CHINA: China's besieged factories: Activists aim to expose unscrupulous labor practices to shame companies

Lei Huang could be a poster child for China's laboring classes.

For each 60-hour week he works on an assembly line for Foxconn, a manufacturer of electronics and computer parts in this south China manufacturing hub, he earns $32 and a bunk in a dormitory room with 19 other laborers.

At the factory, managers forbid workers from talking or resting outside of two 10-minute breaks, he said.

Labor rights groups have long documented low pay and strict management in Chinese factories. But as Western firms increasingly move manufacturing to China to cut costs and raise profits, activists are adopting a strategy of publicizing conditions at globally recognized companies including Foxconn, which supplies dozens of international brands, including Apple Inc., from its Shenzhen facilities.

The goal is to pressure management to improve conditions.

A spokesman for Foxconn, the trade name of the Taiwanese-owned firm Hon Hai Precision Industry Co., was not available for comment on this article.

Last month, China Labor Watch, a New York-based nonprofit watchdog group, issued a report stating that several Chinese suppliers to Wal-Mart routinely fail to pay wages and provide health insurance as required by Chinese law.

The survey of 16 Wal-Mart suppliers found that some pay as little as half the minimum daily wage, provide no health insurance or require mandatory overtime. One company provided only one bathroom for its 2,000 employees, the group said.

The report prompted Wal-Mart to investigate the factories, and auditors found instances of underage workers and violations of overtime laws, though not all of the companies mentioned in the report were "direct Wal-Mart suppliers," said Jonathan Dong, a Wal-Mart spokesman.

He explained that some products sold at Wal-Mart are purchased from distributors, complicating efforts to monitor labor conditions.

"The suppliers [with infractions] were put on our warning list and there will be a rigorous auditing process to follow up," Dong said, adding that Wal-Mart had recently increased the number of unannounced audits it conducts worldwide.

Low wages common

Wages below government-mandated minimums - which are set by local officials and range from $45 to $101 a month - are common in Chinese factories, experts said. Other problems are forced overtime and poor working conditions. A recent report by Verite, a Massachusetts-based nonprofit organization working to improve labor practices worldwide, found that "systemic problems in payment practices in Chinese export factories consistently rob workers of at least 15 percent of their pay."

Activists hope the growing focus on "shaming" well-known companies could have a significant impact on labor standards, said Li Qiang, director of China Labor Watch.

China is the world's largest exporter and the largest single source of American imports. In 2005, the year for which the most recent available data are available, factories in China shipped $163 billion worth of goods to the United States, 30 percent more than in 2004.

Tuesday, the Commerce Department reported that the U.S. has a $232.5 billion trade deficit with China, the highest ever recorded with a single country.

Because the Chinese government "is most concerned about economic growth" and has limited resources to investigate factories, "there is growing recognition among labor rights activists that the best way to make gains [in China's labor standards] is by publicly shaming well-known corporations," Li said.

Conditions chronicled

That lesson was reinforced last summer after a series of news articles chronicled labor conditions at the Shenzhen factory run by Foxconn.

In June, London's Mail on Sunday newspaper ran a story documenting forced overtime and use of corporal punishment, including having workers stand still for long periods and do push-ups in the factory that builds iPods for Apple.

The story prompted a series of Chinese journalists to investigate conditions at the factory. One Beijing Times story reported that workers averaged 80 hours of overtime each month, far more than labor laws permit.

Apple responded quickly, sending a team of inspectors to the factory to interview workers and study personnel records.

In August it said that while Foxconn complied with its supplier code of conduct in "the majority of areas audited," management had committed some violations, including disciplining workers by making them stand at attention, a practice Apple said it would ask Foxconn to discontinue.

While Apple's auditors found that Foxconn paid at least the minimum wage, the audit report stated that "the pay structure was unnecessarily complex" and that workers labored more than six consecutive days 25 percent of the time. Chinese law requires that workers must have at least one day off each week.

To improve what Apple considered substandard dormitories, Foxconn committed to increasing "total living space" by 46 percent, the report stated, adding that Apple had hired Verite to monitor compliance.

The reprimand and Foxconn's commitment to improve practices thrilled activists.

"The Foxconn case was an example of how publicity can have a significant impact on labor practices," said Tai Ngai Lung, program coordinator for the Hong Kong-based group Students and Scholars Against Corporate Misbehavior.

"The lesson is that we have to make abuses very public."

Documenting labor abuses, is difficult, and many Chinese companies are adept at hiding problems, experts said.

Many managers keep double sets of books - one to track actual accounting and one to show auditors - and coach workers how to respond to outsiders asking about the factory.

During a recent audit in eastern China, Verite investigators found a cheat sheet for employees with the question, "Does the company use corporal punishment?"

The prepared answer was, "Never."

Journalists keep out

Other companies, including Western firms, prohibit journalists from facilities. Apple denied several requests to visit Foxconn facilities producing iPods while a Foxconn spokesman said that without Apple's permission, journalists could not visit "or we could be sued."

A sign outside a section of Foxconn's Shenzhen campus stated that no recording devices are allowed on the grounds.

Anecdotal evidence, however, suggests that Foxconn, which according to Chinese media reports employs 200,000 workers, breaks Chinese labor laws.

Eighteen-year-old Huang Duomei, who had moved to the Shenzhen district of Longhua from China's eastern Anhui province last summer, said some workers at the factory worked "for a month straight because they want to earn more overtime pay."

According to local and national laws, the assembly line worker Lei Huang's weekly salary should be at least $38, slightly more than he reported earning, said a local labor bureau official, who gave only her surname, Li.

But determining whether laws are broken in China is complicated because companies can deduct charges for room and board before paying workers, she added.

Less difficult to document is China's poor workplace safety. According to the government office in charge of work safety, 14,382 people died in "industrial accidents" in China in 2006.

Workplace safety is particularly poor in Shenzhen, experts said. Seven died an underwear factory fire last month after sponge used in bras "apparently blocked the only exit and emitted a poisonous smoke," the China Daily reported.

But Chinese workers continue to seek factory jobs because they pay more than farming.

"If people know that a computer or toy was built in a sweatshop, they are less likely to buy it," China Labor Rights director Li said.

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