhongshan, China, where they sew Kathie Lee handbags for Wal-Mart. The workers are paid according to a piece rate. They work 12 to 14 hours a day. The paycheck they received on October 31, 1999 covered the 31-day period from August 20 to September 27. The names of the workers are being withheld to protect their security. Since Qin Shi factory management fines the workers $2.49 for failure to return their pay records, the workers had to take advantage of their one-hour supper break to sneak out and xerox their pay stubs.
19 Workers Surveyed from the Sewing Department:
Five workers surveyed from the gluing department:
Note: The monthly payday is on an irregular schedule, varying according to production volume and delivery date. Deductions are withheld from the workers' wages for living/dorm expenses, food, job placement fee, temporary residency permit and various fines (e.g.-for not returning ones pay record). The exchange rate is 8.3 rmb to $1.00 U.S.
The "regular" daily work shift is:
The workers are at the Qin Shi factory up to 115½ hours per week, from 7:00 a.m. to 11:30 p.m., or 16 1/2 hours a day, seven days a week. This was the schedule in September, which is their busy season, when they were making the Wal-Mart handbags.
But they were paid for only 14 hours a day, and 98 hours a week.
Working seven days a week and 30 days a month, essentially the workers would receive one day off every other month.
All overtime work is mandatory. The 98-hour workweek at Qin Shi exceeds the legal limit on total overtime by 200 percent. (China's labor law states that overtime cannot exceed 36 hours a month, or 9 hours a week over the regular 40-hour, 5-day workweek).
Despite these excessively long hours, the workers receive no overtime premium, earning always the same standard piece rate.
All the workers at Qin Shi are paid according to a piece rate system, which varies given the type of operation required. Piece rates per unit completed ranged from 1/10th of a cent to 4/10ths of a cent, with the average being just a little over 2/10ths of a cent. So, for example, if a worker sewed 100 pieces for the Kathie Lee handbags, he or she would earn 24 cents.
In September and October, when the factory was producing Wal-Mart, the range of the workers wages varied wildly, but no one came even remotely close to making the already below-subsistence legal minimum wage of about 31 cents an hour, on which no one can possibly survive.
The highest take-home wage we found in the factory was just 10 cents an hour, or $1.20 a day -- $44.22 for 37 days of work.
The average wage in a sample of 24 workers amounted to only 3 cents an hour. However, of that sample 46 percent of the workers earned nothing at all after more than a month's work, and in fact owed the company money due to all the deductions for company dorm and food expenses, fines and other illegal withholdings.
One worker earned 36 cents for the entire month of August, which would amount to 8 cents a week, or 8/100ths of a cent an hour.
The Kathie Lee handbag the workers make at the Qin Shi Factory retails at Wal-Mart for $8.76, which by American standards is quite cheap. However from the perspective of the average worker in the factory, earning just 3 cents an hour, the Kathie Lee handbag is very expensive indeed. At 3 cents an hour, he would have to work 299 hours to purchase such a handbag for his girlfriend.
Average Wage at Qin Shi
Highest Wage at Qin Shi
Legal Minimum Wage in Zhongshan City
(Which is already below subsistence levels)
Because of the pitiful and illegally low wages at the Qin Shi factory the workers were forced to go without even the most basic necessities. Seventy percent of the workers reported lacking the money for even a tiny breakfast. Kept in the position of indentured servants, the workers had no money or savings even to leave the factory to look for other work.
Footwear factory in China. China accounts for 60% of all the shoes imported to the U.S., with a retail value of $16.9 billion a year.
The Wal-Mart Audit: A True Farce
After having begun production at the Qin Shi factory in September, Wal-Mart sent an inspection team to visit the factory in early November to conduct an audit.
The visit was announced in advance and Qin Shi management was well prepared. Before Wal-Mart arrived, management split the factory in two. Those still working on the first and second floors of the building remained Qin Shi employees, while those working on the third and fourth floors would now be working for a separate front company called the Yecheng Leather Parts Factory. This factory was illegal and unregistered, and in fact the 800 workers there still continued to do the same work producing the Kathie Lee handbags. The Yecheng Leather Parts Factory was simply a front company set up to fool or appease Wal-Mart. On the third and fourth floors conditions remained wretched with excessively long overtime hours till 11 p.m. and criminally low wages, since the workers had to strain to also finish uncompleted production quotas from the first two floors, which were now turned into a "model" factory of sorts.
Meanwhile, in November, the 200 workers left on the first and second floors started to receive 350 rmb ($12.17 U.S.) a month in back wages, to make up for the below-minimum wages they had been earning since September when the Wal-Mart work began. Also, from November onward these workers were to be paid the legal minimum wage $12.51 a week, even if the company continued to cheat and fudge on the amount of overtime actually worked.
The first and second floors were cleaned, and fancy high quality toilet paper was installed in the bathrooms. Wal-Mart's Code of Conduct went up on the wall. Even Wal-Mart's human rights hotline numbers were posted: 1-800-WM-ETHIC for the U.S. and 1-800-963-8442 for outside the U.S.
Any serious auditor would realize rather quickly that those 200 workers alone could not be producing the amount of goods Wal-Mart ordered, and might even have walked up the flight of stairs to see the other 800 workers doing the vast majority of the work.
But Wal-Mart's audits are a farce, and one can only conclude that Wal-Mart does not care, and really does not know what its contractors are doing. Wal-Mart then covers this farce by threatening to pull out of any factory violating Wal-Mart's Code of Conduct --that is, in the unlikely event that they are actually exposed by a handful of tiny NGOs searching for the estimated 1,000 hidden contractors Wal-Mart uses in China alone. Of course, Wal-Mart refuses to publicly disclose to the American people even the names and locations of the factories they use in China. They claim this information is a trade secret.
The Workers Fight Back and 800 are Fired. But They Win a Significant Victory.
On November 28, Qin Shi management posted an announcement stating that the 800 workers on the third and forth floors would, as of December 10, have to start purchasing food coupons in order to eat in the factory canteen. But the workers were already penniless and miserably underpaid, and lacked even the money to purchase the food coupons. It was another way of saying that many of the workers would now have to starve.
That was the last straw. A group of workers went on the offensive publicly denouncing the exploitive conditions at the Qin Shi factory including:
In mid-December, Qin Shi management shut down the third and fourth floors, firing all 800 workers.
But the workers refused to leave until they received their back wages and the deposits which they were owed — and they won!
This might not seem like much of a victory, unless one understands the climate of total suppression of all worker rights in China.
A Worker Tries to Call Wal-Mart's Hotline
A worker at the Qin Shi factory tried to call Wal-Mart's human rights complaint phone number: AT&T Direct 1-800-963-8442 (outside the U.S.). The worker could not get through.
Later a letter was sent to Wal-Mart headquarters on Bentonville, Arkansas. It is not known if that got through. At any rate, there has been no response from Wal-Mart.
As of our last contact with the workers in mid-January 2000, Wal-Mart production continued at the Qin Shi factory.
Factory dorm space.
Another example of wages at the Qin Shi Factory, where they sew Kathie Lee handbags for Wal-Mart, is outlined below. At Qin Shi, the regular shift is 12 to 14 hours a day, seven days a week, with one day off per month.
1.) Mr. X, Shandong Province: Started working in the trimming section of the factory in March 1999, earning just 65 cents an hour (5.4 rmb) in August and around $6.02 (50 rmb) in September. This would put Mr. X's average wage for these two months at 77 cents a week—8/10ths of a cent per hour.
2.) Mr. Y, Guangxi Province: Started working in the factory on April 30, 1999 and by October 29, after working 5 months and 29 days—had earned a total of $19.52 (162 rmb). This amounts to 75 cents for a full 91-hour workweek, or 8/10ths of one cent per hour.
3.) Mr. A, Guangxi Province: Started working in the factory May 4, 1999, and after nearly six months of work, on October 30, was paid a total of $42.17 (350 rmb). This would come to $1.62 a week—2 cents an hour.
4.) Mr. B, Guizhou Province: Was able to earn just $39.76 (330 rmb) in five months of work, and received his first pay only after completing three months of work. His pay averaged $1.84 a week—2 cents an hour.
5.) Mr. C, Henan Province: Started working on July 22, 1999, receiving his August wages on September 30, earning $30.24 (251 rmb). This was the highest wage in the group, coming to $6.98 a week—8 cents an hour. However, the following month, he received only partial payment.
6.) Mr. D, Henan Province: Started working on June 18, 1999 and received just 36 cents for the full month of August. This amounts to earnings of 8 cents a week, or 1/10th of a cent (.09 cents) an hour. The following month, Mr. D did much better, earning $14.46 (120 rmb) for September. His 4-cent-an-hour wages, $3.34 for the week—ranked him among the top 30 percent of wage earners in his production team of 80 people.
7.) Mr. E, Henan Province: Started working on June 7, 1999, but by the end of October had earned nothing at all, and in fact owed the factory $12.05 (100 rmb). After 19 weeks of work, Mr. E had actually lost money.
8.) Mr. F, Henan Province: Started working on June 14, 1999 and received $24.14 (200.4 rmb) for July, ranking him 10th in earnings among his 100-member production section. For August, Mr. F received $12.05 (100 rmb) which still ranked him in the top 14 percent of his team. For the two months, Mr. F's average weekly wage was $4.18—5 cents an hour.
The National Labor Committee recently purchased a Disney garment in a Wal-Mart Supercenter in Shenzhen in the south of China. A hangtag on the garment identified the specific name and location of the factory in China where the Disney child's sweatshirt was made.
The question is: If Wal-Mart and Disney will provide the authoritarian government in China with the names and addresses of the factories in China where they are making their goods, then why do they continue to refuse to release this very same information to the American people?
In China, under the Law of Consumers Rights (Chapters 2 and 3), consumers have the right to know the origin of the products they purchase, including supplier information. Of course, like all laws in China, implementation can be weak and spotty. Still, the principle exists and in some cases Wal-Mart and Disney respect the law and make available their suppliers' names and locations.
Why is it that Wal-Mart can trust the Chinese government, but it will not trust the American people?
From the hangtag on the Disney garment we learn that it was sewn at the Midway Daily Products Factory, located in Dongguan City, Guanghou, Guangdong Province, China.
Not that Wal-Mart or Disney would have much to brag about regarding conditions at the Midway factory. During the busy season, workers will be at the factory up to 14 hours a day, seven days a week, from seven a.m. to 10 p.m. earning just 33 cents an hour. Ten workers share a single dorm room. Any attempt to form an independent union will be crushed. If a worker is absent for three days, he or she is fired. Arriving at work 15 minutes late is punished with a fine amounting to more than a full day's wages.
During the slow season, when workers are in a 50-hour weekly schedule, they earn $16,68. Overtime is rewarded with an extra 10-cent-an-hour premium.
See: "Mulan's Sisters/Working for Disney is No Fairy Tale" by Hong Kong Christian Industrial Committee and CAFOD, Hong Kong, April 1999.
Wal-Mart, Nike, Huffy, Timberland, New Balance and many other U.S. companies routinely violate China's labor laws. It must also be noted that the government of China does nothing to implement its own labor laws.
Workers making Keds sneakers.
An 8-hour workday, 5 days a week, a 40 hour work week
Article 36: The state shall practice a working hour system under which laborers shall work no more than eight hours a day and no more than 40 hours a week on average (as of May 1, 1997)
Prohibiting Excessively High Daily Production Quotas
Article 37: In the case of laborers working on the basis of piecework, the employing unit shall rationally fix quotas of work and standards on piecework remunerating in accordance with the working hour system stipulated in article 34 of this law.
No Forced Overtime/Overtime Strictly Limited to Nine Hours a Week/ Legal Work Week Capped at 49 hours.
Article 41: The employing unit may extend working hours due to the requirements of its production or business after consultation with the trade union and laborers, but the extended working hours for a day shall generally not exceed one hour; and such extended hours shall not exceed three hours a day and only under the condition that the health of the laborer is guaranteed. However, the total extension in a month shall not exceed thirty-six hours.
This means that overtime work should never exceed three hours a day, making the longest legal shift permitted 11 hours. It is illegal to work more than 9 overtime hours a week. That caps the longest legal workweek allowed at 49 hours.
All Overtime Work Must Be Paid at a Premium
Article 44: The employment unit shall, according to the following standards, pay laborers remunerations higher than those for normal working hours under any of the following circumstances:
- to pay no less than 150 percent of the normal wages if the extension of working hours is arranged;
- to pay no less than 200 percent of the normal wages if the extended hours are arranged on days of rest and no deferred rest can be taken;
- to pay no less than 300 percent of the normal wage if the extended hours are arranged on statutory holidays.
After one year, all workers are entitled to paid annual vacations
Article 45: Laborers who have kept working for one year and more shall be entitled to an annual vacation with pay.
Detaining Workers Wages, Fines or Mandatory Deposits is Illegal
Article 50: Wages shall be paid monthly to laborers themselves in the form of currency. The wages paid to laborers shall not be deducted or delayed without justification.
Companies Must Join and Pay into Social Security
Article 72: The employing unit and laborers must participate in social insurance and pay social insurance premiums in accordance with the law.
No Discrimination Against Women
Article 12: Laborers shall not be discriminated against in employment, regardless of their ethnic community, race, sex, or religious belief.
The Right To Organize Independent Unions
Article 7: Laborers shall have the right to participate in and organize trade unions in accordance with the law.
Every Worker Has the Right to a Written Work Contract
Article 16-19: A labor contract is the agreement reached between a laborer and an employing unit for the establishment of the labor relationship and the definition of the rights, interests and obligations of each party. A labor contract shall be concluded in written form and contain the following clauses [including]: wages, working conditions, type of work.
Safe and Healthy Working Conditions
Article 52: The employing unit must establish and perfect the system for occupational safety and health, educate laborers on occupational safety and health, prevent accidents in the process of work, and reduce occupational hazards.
Protecting Juvenile Workers
Article 58: The State shall provide female and juvenile workers with special protection. [For example, 16 and 17- year-olds cannot work more than eight hours a day or at night.]
Workers making Keds at Kunshan Sun Hwa factory.
Huffy bikes are being made at Baoan Bicycle Factory I
Zhen Bei Road
Sha Jiang Town
Bu Gang, Shenzhen
(There is a factory, a storehouse and nearby dorms. The Baoan facilities are owned by the Taiwanese Zhenzhen Nan Guan Corporation. Nearby, there is a second smaller Baoan Bicycle Factory #2, with 200 workers. The Baoan factories assemble bicycles from parts supplied from local materials factories or from the Fuda Corporation of Taiwan.)
The major production in the factory is for Huffy Bicycles (other lesser brand names include Germini and Tec). The bikes are exported to the U.S., Canada and Europe.
There are 700 to 800 workers, mostly men, but there are 200 women employees ranging in age from 21 to 24 years old, who are mostly employed in the packing section. As is typical in the export assembly industry, most workers leave after they reach 25 years of age, since they are worn out from the grueling overtime hours.
The vast majority of the workers are migrants from rural provinces such as Hanin (over 1000 miles from Shenzhen), Jiangxi, Hunan and Xianxi.
The factory is broken down into several sections: preparing and assembling parts, the tire section, welding, final assembly and packing.
The "regular" daily work shift is:
Workers report that they are forced to work overtime nearly every day, including Sunday work. On average, the workers may receive every other Sunday off. During particularly large rush orders, some workers said they had to work through to 3:30 in the morning, which means they would be at the factory for a shift of 19½ hours.
During the "regular" shift, the workers would be at the factory 13½ to 15 hours a day, six and seven days a week, while being paid for 11 to 12 ½ hours. On average, they would be at the factory over 93 hours a week, while being paid for just 76 hours.
Refusal to work mandatory overtime hours is illegally punished by a fine of 50 rmb-U.S. $6.02, which amounts to more than two days' wages.
Workers in the assembly and packing section are paid according to a piece rate. They earn between 25 and 34 cents an hour.
A worker putting in a 66-hour workweek would earn $16.68-25 cents an hour. Other workers working 81 hours a week earned $27.80, or 34 cents an hour.
In the painting and welding departments, the workers are paid by the hour and earn approximately 41 cents an hour. For example, someone working a seven-day, 81-hour week would earn $33.36, or 41 cents an hour. This would include a $7.23 U.S. bonus each month for those working in the welding section due to the extremely high temperatures.
- 25 cents an hour
- 41 cents an hour
- $2.78 a day (for an 11-hour shift)
- $4.77 a day (for an 11 ½-hour shift)
- $16.68 for a 6-day, 66-hour week
- $33.36 for a 7-day, 81-hour week
- $72.28 a month
- $144.56 a month
- $867.36 per year
- $1,734.72 per year
No overtime premium is paid to the hourly workers, while those on piece rate only receive an overtime bonus if they reach their production goal.
Workers complain about the extremely long mandatory overtime hours and the lack of even one regular day off each week. They say they "hardly can rest" and at the end of even the standard overtime shift they return to their cramped dorm rooms "exhausted." Many workers have to handle heavy weights all day long, while others are on their feet constantly for 11 to 12 ½ hours a day. Asked if they would like to take mechanical skills or other learning classes at night, the workers responded saying that because of all the overtime hours, they "haven't the time or the energy at night to attend classes, even if they existed."
Illegally, the workers are not provided written work contracts describing factory hours, working conditions and wages, including overtime rates.
There is a strong chemical odor in the spray painting section, and the temperature in the welding area is excessively high.
Workers also complain about strict factory rules and harsh management style. For example, talking during working hours is strictly prohibited. Cutting into a line is punished with a fine of up to $1.20-nearly five hours wages.
The workers said these wages were too low. One worker in the packing section explained that he earned 600 rmb per month, $72.29, and was unable to save or send any money home. Despite all the overtime hours he worked, he was just able to survive, never getting ahead.
At the Baoan Bicycle Factory there is no medical insurance or social security pension. The workers have nothing, not even a primitive factory clinic. If they are sick, they need to go to the local hospital in town. But the workers said it was then very difficult to get permission to be absent from work.
No worker had ever heard of any so-called U.S. Corporate Code of Conduct, and they had no idea what it might be.
The first month's wages are illegally withheld as a deposit, so the workers only receive their first pay during the second month.
The amount of 180 rmb--$21.67, more than a month's wages-is deducted to pay for the worker's temporary residency permit. Another 10 rmb ($1.23 U.S.) is deducted from each worker for their factory ID cards.
No Rights: Fired for Raising a Grievance
As is standard in China, no independent union is allowed at the Baoan Bicycle plant. Any public dissent or raising of a grievance is met with firings.
Toward the end of 1999, delivery workers at the Baoan factory went on a wildcat strike to protest the harsh factory treatment, excessively heavy workloads and long overtime hours and the low wages. All the strikers were fired. Dissent is not permitted.
Living Conditions: 12 to a Dark, Crowded Dorm Room
Twelve workers are crowded into each dorm room, which the workers described as stark and dark. There are no entertainment facilities other than a single TV in the common area. The workers explained that the only "entertainment" available to them was to hang around nearby snack and grocery stores.
The Baoan workers are charged 45 rmb per month ($5.42) for food--two meals a day, which is deducted from their wages along with a small dorm fee of $1.81 U.S. The workers report that the quality of the food is very poor.
Huffy Wages in China are Less than 2 Percent of What They Paid in the U.S.
1,800 U.S. Workers Lose Their Jobs
In the last 17 months, 1,800 Huffy Bicycle workers have lost their jobs as Huffy shut down its last three remaining U.S. plants to outsource its production its production to China, Mexico and Taiwan. The plants closed were in Celina, Ohio; Farmington, Missouri, and southern Mississippi.
The 850 Huffy workers fired in July 1998 from the Celina, Ohio plant were members of the United Steelworkers of America (USWA), who earned $17 an hour--$11 in wages and $6 in benefits. Their last job was to cover an American flag sticker that was on bikes made in China with a new sticker representing the globe. The average wage of the workers in China currently making Huffy bicycles is 33 cents an hour, less than two percent of what the USWA members made.
The Huffy Bicycle Company (which owns the Huffy, Royce Union Bikes and American Sports Design brands as well as producing private brands for other companies) controls 80 percent of the U.S. bicycle market. In 1998, the Huffy Corporation had sales of $584 million and a gross profit of $97.5 million. Huffy Corporation CEO, Don R. Garber, paid himself $771.091 in 1999.
Many of the fired Huffy workers are now working two, or even three, minimum wage jobs to try to make ends meet and not fall behind in mortgage and car payments, school and other expenses for their children.
Unlike Canada and the entire European Community, the United States is the only industrialized country in the world, with the possible exception of Australia, that makes no attempt to regulate bike imports. Due to human rights concerns and anti-dumping regulations, Huffy bikes made in China are not sold in Canada or Europe.
But can you really live on the 25 cent an hour wages that the U.S. contractors pay in China—which come to $15 for a 6-day workweek or $65 a month?
The cost of living in China is, of course, just a fraction of what it is in the U.S., and U.S. companies like Wal-Mart and Nike assure the American people that they pay fair and adequate wages in China, which, they add, are very competitive given the low cost of living there.
But Nike, Wal-Mart and the other U.S. companies are wrong, and they are deliberately misleading the U.S. people. In China, it costs $12.05 a month to provide milk for a six-month-old infant.So how can anyone survive on just $65 a month in wages?The cost for one child's milk amounts to 19 percent of the month's wages.
We gathered information on the cost of living for a lower middle class family in Shenzhen City in southern China—where many of the assembly factories exporting goods to the U.S. are located.
Monthly Expenses in Shenzhen:
Rent for a 3-bedroom Apartment
Utilities (water and electricity)
Food for 3 people
Monthly Cost of raising a 6-month old child
$60.21 - $84.34
Fuel for cooking
(Note: Many people choose to eat out, since it is cheaper than preparing food at home. For example, to prepare lunch at home for three people can cost 25 to 35 rmb--$3.01 to $4.22, or about $1.20 each. A quick, cheap lunch of noodles can be purchased from a vendor for 5 to 10 rmb, as little as 60 cents.)
Workers' dorms in Shenzhen. 9-12 people share one room sleeping in bunk beds.
If you add up even just these common expenses, it already amounts to $350.59, which is more than five times the wage of a typical factory worker who is producing goods for the U.S. companies.
Food is cheap at the local market
10 cents per pound
14 cents per pound
33-55 cents per pound
22-44 cents per pound
A whole chicken
Workers locked in factories in China producing goods for the largest and most profitable U.S. multinational companies are barely able to eke out an existence, living hand to mouth and surviving only because they are crowded into tiny dorm rooms with 12 other people and eating three dismal company meals a day.Dorm accommodations and food expenses are deducted from a worker's gross wage.To share a bunk bed in a crowded dorm room costs about 305 rmb per month, or $36.75 U.S.Meal coupons cost 3 to 9 rmb per day, or between 36 cents and $1.08.For the month, this would average $22.00 U.S.
A factory worker's wages are merely wages of survival and the job leads to a dead end, without advancement or rights.
Workers use the iron bars to dry their clothes.
Visiting the Company Dorm
In Shenzhen City, just as there are rows of factory buildings, so too are there row after row of company dormitories, which are drab concrete buildings seven or eight stories high. With heavy iron grates or bars covering the windows, the dorms resemble prisons.
The workers use the grates to hang up their clothing to dry.
We went into one of the dorms. The building super assumed that we were working for a North American company and were looking for dorm space to house our workers, so we received the grand tour.
It was explained that in a 10-by-20-foot room, it would be easy for us to fit 9 to 12 people. He showed us plenty of such rooms, demonstrating how they had arranged the two-level bunk beds lined up against every inch of wall space, leaving a narrow corridor down the center of the room. The bunk beds had hard wooden surfaces covered with paper thin straw mats. Some workers had been able to secure thin mattresses, while others slept on folded up blankets.
The few possessions the workers owned were hung up inside their tiny bunk space-for example, two shirts hanging from a nail, with some pictures torn from magazines taped on the wall.
The workers hung blankets or sheets or strips of torn plastic over the outside part of their bunks in order to provide a little privacy.
The walls were cinderblock, the floors concrete and the one fluorescent light was affixed to the ceiling. The rooms were damp and drab.
One of the workers with whom we spoke worked in a plastics factory, 16 hours a day he said, from 8:00 a.m. to midnight. He received two Sundays off each month. For working over 90 hours a week, he earned $27.87.
Worker dormitory. Workers hang sheets for privacy.
483,000 U.S. Manufacturing Jobs Lost
In a single year, 1999, we lost 256,000 well paying manufacturing jobs in the United States. And in just the last two years, 1998 and 1999, we lost 483,000 manufacturing jobs. At the beginning of 1998, there were 18,838,000 U.S. workers employed in manufacturing. By the end of 1999, there were just 18,355,000 left.
The single greatest factor contributing to the growing income disparity between the rich from the poor in the U.S., is the loss of well paying, largely union, manufacturing jobs.
For example, General Motors used to be the largest employer in the U.S., with wages of $26 an hour and $20 an hour in benefits. Today, Wal-Mart is the largest private sector employer in the U.S. with 885,000 employees, nearly half of whom qualify for federal assistance under the Food Stamp program.
Citation: Bureau of Labor Statistics 3/10/00
Want ad: "Urgently Wanted: Assembly Workers--many female, assembly of handbags, related experience preferred, will consider good quality workers if not experienced.
The Race to The Bottom -- $9.32 an hour versus 25 cents an hour
One shoe company in China, Pou Yuen, employs over 100,000 workers to assemble Nike, Timberland, Reebok, and New Balance sneakers and shoes for export to the U.S.
Meanwhile"In the United States there are only 24,800 footwear workers left in the entire country from coast to coast. This means that just one Taiwanese-owned shoe conglomerate with multiple factories in China employs almost four times as many footwear workers as are left in the entire U.S.
Between 1990 and 1999, 37,900 footwear workers lost their jobs in the U.S. Employment in the shoe industry was slashed by 60 percent, falling from 62,700 jobs in 1990 to 24,800 today.
The average footwear worker in the U.S. earns $9.32 an hour, while in China workers making Nike, Reebok, Timberland and New Balance are paid approximately 25 cents an hour. So, footwear workers in China are paid just 3 percent of what U.S. workers earn.
Citation: Bureau of Labor Statistics 2/07/00
|Today, Wal-Mart is the largest private sector employer in the U.S. with 885,000 employees, nearly half of whom qualify for federal assistance under the Food Stamp program.|
With heavy iron grates or bars covering the windows, the dorms resemble prisons.
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