DONGGUAN, China -- More than 4,000 workers who churn out athletic
bags in a huge Nike contract factory here breathe ventilated air. They
wear earplugs when pounding rivets. They use bathrooms with running
water. And they read their rights on wall-mounted bulletins.

Gone are the acrid fumes, the scant protective gear and the foul
restrooms evident during past years in plants making Nike products.
Workers flocking from poor villages to booming, smog-choked southeast
China express eagerness for their jobs here, belying the image of
sweatshop exploitation that has plagued the Beaverton-based company for
years.

Yet the Golden Prene factory, which makes about 25,000 bags a day
and generates $80 million in annual revenues, is hardly a carefree
place. Assembly workers toil long hours at repetitive jobs. Many of
them endure separation from families. Their wages are higher than
incomes back on the farm, but meager by U.S. standards at an average of
$5 a day, including overtime. Workers' modest dreams reveal difficult
lives.

"My mother is raising our 3-year-old son back home," says Kuang
Wangxin, a 27-year-old floor supervisor. Twice a year, Kuang rides a
bus eight hours with his wife, an assembly worker, to see their child.
"I hope when he grows up he can start as a manager," Kuang says, "and
not go through what I did."

After Nike's recent disclosure of the names and locations of 705
independent contract factories in its network, a plant visit reveals
significant improvements since the 1990s. The main issue to surface is
one that Nike managers acknowledge as a widespread problem: overtime
hours exceeding maximums set by Nike and local laws.

A few hours in one factory is not enough time to thoroughly assess
working conditions, and the Golden Prene factory may or may not be
representative. Nike still does not release audit scores for individual
plants.

A Nike manager hosting the visit substituted Golden Prene for Bonny
Sports, another Chinese factory requested from the disclosure list. He
said Bonny made products for Bauer Nike Hockey, a subsidiary not yet
fully covered by Nike's compliance standards.

At Golden Prene, randomly selected workers voiced few complaints
during interviews with and without a Nike manager present. But
fundamental issues of fairness linger from the days when activists
dragged Nike into the headlines, contrasting factory workers' wages
with rising sneaker prices and lavish endorsement contracts.

Nike public-relations officers once bristled at suggestions that
their company, dedicated to lofty goals of athletics and achievement,
would exploit workers who, in their view, were gaining economic
opportunities. But today Caitlin Morris, Nike compliance integration
and collaboration director, sticks to a positive message.

"The obligation that Nike has is to make good on the concept that
foreign investment in these countries does raise standards of living,"
Morris says. "My aspiration as someone in Nike's
corporate-responsibility department is to make a positive contribution
to that."

Longtime critics acknowledge progress made by Nike managers, adding
that it occurred only due to public pressure. "What they've eliminated
is super exploitation, and now they're just down to plain
exploitation," says Medea Benjamin, founding director of Global
Exchange, a San Francisco human rights organization.

Benjamin says Nike, which reported record profits last year, could
afford better wages for its contract workers. She says the company
should shun China and other nations that ban unions; Nike managers
maintain they can do more to support freedom of association by engaging
with China.

Jeff Ballinger, director of Press for Change, a tiny but vocal
activist organization in Toronto, says Nike executives should empower
workers instead of imposing conveniently crafted initiatives. "They're
skating by with some corporate social-responsibility template that's
been hammered out by expensive consultants," Ballinger says.

Ballinger and Benjamin grant that consumer outrage has waned.
Instead of actively targeting Nike, Global Exchange is pushing U.S.
city governments to buy "sweatshop-free" products.

Contract payroll increases

Nike's contract work force, meanwhile, has grown to 653,000 in more
than 50 countries. One of those workers, Lu Ling, a 26-year-old Golden
Prene stitching operator, left her distant rural village eight years
ago. She works a standard 60-hour six-day week.

As the eldest child, the middle-school dropout sends money home from
her $145 monthly earnings so that her siblings can attend school.
Hunched over a sewing machine, she races to exceed hourly production
targets so her team can earn more. "Someday," Lu says, "I want to have
my own bag factory."

Lu and other workers are so pressed that they don't glance up when
visitors come by. They receive health benefits required by Chinese law.
They earn enough to buy bicycles -- some workers buy motor scooters --
but not cars.

The Golden Prene factory, owned by the Guang Der Corp., comprises
four hulking manufacturing buildings. The 15-year-old complex is
located in the gritty Hua Nan Industrial Zone, one of the many huge new
manufacturing districts that sprawl across a mainland Chinese region
near Hong Kong.

Factory manager Charles Shang, a former Taiwanese army major who
served in a military boot-making plant, says the decision to begin
making Nike goods about seven years ago forced changes. Before then, he
says, employees worked from 7:30 a.m. until 11 p.m. with two one-hour
breaks -- every day of the month.

In those days, about 30 percent of the workers failed to return
after Chinese New Year holidays. But now, Shang says, annual turnover
is under 10 percent.

Nike accounts for between 55 percent and 65 percent of the plant's
production. The factory also makes bags for Dakine Hawaii Inc., the
Hood River sports-accessory company, and for other brands. Adidas moved
out several months ago.

Golden Prene has followed Nike's transition away from oil-based
solvents and other hazardous chemicals to water-based materials. Plant
managers have grown accustomed to Nike audits, which Shang credits with
helping attract customers.

"After they heard we were doing business with Nike," Shang says, "they understood we were qualified."

About 30 Nike employees work in offices inside the Golden Prene
plant, with responsibilities ranging from conducting audits to readying
Beaverton-designed products for manufacture.

Government, family connections

Golden Prene and other Guangdong-province manufacturers have faced a
tightening labor market recently, as workers favor other industrial
regions. Instead of raising wages, as some factories have done, the
plant works through rural provincial officials, who steer workers its
way.

Village and family connections also help. Wan Tianyan, a 21-year-old
riveter who projects a macho air, followed his two older sisters to the
plant from the family rice paddy. He's saving $97 a month so that he
can get married by 25 and give his parents what they want most: a
grandson.

"It's not easy here," Wan says.

• 17 Science Applications International Corporation
• 104 Globalization
• 184 Labor
• 204 Manufacturing