Alpine Car Stereos 

Alpine stereos are produced at: 

Qingdoa Daesung Electronic Corp. Ltd.
Xia Wang Bu Licang Qu Qingdao City
Shandong Province, China

Top of the line Alpine car stereos, some costing up to $1,300 each, are made in China by young women who are paid 31 cents an hour and sit hunched over, staring into microscopes 9½ hours a day, six days a week, soldering the fine pieces of the stereo.  Above the women is an electronic scoreboard which monitors their progress in meeting their production quota of 720 stereos a day.

Not just apparel and sneakers. There are high tech sweatshops. 

The Daesung Electronic Corporation moved to the city of Qingdao from South Korea in 1991, becoming just one of 3,000 South Korean investments currently in the city of Qingdao, most of them export assembly factories.  There are also 1,000 U.S. investments in Qingdao, which has 55 industrial parks within its city limits.  Every month 300 ships leave Qingdao's port, carrying a total of $3.8 billion of cargo every year.

There are 700 production workers at the Daesung factory, almost all of them young women from the surrounding area.  They are joined by 100 managers and research staff who are from South Korea.

Daesung produces high tech electronic components such as motors, amplifiers, mobile pagers, beepers and car stereos.  Most of their work is for the auto industry.

When we visited the factory in July 1999, they were making Alpine car stereos which were exported to the U.S. through the port of Los Angeles.  Their destination was the Big Three and other automakers and suppliers.

According to factory management, there is a 9½ hour daily shift, from 8:00 a.m. to 5:30 p.m., six days a week, with an hour off for lunch.  We could not independently confirm this with the workers, but if management was accurate, the workers would be in the factory 57 hours a week, while being paid for 51 hours.

Management said that the base, or starting, wage was 360 rmb--$43.31 a month.  This would come to 20 to 22 cents an hour, depending upon whether they worked a 45 or 51-hour workweek.

The average wage, the company said, was 500 rmb per month, $60.24 U.S.

Average wage: (According to the company)           

• 27 to 31 cents an hour
• $2.31 a day (8.5 hours)
• $13.90 a week (for a 6-day, 45-51 hour workweek)
• $60.24 a month
• $722.89 a year

Daesung factory managers said that the fully loaded wage for a skilled worker-including all mandated social security benefits, transportation stipends, bonuses, etc.-came to $100 U.S. a month, $23.08 a week.  We were unable to verify any of these wage figures with the workers.

The Daesung factory declared a profit of $400,000 in 1998, which was sent back to the parent company, which continues to operate two factories in South Korea.

A Walk Though the Factory:

Daesung Electonics is a high tech manufacturing company built with an initial investment of seven million dollars.  The factory was clean, air conditioned and full of the latest computerized equipment.  The young women workers were dressed in long white uniforms with matching white caps.

 Alpine car stereos being made for 31 cents an hour. 

They sat concentrating, bent over, staring into microscopes as they soldered the fine pieces of the Alpine car stereos, which moved along a U-shaped assembly line.  No one looked up;  no one talked;  no one smiled.  They worked very fast, and one could not help but think how exhausted these women must feel at the end of their shift after having stared into a microscope all day.  Above the women, an electronic scoreboard posted their daily production quota of 720 Alpine car stereos, and monitored the workers' progress, comparing how many stereos they had completed up to that minute with how many they should have made in order to reach their quota by the end of the day.

The Daesung Electronics Corporation Came to China to Escape Unions

Unlike their North American counterparts, the South Korean factory managers were very direct and pulled no punches as to why they had relocated to China.  Daesung senior managers told us they moved to China to escape the labor movement and the high wages in South Korea, where the minimum wage is $1.60 an hour and the average manufacturing wage about $2.49 an hour.

Daesung management spoke very glowingly of the All China Trade Union-ACTU-that is the official government-run union.  The said to us:  "You have to understand, the ACTU does not bargain for rights or wages.  This union is nothing like the unions in South Korea, or in the U.S.  The ACTU represents both management and labor, and really acts as a channel of communication so we know what the workers are thinking."

In fact, the government-controlled All China Trade Union, functions as one giant company or yellow union, which actively collaborates with and provides cover for the authoritarian regime's total denial of internationally recognized worker rights in China.  It is another burden the workers have to deal with, another nail in the trap.

Daesung management was full of the same complaints we heard in numerous other assembly factories: that in China, there were no clear laws; that regulations and standards varied from one local government office to another; that there was no way to know how the local bureaucrats would implement these shifting regulations, so in many cases you had to rely upon bribes, which made it essential to make friends with local government authorities and the police.

They complained that port charges in China-the ports are owned and operated by the government-are just as expensive as in South Korea.  Further, their Social Security payments for workers' health, unemployment and pension benefits were becoming too high, and many investors were trying to avoid these expenses.

Asked if there was a middle class in China and a possible market for their products, they responded "No, none, and there never will be under this government."

Still, despite all the problems, they said that Korean companies are racing to get into China before things change.  So it must be a good deal for them after all.

New Balance in China

Freetrend Factory
Shenzhen
Guangdong Province, China

We know of five factories in Southern China where New Balance sneakers are currently being produced. What follows is a report on four of those factories.

Freetrend is a Taiwanese-owned company operating a six-plant compound in Shenzhen, with two additional factories currently under construction. Its major production is for New Balance. According to several warehouse workers, it is common for Freetrend to also subcontract work to the Lizhan Footwear Factory, which is another major New Balance supplier. Materials for the New Balance sports shoes come from Taiwan.

There are more than 10,000 workers in these six factories, and as is typical in the assembly industry, the vast majority are young women aged 18 to 25 who have migrated to Shenzhen from more agrarian provinces.At 25 years of age the workers are fired.Though there is no written rule, the workers know that the company will not tolerate pregnancies.One woman, an assistant, was illegally fired one week before the researchers arrived because she was pregnant.

Summary — New Balance Made at Freetrend

• Workers at the factory 14 to 15½ hours a day, from 7:30 a.m. to 9:30 p.m., six days a week.
• 18 cents an hour base wage.Average wage is 25 cents an hour, or $2.25 for a 10 hour day.
• 12 cents premium for working overtime hours.
• No freedom of movement.Workers need prior permission to leave the factory during their lunch break. Factory and dorms are locked down at 9:00 p.m. every night, after which no one can enter or leave. Workers need permission to use the toilet and the time away from their workstation is monitored.
• Treated like children, workers must memorize factory quality control regulations.Failure to recite them from memorywill be punished with having to write out the regulations 100 times.
• Harsh rules and management.Section chiefs are very strict and scream at the women, who are frequently brought to tears. One woman stated: “When you are in the workplace you are scolded for just laughing or standing up.” There is constant pressure to produce.
• Workers are fined for taking sick days.
• Illegal deductions.To get a job at Freetrend, workers must pay a 50 rmb deposit and then the first month wages are withheld by the company.
• 12 workers share one small dorm room.
• No independent union will be permitted, nor are workers allowed to raise grievances.

Hours: At the Factory 14 to 15½ hours a Day, Six Days a Week, From 7:30 a.m. to 9:30 p.m. or 11:00 p.m.

The standard shift four days a week is from 7:30 a.m. to 9:30 p.m. However in June, some women reported working until 11:00 p.m.

The standard shift: (Monday, Tuesday, Thursday and Friday)

• 7:30 a.m. – 11:30 a.m.
  (11:30 a.m. – 1:30 p.m., lunch break)
• 1:30 – 6:10 p.m.
  (6:10 p.m. – 7:30 p.m., supper break)
• 7:30 p.m. – 9:30 p.m.

So the workers are at the factory 14 hours a day while being paid for only 10 hours and 40 minutes.When they work until 11:00 p.m. they are at the factory 15½ hours a day.

On Wednesdays and Saturdays the shift is shorter, from 7:30 to 6:10 p.m., so the workers are at the factory for 10 hours and 40 minutes.

• 7:30 a.m. – 11:30 a.m.
  (11:30 a.m. – 1:30 p.m., lunch break)
• 1:30 – 6:10 p.m.

The workers are typically at the factory six days a week for a total of 77 hours and 40 minutes, while being paid for just 60 hours of work.

In the molding section there is also a second grueling night shift stretching 12 hours from 7:30 p.m. to 7:30 a.m., with just one half hour break from 1:30 a.m. to 2:00 a.m.These workers are at the factory 72 hours a week while being paid for only 69 hours.

Wages: 18 Cents an Hour Base Wage; Average Wage is 25 to 30 cents an Hour, or $2.55 to $3.01 for a 10 Hour Day.

The base wage at Freetrend is 18 cents an hour. However with all overtime hours, incentives and bonuses added most workers make more, averaging between 25 and 30 cents an hour.

In the stitching, cutting and hand work sections, the workers are paid according to a piece rate system. The workers said they earned between 500 rmb and 600 rmb each month, or between $60.24 and $72.29 U.S. This would mean their hourly wage ranges from 23 cents to 28 cents.

Average Piece Rate Wage (including all overtime hours, bonuses and production incentives):

• 25 cents an hour
• $2.55 a day (for a 10 hour day)
• $15.29 a week (for a 60 hour, 6 day work week)
• $66.27 a month
• $795.18 a year

In the molding, quality control and warehouse sections the workers are paid hourly wages which range from 28 to 32 cents an hour, or from $16.68 to $19.46 a week.

Average Hourly Wage

• 30 cents an hour
• $3.01 a day (for a 10 hour day)
• $8.07 a week (for a 60 hour, 6 day work week)
• $78.31 a month
• $939.76 a year

Overtime hours are paid at a rate of up to 36 cents an hour. Also, workers who meet their daily production goal will receive a 72 cent bonus each day.

Working Conditions at Freetrend / New Balance

No freedom of movement. Factories and dorms locked down at 9:00 p.m. every night. Fines for sick days. Section chiefs scream at the women to work faster. 12 workers to a single dorm room. No independent union allowed.

Illegal Deposits, Wages Withheld

To prevent or discourage new employees from seeking better conditions and wages elsewhere, Freetrend charges each worker a 50 rmb deposit ($6.02) upon entering the factory and then illegally withhold their first month’s wages (about $66 U.S.) neither of which will be returned if the worker leaves the factory before their first year is out. The workers only receive their first pay at the end of the second month.

No Freedom of Movement

Workers are not permitted to leave the factory compound to walk outside during their lunch break without prior permission from factory managers. Then every night at 9:00 p.m., the factories and dorms are locked down, after which no one is allowed to enter or leave.

New factory construction at Freetrend. In China, construction workers are paid 18 cnets an hour and work 12-hour shifts, seven days a week. 

Treated Like Children. Harsh Factory Rules and Treatment. Fined for Sick Days.

Workers must memorize their supervisors and managers’ names and the factory’s regulations regarding quality control. Failure to be able to recite the regulations in full, upon demand, will be punished by having the worker write out each regulation 100 times.

There are strict factory rules at Freetrend backed up by a system of demerits and fines. Workers who forget to wear their factory I.D. cards, are out of proper uniform, or fail to sign the registry each morning will be fined. Workers are fined 2 rmb for taking a sick day. Workers who lose their I.D. card will be fined 100 rmb, or nearly five day’s wages.

To use the bathroom, a worker must first gain the permission of their line supervisor and receive an “off-duty permit”, without which they cannot leave their work station. The length of their bathroom visit is monitored.

The workers say there is a lot pressure on them to work faster, to meet production goals, and that the sections leaders are very strict, screaming at and scolding the young women, leaving many of them in tears.

One worker commented that there were more regulations in the factory then there had been in junior high school: “When you are in the workplace, you are scolded for just laughing or standing up.”

Heavy Dust Powder in the Air

Workers in the stitching section complain about a heavy dust-like powder which fills the air they must breath. Despite the lack of proper ventilation they are not provided safety masks.

No Social Security, Health Insurance or Pension Plan

Illegally, Freetrend has not joined and inscribed the workers into any social security health or pension plan, to which both the company and the workers would have to contribute. As China privatizes its health and pension system, the Freetrend workers are left with no long range protections whatsoever.

There is a factory clinic at Freetrend, but the workers must pay for all medicine.

No Paid Vacation

After a year’s service, the law entitles each worker to a paid annual vacation. Freetrend permits only unpaid leaves.

12 Workers to a Dorm Room

Workers are housed 12 people to a small dorm room. There is one toilet on each floor. The workers are charged 70 rmb ($8.43) every month for lodging and food.

Spending $3.00 a Week On Yourself

One young woman explained that she attempts to send $48 U.S. a month home to her family in Hunan, but to do so she can only spend about $3.00 U.S. a week on herself. So, for example, on her day off, rather than go into town which would cost money, she instead stays in the industrial zone and just takes a walk.

No Union at Freetrend

Most workers have no idea what a union is. They have no experience with independent organizing, since anyone attempting to form a real union would be immediately arrested and imprisoned for 5 to 8 years without a trial.

New Balance

Lizhan Footwear Factory
Dongguan City
Guangdong Province, China

Lizhan Footwear is a Taiwanese-owned sneaker and shoe manufacturer with three plants in Dongguan City in the south of China. Lizhan Factory II produces for New Balance, while Factory I produces K-Swiss. Factory III makes various brands, including ones for local consumption.

There are approximately 3,500 workers in Lizhan Factory II assembling New Balance sneakers. The vast majority of the workers are young women, 18 to 25 years of age, who have migrated to Dongguan City from rural agarian provinces. There appear to be several 15 year old minors illegally employed at the factory. The workers report that the company does not accept married women.

Summary — New Balance Made in the Lizhan Footwear Factory:

• Workers at the factory 11 to 14 hours a day, six and seven days a week.
• In June 1999, the sole section was working up to 84 hours a week.
• The base wage is less than 18 cents an hour, or $1.46 for an 8½ hour day, including all overtime bonuses and incentives.Hourly wages range from 24 to 34 cents an hour.
• Workers need permission to even leave the factory grounds and the factory and dorms are locked down at 9:00 p.m.Anyone returning after 9:00 p.m. will be locked out for the night.
• 20 workers share a crowded dorm room, sleeping in triple-level bunk beds.
• The young workers are threatened, coached and told to lie to any U.S. company auditors. Whenever asked, they are instructed to say they are working just 8 hours a day.
• At 25 years of age the workers are fired as the company feels they are “used up” from the grinding schedule.
• When a production line fails to complete its daily production quota, the workers must remain working overtime, with no overtime bonus until they reach the goal the company sets. Sometimes wages are deducted as a punishment for not reaching their quota.
• Through illegal wage deductions and deposits, the factory withholds up to five weeks of the workers’ wages.
• When the workers in the polishing section could no longer stand the long hours and low wages and spontaneously went out on strike, they were all fired.The company will not accept an independent union, strikers, or worker grievances.When asked why the fired workers did not approach the local government’s labor bureau for help, the leader of the strike responded, “It is useless to approach the Labor Bureau even if there are deaths in the factory.”
• The workers feel trapped and helpless.There are no promotions.

Hours: At the Factory 11 to 14 Hours a Day, Six and Seven Days a Week

The “regular” shift is from 7:30 a.m. to 6:30 p.m., six days a week, though in June of 1999 workers in the sole department reported working from 7:30 a.m. to 8:30 or 9:30 p.m. In these giant factories hours can vary from section to section, as do wages.

The “regular” shift would be:

• (7:00 a.m. – 7:30 a.m., exercise period which is voluntary)
• 7:30 a.m. - 12:00 noon
  (12:00 noon – 1:30 p.m., lunch break)
• 1:30 p.m. – 6:30 p.m.

There is an hour and a half break for lunch though most of the workers must rush to finish their lunch in 15 minutes in order to make room for others, as the canteen area is too small to accommodate everyone.

So the workers are at the factory 11 or 11½ hours a day, six days a week, or for 69 hours while being paid for only 9½ hours a day, or a 57 hour work week.

However, if an assembly line fails to reach its daily production quota in the 9½ hour shift, the workers are required to remain – without receiving any overtime bonus – for however many hours it may take to reach the goal the company sets. Not only are they not paid any overtime premium, but failure to reach the production goal may also be punished through wage deductions.

In June, 1999 workers in the sole section reported working 11 to 12 hours a day, sometimes seven days a week. Their shift was:

• (7:00 a.m. – 7:30 a.m. exercise period which is voluntary)
• 7:30 a.m. – 12:00 noon
  (12:00 noon – 1:30 p.m., lunch break)
• 1:30 p.m. – 6:30 p.m.
  (6:30 p.m. to 7:00 p.m., supper break)
• 7:00 p.m. to 8:30 or 9:30 p.m.

Working this shift the women would be at the factory 14½ hours a day, after which they would be locked in the dorms.

In the cutting and sole section of the factory there are two shifts with a second grueling 11½ hour night shift from 7:30 p.m. to 7:00 a.m., which has recently been cut back by management for fear of exposure and the reaction of North American consumers.

The workers receive one day off a week.However when there are large rush orders, Sunday work is mandatory.

 Lizhan Factory/New Balance Want ad

"Recruitment Notice: In order to fulfill production demands, our factory must now recruit a large number of workers and supervisors in the cutting, stitching and shaping sections. Requirements:
1) Female only
2) Age 18-25
3) Healthy
Skilled ones will be preferred.
Please bring necessary documents to enroll and join the interviews!" 

Wages: 18 cents an hour base wage.  With overtime and incentives added, wages range from 24 to 34 cents an hour or $13.90 to $19.46 for a 6 day, 57 hour workweek.

The basic wage is 18 cents an hour.

However the majority of workers are paid by piece rate, according to how many operations they complete.In the sole section of the Lizhan Factory the workers report earning on average between 500 rmb to 600 rmb per month, or $60.24 to $72.29.This would amount to weekly wages of $13.90 to $16.68, or 24 cents to 29 cents an hour, for a six day, 57 hour workweek.

Low piece rate (all incentives included)

• 24 cents an hour
• $2.28 a day (for a 9½ hour shift)
• $13.90 a week (for a 57 hour, 6 day week)
• $60.24 month
• $722.87 a year

In the molding section wages are a little higher, where skilled workers earn from 600 rmb to 700 rmb per month, or $72.29 to $84.34. For a six day, 57 hour workweek, a molder’s pay would amount to between $16.68 and $19.46, or 29 cents to 34 cents an hour.

High piece rate (all incentives included)

• 34 cents an hour
• $3.23 a day (for a 9½hour shift)
• $19.46 week (for a 6 day, 57 hour week)
• $84.34 a month
• $1,012.50 year

Mandatory overtime work on Sundays is compensated at 36 cents an hour, or twice the base wage of 18 cents.

In a practice which appears to be fairly standard in the shoe industry in China, as an incentive to keep the workers at the factory, after the first three months their wages are raised $1.20 each month, or 30 cents a week. For the 57-hour workweek at Lizhan, this would amount to ½ cent an hour increase in pay each month for the workers making New Balance.

The workers are charged a small fee each month for the use of toilet paper. Also anyone late for her shift will be fined approximately three hours wages. Those who lose their factory I.D. cards will be fined $2.20, or two days wages.

Lizhan factory workers in uniforms cue up to enter the factory. There is an SA8000 banner on the factory, which reads, "Fully implement SA8000 Accountability Management System." 

Another constant complaint is that the workers have no idea how their salary is calculated by the company since they do not understand the specific rates for the various categories of work. Nor can they understand all the deductions or how their incentives are set. In fact, it appears that the line supervisors have the control to arbitrarily distribute each worker’s incentive. Also, the workers cannot understand why their wages vary so much from month to month. For example, in just a two month period one worker’s wages fell from $19.46 a week, or 34 cents an hour, to $11.12 a week or 20 cents an hour, for the exact same 57 hours of work.

Assistant supervisors earn about 1000 rmb per month, or $120.48, which is about twice what the production workers earn.

Working Conditions: New Balance/Lizhan Footwear Factory

Illegal Deposits and Wage Deductions:

To get a job at the Lizhan Footwear factory making New Balance sneakers, workers are charged various deposits and wage deductions totaling a full five-weeks of wages.

First, as migrant workers they are charged more than 200 rmb—over $24.00 U.S., or nearly a week and a half’s wages – for temporary residency and work permits. (The Chinese people are not free to move around their country. The government controls population movement by requiring temporary residency and work permits for anyone leaving their home to find work in another province.)

To keep new employees from leaving to find work in another factory which may have better conditions or pay more, Lizhan Footwear management illegally requires the workers to pay a deposit of 100 rmb, ($12.05 U.S.) before they can begin working at the factory. Next, the company withholds the worker’s first month wages, which would amount to about $60. Only at the end of the second month will a worker receive their first paycheck. If anyone leaves the factory before their first year is out, their deposit will not be returned. The withheld wages will not be returned if a worker leaves the factory without providing sufficient advance notice.

No Legal Work Contract

None of the workers at the Lizhan Footwear Factory were provided with a written work contract, which is legally required, and must clearly spell out wages, hours, and working conditions.

No Paid Vacations

Also illegally, the workers are not provided an annual paid holiday, but can only take an unpaid leave.

No Social Security Insurance

Once again, in violation of China’s labor law (Article 72: “The employing unit and laborers must participate in social insurance and pay social insurance premiums in accordance with the law.”), the workers at the Lizhan Factory were not inscribed in any social security health insurance or pension plan, which is mandatory for the company to participate in.

Denial of Freedom of Movement

During the one and a half hour lunch break, no one is permitted outside the factory compound without prior permission from their supervisors. Also the factory/dorm compound is locked down at 9:00 p.m. each night and no one is allowed in or out after that. Workers who cannot report back by 9:00 p.m. will be locked out for the night.

The workers complain that even their freedom of movement is strictly constrained, and it is sad for them since it makes it difficult to visit with their friends in other factories who are from the same province and hometown as they are.

Twenty-eight People to Dorm Room

Twenty-eight workers are crowded into each dorm room, sleeping in triple level bunk beds, which are stacked up against the walls.

Workers Told to Lie to Inspectors

Lizhan management threatens and coaches the workers to lie about factory conditions and the hours they work should any New Balance auditors approach them. The workers are instructed to say they are working just eight hours a day, and not the 9½ to 12 hours they actually work.

New Balance sneakers made in China. 

Fired For Raising a Grievance – Busting a Strike

In February 1999, frustration in the polishing section of the factory spilled over. The workers went on a spontaneous strike to protest piece rates so low that even after 10 hours of work, six and seven days a week, they earned almost nothing. The strike was immediately broken and the factory fired 30 of the most active workers who participated.There was a second strike in the molding section, which was also crushed.

After firing the workers, management let it be known: “that the workers should behave, otherwise they too would be fired. Strikes are not permitted in the factory, and anyone who tries will be fired.” The manager went on to explain to the workers how easy it is to recruit new staff to replace those fired.

No independent union is allowed in this, or any other factory in China. Workers daring to raise a grievance will be fired.

One of the fired strike leaders was asked why they did not run to the local government’s labor bureau for help in protecting the worker’s legal rights. He responded: “It’s useless to approach the Labor Bureau even if there are deaths in the factory.”

No Chance for Advancement

The workers told the researchers: “Once your are employed as a worker you will always be a worker." There is no possibility to advance.It is very frustrating and the workers feel in a trap, going nowhere.

Most of the male workers said it was impossible on their little wages to save money or send money home, explaining that their wages just barely met their own living expenses, which included food to supplement their modest dorm meals, cigarettes and entertainment.

Some of the young women however, through great personal sacrifice tried to send home as much as $40 a month. Locked in the factory and dorm, working at least six days a week, they had little time or opportunity to spend money.The women try to save money so their young brothers back home can go to school.

With an estimated 250 million redundant agricultural workers in China's rural provinces, many seek factory work in the south. 

New Balance

Pou Yuen Factory
Zhongshan
Guangdong Province
China

As was mentioned earlier, the Zhongshan Branch of the Pou Yuen Shoe conglomerate is made up of six or seven factories employing 37,000 workers. Nearby Pou Yuen factories I and II is located a separate unnumbered plant where New Balance sneakers are being produced. Pou Yuen factories I and II produce for Reebok.The Pou Yuen conglomerate promotes itself as the “model” factory in China.

There are approximately 4,000 workers, the vast majority of them single women between 18 and 26 years old, though there are some 15 year olds there, who are employed illegally.Almost all the workers are migrants from rural provinces.Export assembly factories in China rarely if ever hire anyone over 25 years of age. By the time the factory workers reach 25, they are worn out and exhausted from all the grueling overtime hours, and are replaced by younger women.

Summary: New Balance made at Pou Yen

• At the factory 15 hours a day during the busy season, from 7:00 a.m. to 10:00 p.m., seven days a week
• One or two days off a month
• Low wage of 14 cents an hour; average wage of 19 cents
• $11.12 for a 78-hour workweek
• Compulsory exercise from 7:00 to 7:30 a.m.
• 12 workers to a dorm room
• Heavy chemical odor in the sole department; workers complain of skin rashes
• No union
• Never heard of New Balance Code of Conduct
• The women report that “the work is hard and backbreaking” and that their lives are “meaningless”
• Told how much the New Balance sneakers sell for in the US., the workers screamed, “It is unfair!”

New Balance factory at Pou Yen. 

Hours: At the Factory from 7 a.m. to 10 p.m., Seven days a Week

The workday at the Pou Yuen plant starts at 7:00 a.m. with a half-hour of compulsory exercise.

The standard shift is:

• (7:00 a.m. -7:30 a.m., compulsory exercise)
• 7:30 a.m. - 11:30 a.m.
  (11:30 a.m. - 1:00 p.m., lunch break)
• 1:00 p.m. - 5:30 p.m.
  (5:30 p.m. - 6:00 p.m., supper break)
• 6:00 p.m. – 9 or 10:00 p.m.

The workers interviewed explained that overtime hours from 6:00 to 9:00 or 10:00 p.m. were very common, even a daily occurrence. The workers reported that they received one or two days off a month. No one ever receives more than four days off in a month, and that much only during slack periods.

So the workers are in the factory for up to 15 hours a day, seven days a week. Under this schedule they would be at the factory 105 hours a week.But on average, they are at the factory 14½ hours a day, while paid for 12 hours; 6½ days a week, totaling 94½ hours, while being paid for 78 of those hours.

However, hours and wages do vary from department to department in the same factory, which is huge, employing several thousand people.

Some workers in the sole section reported that they were working from 7:00 a.m. to 7:30 p.m. with 1½ hours off for lunch.So they were working 10½ hours a day, 6 or 7 days a week.

Cheating on Overtime Hours – Twisting the Law

Overtime work at Pou Yuen far exceeded what is legally allowed in China, where, by law, overtime is limited to 36 hours a month, or 9 overtime hours a week on top of the regular 40-hour workweek.

So the legal limit permissible is 49 hours of work per week, yet at the Pou Yuen factory, women are working 78 hours a week assembling New Balance sneakers. They are being forced to work 29 hours more each week than is legal, exceeding the limit by 60 percent.

The way Pou Yuen and New Balance can get around the law is by applying a flexible hourly system that is based upon a year rather than the week. During slack periods when there are few or no New Balance orders, many workers may be without work for an entire month. The workers can remain in the dorms and eat, but they are not paid. Those hours can then be worked at any time of year without being recorded as overtime, even if the worker is working 12½ hour shifts seven days a week.

The Ultimate Contingency Workforce

With the permission and collaboration of the local government, Pou Yuen and New Balance have come up with the ultimate contingency workforce, flexible enough to keep thousands of workers on hand, as if in storage at a minimal cost to the company and yet ready to respond at a moment’s notice when New Balance and the whims of the marketplace dictate, by working a 78 hour workweek. Better yet, these excessive hours do not even have to be recorded or paid as overtime.

Wages: 14 to 24 Cents an Hour; $11.12 to $16.68 for a 68 to 78 Hour Workweek

Hourly wage rates at Pou Yuen ranged from 14 to 24 cents an hour, the average wage being 19 cents an hour. Weekly wages ranged from $11.12 to $16.68 for a 68 to 78 hour workweek.

After deductions for living expenses, temporary residency and work permits, etc., the workers report they earn between 400 rmb and 500 rmb ($48.19 - $72.29 U.S.) per month on average.

Average New Balance / Pou Yuen Wage

• 19 cents an hour
• $2.12 a day (for an 11 hour shift)
• $14.82 per week (7 days, 78 hours)
• $64.22 per month
• $770.64 per year

Almost everyone at Pou Yuen factory making New Balance sneakers is paid according to a piece rate system which none of the workers understand. They have no idea what the piece rate is per unit or how it is calculated at the end of the month. And then there are numerous deductions from their wages, including:

• 135 rmb for food
• 45 rmb for lodging
• 15 rmb for medical other fees for hygiene, temporary residency, work permits, etc.

New Balance uses the piece rate system to drive the women to work harder, but since no one understands how their wages are calculated, the workers feel mistreated and cheated.Nonetheless, they have no choice but to work harder each month to see if they can earn a few extra pennies.

Not only do the workers not understand how their wages are calculated, but wage rates tend to vary and wildly fluctuate from month to month.

Working conditions

• No worker was provided with a written work contract, which is legally required to specify hours, overtime, wages, holidays and factory conditions.
• No worker was inscribed in a long-term Social Security health insurance or pension plan.(This is a major issue as China abandons its state-owned enterprises which guaranteed jobs for life that included health benefits and a pension. Now the workers are cut loose, on their own and with no safety net.)
• Workers report a strong chemical odor in the sole section and say they are suffering skin rashes from the toxic chemicals. (However, recently this situation has slightly improved when Pou Yuen installed additional ventilators.) Workers in other sections of the factory complain they are constantly breathing in a heavy “leather dust” which is in the air.
• No worker interviewed had ever heard of the New Balance Code of Conduct. But it is compulsory for the workers to memorize Pou Yuen’s strict factory rules and regulations.
• Workers are housed 12 to a room, sharing bunk beds.
• There is no independent union at Pou Yuen, and in fact, the workers had little idea about what a union is and does. Outside the factory, the company had put up a poster about the “family of trade union” at Pou Yuen. When asked about this, the women responded, “Oh, it seems to just organize some recreational activities.”
• Along with other deductions from their wages, the workers also reported paying labor recruiting agencies in Henan and Shanxi from 350 to 700 rmb ($42.17 - $84.34) in order to get a job at the Pou Yuen factory.
• The workers felt that the procedure to visit the factory clinic was too complicated and time consuming, especially when one was sick. You had to get a medical form from the line assistant, fill it out and return it to the assistant, who in turn took it to the section chief, who after reviewing it would return it to the line assistant.
• Once in the factory clinic, there was no personal care. Nurses did distribute medications, but the patients had to get out of bed and walk over to the dorm canteen if they were to eat. One young woman, bed-ridden with appendicitis, had no one to care for her and went without food and water.

"Our Lives Are Meaningless"

Once at the factory, the young women who come here from rural areas full of hope are quickly disillusioned, as they find themselves working grueling overtime hours six and seven days a week.

The workers explained to the interviewers that “once you are in the production line working, your hands and eyes cannot stop for a minute.” You do the same operation over and over again, a thousand times a day, day in and day out, for more than 12 hours a day. One women said, “My whole life is only work, and it is meaningless. There are no promotions in the factory.”

All the workers agreed that their working life is “hard and backbreaking.” They were also angry that when they were lined up to be selected by Pou Yuen management to participate in a new training program, they felt that they were “slaves in a slave market, where the nicest looking women are the ones chosen.”

“It’s So Unfair!”

When several of the women were told what New Balance sneakers sell for in the United States, they responded: “It’s so unfair!We are so helpless!”

A Second Pou Yuen Plant Connected to New Balance – The Pou Yuen American Leather Factory

The Pou Yuen American Leather Factory is a newer, smaller facility across the street from the Pou Yuen Footwear Factory that is producing for New Balance.

At the time that the researchers visited this factory in June, there were 400 to 500 workers and the factory was just starting up. The workers were producing uppers for New Balance. But this factory may evolve into one of several Pou Yuen materials plants which supply components for further processing to several Pou Yuen factories producing not only for New Balance but also Timberland, Reebok and other brands.

The regular shift at the Pou Yuen American Leather Factory in June was from 7:00 a.m. to 5:30 p.m., six days a week, with 1½ hours off for lunch. Sometimes there was overtime work until 9:00 p.m. An overtime premium of 12 cents an hour was paid on top of the standard piece or hourly rate. Hourly employees said they could earn up to 22½ cents an hour. There were fines of 10 rmb if you reported late to work and 20 rmb if you lost your factory ID card.

The workers’ major complaint was the presence of “leather dust” so thick in the factory air that they could “barely stand it anymore.”No protective equipment was provided to the workers by the factory.

Looking for Fubu and Deep E in China

U.S. companies face no scrutiny in China and can usually get away with whatever they say regarding working conditions at their contractors’ factories—for who is ever going to check?

In 1999, a small socially responsible U.S. shoe company based in Oregon, Deep E – which is a member of Co-op American – was telling the American people that the shoes it produced in China were made by workers whose rights were all respected, who were paid $3.13 to $4.70 U.S. an hour, and who worked 40 to 45 hours a week earning $148.70.

This sounded too good to be true. So the National Labor Committee tried to find the factory Deep E was using in Northern China, which was located somewhere outside the port city of Qingdao, about 400 miles south of Beijing.

The factory, called Tae-Kyung, was located in Jiaozhou City, which turned out to be about 1½ hour drive from Qingdao, only our professional driver could not find it since there was no street address. After stopping a dozen people for directions we finally found the factory located on a dirt road about one half mile off the dilapidated highway which ran through Xiao Ma Wan village.

Fubu sneaker factory in China. Note the guard towers. 

The Tae-Kyung factory was not a pleasant looking place. In fact it resembled a prison, with a high stone wall, with four guard towers and a turret at each corner, surrounding a huge compound enclosing the factory, warehouse and dorms. Two thousand young women, 18 – 20 years old were locked inside the compound. There were four guards posted at the entrance, which was blocked by a sliding metal gate.

It was in a wide-open flat area with other factories nearby. The Tae-Kyung compound was encircled by a 25 foot wide dirt road. There was no way to approach or get near the factory without standing out conspicuously, especially as North Americans. The Chinese people are very friendly and local merchants and passersby soon gathered around us, very curious and wanting to try a few English words out on us.

But every time a small crowd gathered, security police would pull up on their small mopeds and the conversations had to end.Certainly nothing serious could be discussed – we had wanted to question people about conditions in the nearby factories – since we did not want to get anyone in trouble. It was only afterwards that we found out from another factory owner that it is common for the factories to pay $100 or so a month to the local police chief who will then have his people keep an especially close eye on your factory. And in fact, every hour or so two security police on their mopeds would speed around the road circling the Tae-Kyung factory. The place was isolated, well guarded and watched over.

When we arrived at the factory it was nearly 100 degrees Fahrenheit. It was lunchtime and the factory was blasting loud popular music as the women straggled over to the dorms to eat.

The next day we returned to the factory. Our driver, who, like all drivers, worked for the local government, was growing suspicious: why were we visiting factories rather than going to the tourist sites? So we had him drop us off at a small restaurant about a mile from the factory and after he left we walked the rest of the way. We wanted to get inside the factory to see the conditions. When we reached the gate, the guards let us in but held us at the guardhouse. After some time and several phone calls we were told we could go to the factory office. As we went up the step we were met by six or seven of the Korean managers, all carrying walkie-talkies and looking nervous, very agitated, angry and on guard.They showed us into an office showroom and left us alone for about five minutes, enough time for us to start getting a little concerned: were they making phone calls to the authorities to find out who we were? But it gave us time to inspect the Fubu sneakers they were currently making. As it turned out, Deep E had just pulled out of the factory, taking its production to Brazil.

It was very clear that nothing like this had ever happened before, and that we were certainly the first people to show up unannounced and ask to inspect their factory.

The point is, when you realize that it is more than a 20 hour flight from New York to China, which is 13 time zones away; that the factories are walled in and guarded with the local security police also watching; that so many of the factories have no street address and are difficult to find, even with a professional driver who perhaps doubles as an informer as they work for the local governments, you begin to get a picture of how difficult it is to do independent research in China, and why it is the U.S. companies can say just about anything they want and get away with it.

Add to that the fact that every worker in China knows that she can be fired for even being seen discussing factory conditions, that any worker publicly raising a grievance is fired and anyone attempting to organize an independent union will be immediately imprisoned, you can understand how tight the trap is for the workers, who have no rights, not even the right to speak about their working conditions.

Regarding Deep E’s original calculations that the Tae-Kyung workers making their shoes were paid $3.13 an hour straight time and $4.30 an hour over time and were making $148.70 for a 45 hour workweek, they were slightly off. Actually they were off by about 1500 percent, since the workers were in reality earning just $9.73 a week.

 
Fubu and Deep E shoes Made in China

Tae-Kyung Factory
Xiao Ma Wan Village
Tiao-Dong Town
Jiaozhou City
Shandong Province, China

Tae-Kyung is a South Korean-owned footwear factory with 2062 production workers and 98 supervisors and management staff who are largely South Korean. The workers are almost exclusively young women, 18 to 20 years of age, one half of whom are migrants from distant provinces who are housed in factory dorms.  Currently the factory is producing sneakers for Fubu and up to recently they were also producing Deep E hemp shoes.

Conditions at Tae-Kyung / Fubu / Deep E

12 hour shifts from 7:30 a.m. to 7:30 p.m.; 6 days a week; 17 cents an hour base wage, or $9.73 a week; average wage 22 cents an hour; 12 workers to one drab dorm room; workers must sign-out to leave the factory compound.

Fubu sneakers made in China. Retail price: $59.99.

Hours: 7:30 a.m. to 7:30 p.m. or 8:00 p.m., Six days a week

The standard shift at the Tae-Kyung factory is from 7:30 a.m. to 5:30 p.m., with an hour break for lunch. However, the women we interviewed said they almost always worked a 12 hour shift and that they worked most Saturdays.

So their schedule would be:

• 7:30 a.m. – 12:00 noon
  (12:00 noon – 1 p.m., lunch break)
• 1:00 p.m. – 5:30 p.m.
  (5:30 p.m. – 6:00 p.m., supper break)
• 6:00 p.m. – 7:30 p.m. or 8:00 p.m.

They would work this shift 6 days a week, which means they would be at the factory up to 75 hours a week, while being paid for 11 hours a day, or 66 hours a week. When we visited the factory in July it was not their busy season and they were not working on Sundays.

Even if the women were obligated to work just every other Saturday, then their average work week would be a little over 58 hours, or 10½ hours a day times 5½ days.

Wages: 17 cents an hour base wage; $9.73 a week; Average wage 22 cents an hour; Highest wage 34 cents an hour.

The base, or starting wage at the factory is 17 cents an hour, or $9.73 for a 58 hour week.

Base wage:

• 17 cents an hour
• $1.70 a day (for 10½ hour work day)
• $9.73 a week (for 5½ day, 60 hour work week)
• $42.17 a month
• $506.02 a year

However, most workers at the factory earned more than the base rate, and their take home pay – including all incentives, bonuses and overtime premiums – averaged 450 rmb per month, or $54.22.This would put the average hourly wage at approximately 22 cents an hour.

Average take home wage: (including all bonuses, overtime premiums, and incentives)

• 22 cents an hour
• $2.31 a day (for 10½ hours of work)
• $12.51 a week (for a 5½ day, 60 hour work week)
• $54.22 a month
• $650.60 a year

The highest wage we heard about at the factory was one woman who earned 700 rmb for the month, or $84.34 US, for working 57.5 hours a week.This would come to 34 cents an hour.

These wages were similar to those in other factories nearby where the Tae-Kyung workers had friends who were employed.In an electronics factory a few blocks away (the workers did not know what brand they were producing) they were being paid 700 rmb a month, $84.34, while working 12 hours a day, seven days a week. At a nearby wood furniture factory the workers were earning $54.22 a month.

Working conditions: 12 women to a small dorm room; workers need to sign out in order to gain permission to leave the factory.

Twelve women share one drab dorm room, sleeping on metal bunk beds. The women complained that there was no entertainment, not even a single common TV in any of the dorm buildings. It was very drab and boring.

To leave the factory the women had to sign out first in order to get permission.

There was no independent union at the factory and any attempt to organize one would be immediately crushed.

Where Keds are Made in China

Kunshan Sun Hwa Footwear Co. Ltd.
Kunshan City
Jiangsu Province, China
 
16-year-old girls assemble Keds sneakers applying the toxic glue with their bare hands, the only tool they are given is a toothbrush.

The Sun Hua Footwear Company is a South Korean-owned factory located in Kunshan City, which is about 65 kilometers west of Shanghai. The factory is surrounded by a 15-foot high concrete wall topped with barbed wire; the heavy metal entrance gate is kept locked and is patrolled by armed security guards.

There are 1800 production workers locked in the factory, 90 percent of them young women 16 to 25 years of age. There are also 100 office workers, including 30 managers from South Korea.

One hundred percent of Sun Hwa’s production is for export. When we visited the factory in July 1999, they were producing Keds sneakers for Stride Rite. However, in the showroom we saw sneaker and tennis shoe models they had done for Guess, Gap, Tommy Hilfiger and Liz Claiborne. They also make rubber boots and ski boots.

Going Through the Factory your Eyes Stung from the Toxic Glue

There are anywhere from 40 to 90 parts in a sneaker and some of those pieces are glued together. In the Kunshan Sun Hwa factory, like most other footwear plants in China, they use toxic glues. On the floor next to some of the young workers in the adhesive section were shinyten-gallon tin cans of glue marked “XXX STRONG” on which, even if there were further precautionary warnings, the women obviously could not read them since they would be in English. The top of the cans were cut off and the girls dipped small bowls into the can to draw the glue out, which they then applied to the sneaker parts using their bare hands; the only tool they had been given was a toothbrush. The girls look 16 years old. When you went through the adhesive department where they worked your eyes stung from the strong chemical vapors. There was no special ventilation, nor were gloves or masks provided to the workers.

Every young worker was a specialist, doing the exact same operation over and over again, hour after hour, day after day. For example, we saw one young girl marking a pattern with a pencil on canvas pieces that would eventually make up the uppers of the sneakers, doing the same motion 600 times an hour. By the end of a numbing 10 hour shift she would have completed 6,000 such operations.

As we went through the factory no one looked up, none of the workers were talking to each other, and no one smiled. Everyone was bent over glued to their workstations concentrating to keep up with the flow of the production line.

The factory was clearly run with a strict military-style discipline. Workers were strongly encouraged to use the bathrooms during their lunch break from noon to 1:00 p.m. If they needed to use the toilet any other time of the day they would first have to get permission from their section chief.

At the end of the day, the workers had to queue up and leave in single file, as if they were in the military, or rather grammar school. The person sitting at the front of each production line had a cardboard sign with the production line’s number on it.When he or she was given the signal that it was alright to stand up, everyone else in the line also stood, queued up, and left single file, production line after production line.

At least half the workers lived in factory-owned dorms, which were said to be nearby. Everyone left on bicycles, which was all they could ever dream of affording.

The Sun Hwa managers said their factory provided very good jobs, at good wages, though on the other hand it seemed an apparent contradiction when they admitted most workers leave after just one and a half years. If the jobs were so good why was everyone leaving?

According to the company, the average production wage was 600 rmb per month, or $72.29 US, or about $16.68 a week. We could not verify this since we chose not to speak with any of the workers inside the factory, lest they should say the wrong thing and find themselves fired after we left. This 600 rmb figure would include all incentives and production bonuses. The management said they paid the incentives to the whole production line rather than to individuals which was no doubt used as a strategy to make sure workers would pressure each other to work faster so they would all get their small, but very needed bonus. It is not known whether the 600 rmb monthly figure is before or after the company’s deductions for food and dorm accommodations.

According to the company the average wage was:

• 42 cents an hour
• $3.34 a day (for an 8 hour day)
• $16.60 a week (for a 5 day, 40 hour work week)
• $72.29 a month
• $867.47 a year

Company spokespeople said that the factory operated on a daily shift of 9 hours from 8:00 a.m. to 5:00 p.m., five days a week, and with an hour off for lunch. We could not independently confirm whether this was accurate or not, though it would certainly be the exception from standard factory hours across China if they were really working just the legal 40 hour work week.

Coming to China “For the Cheap Labor” and “No Unions”

The Kunshan Sun Hwa factory was opened in 1991.The company general manager said they came to China “for the cheap labor” and “to get away from the unions in South Korea”, where they no longer operate any factories. The fact that the minimum wage in South Korea is only $1.60 an hour says a lot about current wages in China.

We were told that it takes three to five years to get a factory up and running smoothly and at full capacity. Now they could turn around an order from the United States in just three months, from the date the order arrived to the delivery of the sneakers at a U.S. port. Most of their raw materials are imported from South Korea, and the rest come from other nearby Asian countries.Now they do $30 million of business a year.

At the end of the day, workers must leave the Keds factory in a single line. 

If the Sun Hwa factory was following social security health and pension benefit laws in China – which few export assembly factories appear to be doing – then payment of these legal benefits would add 50 percent to their cost of labor. So if the workers were paid 600 rmb a month, their fully loaded wages including all direct and indirect costs would amount to 900 rmb per month or $1,301 a year. For all 1800 workers their total annual payroll would be $2.34 million.

This means that their total direct and indirect labor costs for all 1800 production workers would amount to less than 8 percent of their $30 million in annual revenues.

Sun Hwa’s management also said they expected the Chinese currency, the rmb, to be devaluated eventually as it was already trading in the local black market at 8.7 rmb to the $1.00 US, while the official rate was still 8.3 rmb to the $1.00 US. This represents nearly a 5 percent devaluation (0.048192).

Operating a Factory in China: It all Depends on Who You Know and What Bribes You Give

It’s called “Guanxi”, or literally, the relationship business. You cannot do business in China without developing personal contacts with the local bureaucrats who make, change and implement the law, often in an arbitrary manner. Sun Hwa management explained to us that whenever you need to get something done, then every time you must lobby the person in charge, whether in the tax office or the customs department, and pay a bribe. Business in China runs according to who you know and who you pay.

A case in point. The Kunshan Sun Hwa factory had too much work and, as it often does, it sourced some stitching work to a local company. When the first lots came back, the Sun Hwa quality control managers saw the work was horrible, so they pulled the rest of their materials from the subcontractor and ended the contract.Not long after that, $50,000 (U.S.) disappeared from Sun Hwa’s bank account. No explanation was ever given, but the local subcontractor had obviously contacted the local authorities and together they decided to punish the South Korean factory for breach of contract, even though quality control standards were clearly written into the contract.

Sun Hwa management responded not by going to court, but by paying the local mayor a little visit, who then and there, on the spot, reduced the fine by 66% and then returned $33,00 to the company. They did not say, but perhaps a little inducement was given to the mayor in appreciation for his fairness.

At any rate, in China the laws can be changed quickly and then implemented with little warning, and as there are no exact regulations to implement the laws, penalties can be handed out in an arbitrary manner by the local authorities. This is why you have to lobby people and pay bribes.

Nike in China, and Proud of It

Nike Puts the Swoosh on Contractors' Factories

Sewon Factory
Jiaozhou City
Shandong Province, China

On the walls of the Sewon Factory in Jiaozhou City, you see the famous Nike Swoosh and “Just Do It" – right behind the locked metal entrance gate, the iron bars covering the windows and the spiked metal fence surrounding the factory.  There was a serious fire in the plant in 1995, and the factory was told to take the iron grates off the windows. But apparently Sewon's management did not feel it had to.

The base wage in the factory is 20 cents an hour, and people in the neighborhood said the women had to work 11 to 12-hour shifts, six days a week.  Nor would Sewon and Nike hire anyone over 25 years of age, figuring that by that time the workers were “used up" and “exhausted."

Sewon factory. Nike contractor in northern China. 

Sewon is a South Korean-owned footwear manufacturer with two plants in Jiaozhou City, which since 1989 have produced exclusively for Nike.  The factory we visited had 1,500 workers, mostly young women 18 to 25 years of age.  The outside walls of the factory were covered with Nike's “Swoosh" and “Just Do It."  But with the heavy metal entrance gate locked and bars of the windows, it resembled more an army barracks than a factory.  Sewon's second factory was much larger, with 4,000 young workers.

There are three other factories in Jiaozhou City employing up to 15,000 workers who also work exclusively producing Nike sneakers.  So, in this one city in China, there are 20,500 young women sewing Nike sneakers.

All of Sewon's raw materials come from South Korea.  Frequently Sewon must subcontract its overflow work to other local factories.

Fleeing $2.49-an-hour wages and unions

Sewon's managers further explained that they left South Korea in 1989 and relocated to China to escape the high wages and unions in South Korea.  In South Korea in 1989, a footwear worker earned $600 U.S. a month, for six day, 55½-hour workweeks.  This came to $138.96 a week, $2.49 an hour.  Sewon's direct labor costs in China are less than 9 percent of what they were in South Korea.  Instead of paying $7,200 a year to its workers, Sewon can pay just $650.60 in China, which is an annual savings of $6,549.40 per worker.  With their 5,500 employees in Jiaozhou City alone, they are saving more than $36 million a year in direct labor costs, not to mention paying little or no taxes in China, and the absence of any independent unions.  One can understand why they fled South Korea.  This massive relocation of factories to China has had a disastrous impact on the South Korean labor movement, which represented 20 percent of the workforce in 1989, but less than 10 percent by 1999.

Nike Air Max sneakers. Retail price: $135. 

Twenty to 26 cents an hour; 44 to 66-hour workweek

Sewon managers said they limited the workweek to 49 hours, working just every other Saturday, beyond the standard 8:00 a.m. to 5:30 p.m. shift five days a week.  This would put the workers at the factory 55 hours a week, while being paid for 49 hours.

However, people in the neighborhood, including local vendors, said that the factory was always working 11 to 12-hour shifts, six days a week.  If this were more accurate, then the shift would be from 8:00 a.m. to 7:00 or 8:00 p.m. six days a week.  This would put the workers at the factory 66 to 72 hours a week, while being paid for 60 to 66 hours.

The starting wage making Nike sneakers at the Sewon factory was 360 rmb, or $43.37 U.S. per month, which would amount to $10.01 a week-20 cents an hour, for a 49-hour workweek.

However, Nike and Sewon have a policy to increase wages 30 cents a week every third month, a raise of six tenths of a cent per hour.  This means that a skilled worker, after one year, would earn 450 rmb per month, or $54.22 U.S. to make Nike sneakers.

Sewon/Nike Wage after one year (fully loaded wage, including all incentives, overtime and bonuses)

• 26 cents an hour
• $2.31 a day (9-hour day)
• $12.51 a week (for a 5½-day, 49-hour workweek)
• 54.22 a month
• $650.60 a year

When we visited the factory in July 1999, it was over 95 degrees, but the factory had no air conditioning.

People in the community said Sewon never hires anyone over 25 years of age, at which point the workers are fired.  The factories do this to keep their workforce young and energetic, knowing that by 25 years of age, the workers are worn out, used up and exhausted.  And besides, they may want to get pregnant and the companies do not want to have to pay maternity benefits.

There is no union at the Sewon factory and any attempt to organize one would be met with mass firings, arrest and imprisonment without trial.

Nike Clothing Made in China

Hung Wah and Hung Yip Garment Factories
Liuhuzai Industrial Area
Xiajiao, Huizhou City
Guangdong Province, China

The following research on Nike production in China was carried out between November 1999 and April 2000, by the Hong Kong Christian Industrial Committee (CIC), an extremely important independent NGO human rights organization.

• During the busy season, 15-hour shifts, from 7:30 a.m. to 10:30 p.m., seven days a week; sometimes working all night
• One day off per month
• Average wage:  22 cents an hour.  $18.07 for a 7-day, 83.5 hour workweek
• 12 cent premium for overtime hours
• 98% women
• 12 to a dorm room
• Never heard of Nike Code of Conduct
• No union

Hung Wah and Hung Yip are Hong Kong-owned dual garment factories, employing 2000 to 2500 workers, 98 percent of whom are young women 16 to 32 years of age, who sew Nike and other brands, sportswear and children's clothing.  Most of the women are migrant workers from Sichuan and Hunan provinces.

Peak season hours:  At the factory 15 hours a day seven days a week, from 7:30 a.m. to 10:30 p.m.

Monday - Saturday

• 7:30 a.m. – 11:30 noon
  (11:30 noon – 1 p.m., lunch break)
• 1:00 p.m. – 5:30 p.m.
  (5:30 p.m. – 6:30 p.m., supper break)
• 6:30 p.m. – 10:30 p.m. or 8:00 p.m.

Sunday

• 7:30 a.m. – 11:30 a.m.
  (11:30 a.m. – 1:00 p.m., lunch break)
• 1:00 p.m. – 5:30 p.m.

The workers are at the factory 15 hours a day Monday through Saturday, while being paid for 12.5 hours.  On Sunday they work a 10-hour shift, while being paid for 8.5 hours.  This puts the women at the factory 100 hours a week, while being paid for 83.5 hours.

The women receive one day off per month, which is payday.  If very large orders come in, sometimes the women are forced to work right through the night.

Wages: 20 to 23 cents an hour; $16.68 to $19.46 for a seven day, 83.5 hour workweek; 12 cent bonus for overtime hours

During the peak season wages range from 600 to 700 rmb per month, or $72.29 US to $84.34 US, and $16.68 to $19.46 for the week.

The average peak season wage would be:  (This includes all overtime hours, bonuses, and overtime)

• 22 cents an hour
• $2.58 per day (for a shift of nearly 12 hours)
• $18.06 a week (for a 7-day, 83.5 hour workweek
• $78.31 month
• $939.76 year

Overtime hours are paid at a premium of 12 cents an hour above the standard piece rate.

However, these wages are even lower than they appear since the workers must pay for their own food and are charged 35 rmb per month for their dorm space.  Twelve women share one small dorm room.  Usually the factories deduct these expenses from the worker's wages before they receive their pay.

Working Conditions:  12 workers to a Dorm Room; First Month's Wages illegally withheld; Fined 5½ hour wages for being 5 minutes late; Never heard of Nike's Code of Conduct; No Union.

Management illegally withholds the worker's first month wages, so they only receive their first pay at the end of the second month.  The workers are also charged a 25 rmb deposit for their factory I.D. card, and must pay 90 rmb ($10.84) for their temporary residency and work permits.

The workers have no social security, health, pension, or unemployment insurance, which by law the company is mandated to participate and pay into.

The women are fined 10 rmb, or 5½ hours' wages, for coming five minutes late to the factory.  A worker is fined 5 rmb for failure to wear their factory I.D. card.

No one had heard of any such thing as the Nike Code of Conduct.

The workers had no experience with independent unions, and of course, no union would be allowed at the Hung Wah and Hung Yip factories.

The workers biggest complaints were the lack of any leisure – working seven days a week – their being exhausted, and the very low wages.

Nike, Adidas and Jansport Backpacks Made in China

Keng Tau Handbag Company
Keng Tau Industrial Zone
Panyu Village
Guangdong Province, China

• During peak season workers are at the factory 14 hours a day, seven days a week, from 8:00 a.m. to 10:00 p.m.; one day off per month; some women report working until 3:00 a.m.
• Average wages range from 25 to 36 cents an hour, or $19.46 to $22.80 for a 7-day, 77 ½-hour workweek; some wages are as low as 8 cents to 11 cents an hour
• No overtime premium is paid.
• Failure to work overtime is punished with fines and a warning letter is posted in the factory.
• Sixteen workers to a dorm room; two poor quality meals a day
• Workers instructed not to punch their time cards for night or Sunday work.
• No union.

The Keng Tau Handbag Company is owned by the Taiwanese firm Glorieux Industrial Ltd.  Keng Tau has three factories located in the Ken Tau Industrial Zone, two of which are functioning while the third factory is under renovation.  One Keng Tau factory was built in 1988 and employs 300 to 400 workers while the second, newer and larger plant was built in 1998 and employs approximately 700 to 800 workers.

Adidas bag made in China. Retail price: $39.99. 

These factories produce bags, especially backpacks for Nike, Adidas and Jansport, which are exported to the United States and the United Kingdom.

The workers are mostly women between 18 and 30 years of age, migrant workers from Hunan, Hubei and Sichuan provinces who have come south looking for job opportunities.

Hours

During the peak season workers are at the factory 14 hours a day, seven days a week, from 8:00 a.m. to 10:00 p.m.  Some report working to midnight or even 3:00 a.m.  The workers receive one day off per month.

During peak season the schedule at the new factory is:

Monday through Friday and Sunday:

• 8:00 a.m. – 12:00 noon
  (12:00 noon – 1:30 p.m. lunch break)
• 1:30 p.m. – 6:00 p.m.
  (6:00 p.m. – 7:00 p.m. supper break)
• 7:00 p.m. – 10:00 p.m.

Saturday:                 

• 8:00 a.m. – 12:00 noon
  (12:00 noon – 1:30 p.m. lunch break)
• 1:30 p.m. – 6:00 p.m.

So the workers are at the factory 94 hours a week, seven days a week, from 8:00 a.m. to 10:00 p.m. while being paid for 77½ hours.

However, at the older, smaller factory workers report working sometimes until 12:00 midnight or even until 3:00 a.m., which would mean that they could be at the factory for up to 19 hours a day.  If they worked to midnight each night they would be at the factory 106 hours a week, while being paid for 89.5 hours.

Workers receive one day off per month.

Failure to work overtime is punished with a fine of 9 rmb, the equivalent of 3 ½ hours' wages, and loss of the monthly attendance bonus of 40 rmb ($4.82 US), which the workers only receive if they are never late, never miss a day, and work all the extraordinarily long overtime hours.  The worker who misses overtime also receives a warning letter, which is publicly posted in the factory, and the workers name is announced over the loud speaker.

Workers are instructed not to punch their time cards for evening or Sunday work.  So any company records shown to Nike, Adidas or Jansport are fabrications, seriously underreporting the actual number of hours worked.

Workers receive no overtime premium.  No matter how many hours they work, they always receive the same standard piece rate or hourly wage.

Wages

In the new factory wages range from 25 to 36 cents an hour, $19.46 to $27.80 for a 7- day, 77 ½- hour workweek; wages as low as 9 cents an hour have been reported in the old factory, where wages range between 11 and 18 cents an hour.

Workers' wages in the new factory range from $19.46 to $27.80 for a seven day, 77 ½-hour workweek, or from 25 to 36 cents an hour.  These wages include all overtime hours, bonuses and production incentives.

However, in the old factory, where the exact same work is done, workers report earning just $8.34 to $13.90 for the same 77 ½-hour, seven day workweek, or 11 cents to 18 cents an hour.  One woman reported working until midnight or 3:00 a.m. every night of the week – working 89 ½  hours – and receiving only $8.34 for the entire week, or just 9 cents an hour.

Average wage in the old factory: (Including all overtime hours, bonuses and production incentives)

• 14 cents an hour
• $1.59 a day (for an 11-hour day)
• $11.12 a week (for a 7-day, 77 ½-hour workweek)
• $48.19 a month
• $578.31 a year

Workers are housed 16 to a room; given two poor quality meals a day

Ninety-eight rmb a month, or $11.81 U.S. (which for low wage workers comes to one week's wages) is deducted by the factory from the workers' wages each month in return for dorm accommodations and food.  Workers are housed 16 to a crowded room and fed two poor quality meals a day.  The workers must take care of and pay for their own breakfasts.

Illegal deductions

Upon entering the Keng Tau factories the workers are illegally charged a 60 rmb job deposit and their first month's wages are withheld by the company.  This is done to prevent the workers from looking for better or higher paying jobs, for if they leave before their first year is out, they forfeit both their wages and deposit.

Workers' Chief Grievance

Many of the workers interviewed complained about the long and exhausting forced overtime hours for such low wages.  Especially in the old factory, the turnover rate with workers leaving is quite high.

There is no union at the Keng Tau Handbag factories.

Nike, Adidas and Puma Caps Made in China

Tong Ji
Ja Da Qu
Zhuhai
Guangdong Province, China

Average workweek:  57 ½ hours.  Average pay:  27 cents an hour.

Tong Ji is a Taiwanese-owned cap factory employing 500 peasant workers, who range in age from 18 to 25 years old.  They produce Nike, Adidas and Puma caps for export to the United States, Canada and Europe.

In November 1999, the factory was operating on a schedule of 72 ½ hours weekly which means they were working 32 ½ hours overtime each week on top of the regular, legal 40-hour workweek.

However, by March of 2000, overtime had been cut back to 12 ½ to 22 ½ hours a week, with the workweek now ranging between 52 ½ and 62 ½ hours.

Containers on their way to the U.S.

Hours-Peak Season Schedule:
At the factory 12 hours a day, six days a week

Monday-Saturday:

• 8:00 a.m. -- 11:30 a.m.
  (11:30 a.m. -- 1:30 p.m. lunch break)
• 1:30 p.m. -- 8:00 p.m.

Workers would be at the factory 12 hours a day, six days-72 hours-a week, and are paid for 62 ½ hours.  The average workweek would be 57 ½ hours, a little less than 10 hours a day.

Wages at Tong Ji Range from $13.90 to $16.68 a week, from 22 to 32 cents an hour

All production wages are paid according to a piece rate system.  The average wage is 550 rmb.--$66.27 a month for a 57 ½-hour workweek.

Average Wage (including all overtime hours, production bonuses and incentives):

• 27 cents an hour
• $2.55 a day (for a 9 ½-hour day)
• $15.29 a week (for a 6-day, 57 ½-hour workweek)
  $66.27 a month
  $795.18 a year

For serious production errors, a worker can be fired and fined 270 rmb ($32.53)-more than two-weeks' wages.  The factory withholds half of the workers' first month's wage.

Nike, Fila and Agron Caps Made in China

Wei Li Textile Ltd.
Number 2 Industrial Area
San Xiang, Chongzhan
Guangdong Province, China 

Cap factory pays nearly twice the wage of other Nike contractors in China; Average Wage:  564 an hour; No forced overtime; But factory management runs a company union and hires only single young women, 16 to 25 years old.

Wei Li Textile, or the Supercap Factory, is a Taiwanese-owned company with three factories in Chongshan and Zhu Hai employing a total of 6,100 workers.

Wei Li Textile Factory Number 2 produces caps for Nike, Fila, Agron and other labels for export to the United States and Europe.  There are 3,000 workers in the factory, 80 to 90 percent of them young women, 16 to 25 years of age, who are migrants from the rural provinces of Henan, Sichuan, Anhui and Hunan. A recruitment advertisement posted outside of the Wei Li Textiles Factory #2 in March 2000 read:

In November 1999, the computerized stitching section was working daily 12-hour shifts, with every other Sunday off.

The work schedule was:  

• 8:00 a.m. – 12 noon
  (12 noon – 1:00 p.m. lunch)
• 1:00 p.m. – 9:00 p.m.

During the peak season, the workers were at the factory 13 hours a day, while being paid for 12 hours.  They were working seven days a week, with every other Sunday off.  On average, they were at the factory 84 ½ hours a week, and were paid for 78 hours.

Working this schedule, the women could earn $27.80 a week-37 cents an hour.

However, by March of 2000, the Wei Li Textiles factory appeared to be working on a five-day, 8-hour a day, 40-hour Monday through Friday schedule.

All production workers are paid according to a piece rate system.  Wages range from $19.46 to $25.02 per week, averaging $22.24 per week, or 56 cents an hour.

Average wage:

• 56 cents an hour
• $4.45 a day (8 hour shift)
• $22.24 a week (5-day, 40-hour workweek)
• $96.39 per month
• $1,156.63 per year

The workers are charged 135 rmb a month for dorm accommodations and food, which is deducted from their wages.  Eight workers share one room.  Strict factory regulations require that all dorm lights be shut off before 11 p.m.  Failure to do so will result in a fine.  The workers must pay 70 rmb for their temporary residency permits.

Many workers are not inscribed in Social Security health, pension and unemployment insurance, which leaves them with no safety net whatsoever.

Wei Li Textiles has established a “company union" at the factory, with management choosing the workers' representatives. 

RCA TVs Made in China along with Action TVs Sold at Circuit City and Wal-Mart

TV's Retail Price in the U.S. is Marked up 430 Percent!

Shenzhen Action Electronics

Zhong Her Industrial Park
Baishizhou Nan Shan District
Shenzhen City
Guangdong Province, China

• Mostly young women workers, 20 years of age.  However, some of the workers at the Action Electronics plant appear to be as young as 14.
• Working seven days a week during the busy season, 7:30 a.m. to 9:00 p.m.-or even past midnight.
• There is a special factory overtime premium of 36 cents an hour for work after midnight.
• Base wage for assembly workers is 25 cents an hour.  Fully loaded wage is $18.91 for a 7-day, 65-hour workweek, or 29 cents an hour.  However, workers must pay for their own food which lowers their weekly earnings to just $15.57.
• Ten to 12 people share each small, crowded dorm room.
• 250 rmb is deducted from the workers' wages for their Temporary Residency Permits.
• Workers are fined 10 hours pay for mistakes they make on the production line.
• They are not given a legal work contract.
• Illegally, they are not inscribed in Social Security health, unemployment and pension program.
• Workers have never heard of any so-called U.S. Corporate Code of Conduct.
• No union exists at the factory.  Independent unions are not permitted in China.

Action Electronics is owned by its Taiwanese parent corporation, Hwa Yih.  There are two Action Electronics factories in China, one in Shenzhen and the other in Shanghai.

The Shenzhen Action Electronics factory is located in the Zhong Her Industrial Park, which houses several medium to small sized electronics, rubber and plastics factories.  The Zhong Her Industrial Park is a joint venture of Taiwanese and Chinese capital.  China's investment is in the land, factories and overall management of the zone, while Taiwan's investment is in the actual manufacturing.

Action Electronics, which began operating in 1993, is the largest factory in the zone, housed in a six-story building that includes the production space, offices and storage.

Action Electronics produces 4-inch, 5-inch and 7-inch mini-TV sets, some including radios, or radios together with CD boomboxes, for RCA (Model RT-7945) which retails for $299.  Mini-TVs carrying Action's own label are sold at Circuit City and Wal-Mart.  The National Labor Committee purchased a 5-inch Action color TV at Circuit City for $149.  Action Electronics exports to the U.S. and to Japan.

There are 500 workers in the factory, mostly young women, split into eight production lines.  The average age of the women is 20 years old, however some as young as 14 are employed there.  The women are migrant workers from Sichuan, Hunan, Hubei and Jiangxi provinces.  The factory actively recruits in the local high schools in these rural areas.

Hours

Working 7 days a week during the peak season, sometimes from 7:30 a.m. to 11:00 p.m. or midnight.

During the slack season, the women generally work a five-day, 45 to 47½-hour workweek.  In the peak season, the women must put in a seven-day workweek, working some days from 7:30 a.m. to 11:00 p.m. or midnight.  During particularly large rush orders there may be mandatory overtime hours required even beyond midnight, which is why the factory has established a special 3 rmb (36 cent) per hour premium for working past midnight.

Peak Season Hours:  Seven-day Workweek:

• 7:30 to 11:30 a.m.
• 11:30 a.m. to 12:50 p.m. (lunch break)
• 12:50 to 5:10 p.m.
• 5:10 to 6:00 p.m. (supper break)
• 6:00 to 7:30, 9:00 p.m., 11:00 p.m. or 12 midnight (or later, depending on the size of the order and the shipping deadline.)

If they had to work until midnight, the workers would be at the factory 16½ hours a day.  On average, during the busy season, the women could be at the factory for up to 80½ hours a week, while being paid for 57½ to 65 hours.

Wages

Base wage in the assembly section is 25 cents an hour.  More skilled workers earn 32 cents.

The base wage in the assembly section is 360 rmb per month, $43.37, which comes to $10.01 a week-25 cents an hour for a regular 40-hour workweek.  However, most workers receive a 70 rmb bonus each month ($8.34 for the month, $2.11 a week) if they meet production goals, behave well and do not come late or miss days.

Overtime hours are paid at 30 cents, except when working past midnight, when the premium rate rises to 36 cents.

So during the peak season, if the factory was running on a seven-day, 65-hour week schedule, an assembly worker would earn $81.93 a month, or 29 cents an hour.

Assembly worker's wage:

Assembly workers' fully-loaded wage:

• 29 cents an hour
• $2.69 a day (for a 9 ¼-hour day)
• $18.91 a week (for a 7-day, 65-hour workweek)
• $81.93 a month
• $983.13 a year

The more skilled workers who make the main body of the TV earn a higher base wage of 32 cents an hour, or $12.79 for a forty-hour workweek.  They also receive a higher attendance and production bonus of 120 rmb, which comes to $14.46 a month, or $3.61 a week.  They earn the same 30-cent an hour overtime premium.

Skilled Workers' fully-loaded wage:

• 36 cents an hour
• $3.37 a day (for a 9 ¼-hour day)
• $23.08 a week (for a 7-day, 65-hour workweek)
• $100 a month
• $1,200 a year

However, it appears that the workers have to pay out of pocket for their food, for which the factory charges 120 rmb a month, $14.46 U.S.  This would lower the weekly take-home wage of an assembly worker to $15.30 for a 65-hour workweek, or 24 cents an hour.  A skilled worker's weekly take-home wage would drop to $19.47, or 30 cents an hour.

The workers report that the food they receive at the factory canteen is of poor quality.

Working Conditions-Making RCA and Action TVs

Crowded Dorms

Workers are housed 10 to 12 people to a small, cramped dorm room, with three double bunk beds along each side wall, with only a narrow corridor down the center of the room remaining open.  There is no space for the workers to store their few possessions. 

Strict Factory Rules and Fines

Production errors on the assembly line are punished with a fine of 20 rmb, amounting to the loss of 10 hours wages.  Also, the names of anyone making such production errors are publicized in the factory as a way to pressure and humiliate the young workers.

No Work Contract

The workers are not given written work contracts, which are legally required and which must spell out hours, pay, overtime premiums, days off and other working conditions and obligations.

Workers Not Inscribed in Social Security

Again, this is illegal.  The company by law must inscribe its workers into a Social Security health, unemployment and pension insurance program to which both the company and the workers must contribute.  Without social security coverage, the workers are left with no safety net whatsoever.  There is a very limited factory clinic, but the workers must pay out of their pocket to use it.

Deduction for Residency Permit

250 rmb, $30.12 U.S., is deducted from the workers' wages to pay for their temporary residency permits.

No Code,  No Union

No worker ever heard of any so-called U.S. Corporate Code of Conduct.  There is no union at the factory.  Independent unions are not tolerated in China.

Workers' Main Complaints

The workers were very upset about the low wages they made in the factory, which after all the deductions and paying for basic necessities left them with very little money despite the long hours they worked.  They also complained about the harsh treatment in the factory and in the industrial park, especially from the Chinese personnel managers.

Many of the young women workers said they would like to be able to study English or computer programming at night.  But they have no time to do so given the long overtime hours they must work.  Also, they said, they do not have much energy left when they finally return to their tiny dorm rooms after the day's work.

Tracing a TV Made in China to Circuit City in New York and Finding a 430 Percent Mark-up

Using U.S. Customs Department shipping documents made available in the Piers database, the National Labor Committee was able to trace an Action brand 5-inch mini color TV set (model CAN 5503) made in the Action Electronics Factory in Shenzhen City in southern China to a Circuit City store on 14th Street in New York City.

Two thousand one hundred Action 5-inch color TV sets, shipped from China on an Evergreen Line vessel arrived in Los Angeles on October 26, 1999, where they were declared to have an estimated customs value of $72,904.  Each TV had a customs value of $34.69, which represents the total materials and labor cost to make and ship the product.

The 5-inch Action color TV (Model CAN 5503/Made in China) which the NLC purchased in Circuit City cost $149, which represents a 430 percent mark-up over the total cost to make the TV, including Action Electronics' profit.

The big losers are the assembly workers in China, who are denied their rights and paid just 25 cents an hour to make these sets.

In the global sweatshop economy, the 430 percent mark-ups, a company's huge advertising budget, booming corporate profits, the CEO's enormous salary, all of it rides on a pyramid scheme in which those at the bottom, in the developing world, are stripped of their rights and toil for pennies an hour to funnel money up the pyramid to those at the top.

If the U.S. retailers were willing to give up just a tiny piece of their substantial mark-up, then it would be possible to pass it along to the workers in China, whose wages would then begin to climb to at-least-subsistence levels.

China's president welcomes GM with a billboard: "Twenty-first century. Construct modernized plant. Make new century vehicles and develop new century people."

Finding Spiegel in China

15-hour shifts, seven days a week

Spiegel's first quarter 2000 revenues were up 14 percent, to $714.9 million, with a net profit of $20.2 million.  Catalogue sales make up nearly half of Spiegel's total sales

Shenzhen City
Guangdong Province, China

The southern China city of Shenzhen is teeming with assembly plants.  Row after row of nondescript concrete five-story buildings house small assembly factories on every floor.

While visiting Shenzhen in late January 2000, we decided to enter one of the buildings to see what the factories looked like inside.  When we reached the third floor, we found the doors wide open, and so we went in.

It was an apparel factory where young women were sewing two-piece women's outfits, a matching white jacket and skirt carrying the “Apart" label, which is owned by Spiegel and sold through their catalogs.

Spiegel's "Apart" jacket. 

There was a large hand-written cardboard sign on the wall letting the women know that they would be working until 11:00 p.m. every night that month, seven days a week.  They started work at 8:00 a.m. and if they arrived a minute late, they would be fined two hours' wages.

A middle-aged man approached us.  He explained that he was the manufacturer; these were his clothes, but that this was not his factory.  He was only subcontracting some overflow production here.  His factory, which was much larger, was 60 or 70 kilometers away in Dongguan City.  He also was operating his plant at full capacity, from 8:00 a.m. to 11:00 p.m., seven days a week.

Thinking we were U.S. buyers, he was very anxious to speak.  He said that his total cost for each two-piece outfit was 200 rmb, or $24.10 U.S.-but that included everything: fabric, labor, shipping costs, even the cost of the quota.  He was manufacturing the clothing for a company in Hong Kong which had the Spiegel contract.

For his costs, some overhead and his profit, he tacked on another 100 rmb, or $12.05 U.S., bringing the total cost of the two-piece outfit to 300 rmb, or $36.14.  Presumably that is what he charged the company in Hong Kong.

Questioned about his labor costs, he said his fully-loaded labor cost, including all direct and indirect expenses such as social security benefits, came to 7 rmb, or 84 cents per piece for either the jacket or the skirt.  Given that this Spiegel blazer retails for $99 in the U.S., the fully-loaded labor cost to produce it in China amounts to just 8/10ths of one percent of the price.

When we told him his prices seemed a little steep, he got angry and told us to go further north into China if we wanted cheaper prices.  However, he soon warmed up again and invited us to visit his factory in Dongguan, which we could not do, since it lay outside the area permitted by our visas.

Factory where Spiegel was being made. 

Labor Activists Imprisioned in China

Some of the 15 to 20-year sentences for attempting to peacefully defend internationally recognized workers rights.

(Partial list prepared by China Labour Bulletin.  Updated as of February 28, 2000.)

Rhetoric versus Reality

The role of U.S. companies in China and the truth about factory conditions

Major Issues

1. Wages

North American companies say they and their factory contractors in China pay decent subsistence wages, wages which are very competitive given the low cost of living in China.

Fact:  Twenty-five cents an hour is not enough.  The wages in China's export assembly industry do provide a subsistence level existence--if it is meant in the sense that VF/H.H. Cutler's CEO said of the 28-cent-an-hour wages they paid in Haiti:  “Well, the workers are alive aren't they?  So they must be subsistence wages."

This is exactly the point.  The factory workers in China do survive on their wages, because they work 12 to 14 hours a day, seven days a week during peak seasons, often with just one day off a month.  They survive because most factory workers are migrants from rural areas who, once they arrive at the factory are housed 10 to 20 people to one small, crowded company dorm room.  For the years they are at the factory, their “home" is a 2 ½ by 2 ½ by 6 ½-foot space on a metal bunk bed.  They subsist on two or three dismal meals a day provided at the factory canteen.

The North American companies want us to think of these workers as individuals, young people out on a lark, travelling to the cities to try their hand at industry.  This is untrue.  They are working to help their families survive back home.  They need to save to send money home.   And those who are lucky enough to come from families who are not living at the edge of abject poverty need to save money for what comes afterwards, since no one last more than three to four years in these factories, given the grueling overtime hours and harsh conditions.

Can you live on the 25-cent-an-hour wages U.S. companies and their factory contractors pay in China, which come to about $65 a month?

Not even close:  It costs $12.05 a month in China just to provide milk for one six-month old infant.  So this expense alone would consume 19 percent of your total wage.  A very modest diet for a three-person family costs approximately $72.29 a month, which is more than most factory workers earn.

Some expenses in China:

U.S. companies claim they are developing a middle class in China.  But how could a factory workers afford a new 15 by 17-inch color TV that costs $343.37, which is nearly half a year's wages.  Just the tax on purchasing a new car is $1,205, and to install a phone, the cost is $361.

In fact, between 1990 and 1998, the share of total urban income in Chine shrunk for the bottom 20 percent of the people to 5.5 percent from 9 percent, while the share held by the top 20 percent leapt from 38.1 percent to 52.3 percent.  Since 1985, family income as a percentage of China's GDP has fallen from 57.7 percent to 45.5 percent as wealth has shifted to the corporations.  China now has a more unequal distribution of wealth than the United States has.
 

2.  Spreading U.S. Values…
But then, how do you explain conditions of indentured servitude?

North American companies have consistently claimed that their presence in China would set an example of respect for human and worker rights, and that this example would spread throughout China.

Fact:  Wal-Mart's Indentured Servants:  Wal-Mart has been in China for over a decade and is the largest importer into the U.S. of goods made in China.  Kathie Lee handbags were made for Wal-Mart in China by workers forced to work 12 to 14 hours a day, seven days a week, with one day off a month, for an average wage of three cents an hour.  However, many of the workers--in one sample, 46 percent of them--earned nothing at all after having worked three to four months making Wal-Mart handbags and in fact even owed money to the company.  They were housed 16 to a small dorm room and fed two dismal company meals a day.  Their identification documents were confiscated and they were allowed outside the factory for at most 1 ½ hours a day.  Many did not even have the bus fare to leave to look for other work, and when they protested the grueling mandatory overtime work for literally pennies an hour, or nothing at all, 800 workers were fired.

Now, surely the Wal-Mart case of indentured servitude is at one extreme, and while it is true that Wal-Mart is usually found in a country's worst factories, and is the worst sweatshop abuser in the world today, still, how can we be sure that there are not other such factories across China, hundreds or even thousands of them, producing goods for export to the U.S. under similar conditions?  It is unlikely that this factory is completely unique.  But the North American companies continue to hide their production locations across China, refusing to even release to the American people the names and addresses of the factories they use in China to make the goods we purchase.  Until the U.S. companies come clean and stop hiding their production in China, we can only assume that there are many more such cases of indentured servitude in factories producing for U.S. companies.

Two New Balance contractors in China, the Freetrend and Lizhan factories, deny their workers freedom of movement.  Both factories are locked down at 9:00 p.m. every night, after which no one can enter or leave.  At the Freetrend factory, workers need prior permission to even leave the factory compound during their lunch break. 

3. Women's Rights:

North American companies are particularly sensitive to the issue of women's rights, and they go out of their way to proclaim their steadfast commitment to protecting and guaranteeing the rights of women.  They tell us they have zero tolerance for abuses of women rights.

Fact:  The companies only hire single women 17 to 25 years of age, after which they are replaced with another crop of young women.

In China, approximately 80 percent of the factory workers are young women, 17 to 25 years old.  Why is this the case?

Consider a recruitment ad posted by a Nike contractor in China, the Wei Li Textile Factory, which calls for “Females only…17-21…[with]single certificate..."

Nike Contractor Wei Li Textile Factory Recruitment Ad:

Or, consider a similar recruitment notice posted by a New Balance contractor, the Lizhan Factory:

Lizhan Factory / New Balance Want Ad:

At the Lizhan factory, as is typical across the export assembly industry in China, there is also an unwritten rule--that if a worker becomes pregnant she will be fired.

So it is quite clear that the U.S. companies and their contractors want to hire predominantly young women, 17 to 25 years of age, presumably because they feel that the young women will cause less trouble, will talk back less, and will be less likely to demand their rights.  At any rate, that is exactly the rationale given by the U.S. companies and their maquila contractors across Central America, who also prefer young women employees.

Why is it fairly rare in China to find a factory worker over 26 years of age making goods for export to the U.S.?  Because after working 12 to 14 hours a day, seven days a week, with perhaps only one day off a month during the long peak seasons, the women become “worn out," “exhausted," and “used up" after just a few years, maybe three or four, working under such conditions.  Living conditions are similarly harsh--sharing bunk beds with 10 to 20 other workers in a crowded dorm room and existing on two or three company meals a day.  No one lasts long working under these conditions, so the women either leave or are pushed out after they reach 26 years of age.  At any rate, they are replaced with another batch of young women, and the work goes on.

Not only do the women leave the factories after a few years exhausted and with little or no savings, they also depart with no skills, having learned nothing beyond the few piece-rate operations they repeated hour after hour, day after long day.

The women at the Pou Yuen factory who sewed New Balance sneakers explained that “once you are in the production line working, your hands and your eyes cannot stop for a minute."  One worker said, “my whole life is only work, and it is meaningless.  There are no promotions in the factory."

The workers agreed that their jobs were “hard and backbreaking."

The women at the Lizhan factory echoed those feelings:  “Once you are employed as a worker you will always be a worker."  There is no possibility for advancement or promotion.  The factory workers are in a trap, going nowhere.

It is difficult to understand the claim of the American companies that such conditions are promoting women's rights.
 

4.  Hours and Working Conditions

The North American companies say they have strict factory guidelines, or Corporate Codes of Conduct, which guarantee healthy and safe working conditions and which reasonably and humanely limit the number of hours worked at their contractors' plants in China.

Fact:  Mandatory 14-hour shifts, 7 days a week are quite common, as are 100-degree factory temperatures and the handling of toxic glues and paints.

Low wages and excessively long mandatory overtime hours are the chief complaints heard from factory workers in China.  During the busy season it is not uncommon for the workers to be forced to work 12 to 14 hours a day, seven days a week, with just one or two Sundays off each month.

At the Baoan factory in China, workers making Huffy bicycles are at the plant from 7:00 a.m. to 11:00 p.m., seven days a week.  No overtime premium is paid, but failure to work all the overtime hours is punished with loss of two days' wages.  During working hours you are not allowed to talk, and strong chemical odors permeate the painting department.  At the Action Electronics factory making RCA TVs, there is a special overtime rate of 36 cents an hour, which kicks in after midnight.  At the Keng Tau Handbag factory, during the peak season young women are at the factory from 8:00 a.m. to 10:00 p.m. making Nike backpacks, seven days a  week.  Failure to work overtime is punished with the loss of 3 ½ hours' wages as well as the entire month's attendance bonus.  Further, the offending worker receives a warning letter and her name and crime are broadcast over the factory's loudspeakers.

If you arrive a minute late to your 8:00 a.m. to 11:00 p.m. seven-day shift sewing Spiegel women's clothing, you are fined two hours' wages.  If you come five minutes late to the Hung Wah factory making Nike clothing, you will be fined 5 ½ hours' wages.

Sixteen-year-old girls assembling Keds sneakers at the Sun Hwa Footwear factory apply the toxic glue with their bare hands, the only tool they are given, a toothbrush.

Sixteen and seventeen year olds making Timberland shoes at the Pou Yuen factory report handling toxic glues and solvents without gloves, some working in temperatures exceeding 100 degrees Fahrenheit and breathing in leather dust particles which fill the air.  At another Pou Yuen factory making New Balance sneakers the women complained of skin rashes brought on by exposure to abrasive chemicals.

At the Freetrend Factory, workers making New Balance sneakers need permission to use the bathroom, and the time they take is monitored.

At the Action Electronics factory many of the young women making RCA TVs said they would like to be able to study English or computers at night, but because of the long overtime hours demanded each night, there was no time to do so.  Also, they said they were too exhausted at the end of the day.

Most of the factories even cheat the workers out of Social Security health care, pension and unemployment insurance coverage, leaving them with no safety net whatsoever.  The companies complain that Social Security benefits cost too much, and so with the help of local government authorities, they find ways to avoid the legal mandate that companies inscribe their workers in Social Security and contribute their share of the fees, which could add another 30 percent to their labor costs.

At several factories, such as Pou Yuen where workers make Timberland shoes, they are threatened and coached to lie to any North American auditors regarding factory conditions.  The same is true at the Lizhan factory, where they make New Balance.  AT the Keng Tau factory, where they make Nike bags, the workers are instructed not to punch their time cards for evening or Sunday work, in order to hide the number of overtime hours actually worked each week.
 

5. Freedom of Association and the Right to Organize:

Many U.S. companies have corporate Codes of Conduct which claim they recognize and will respect the right of workers to organize free of reprisals and to bargain collectively.  Of course, everyone agrees that the right to organize is the most fundamental of the internationally recognized worker rights.

Fact:  There are no worker rights in China, and least of all the right to organize an independent union.  Any such attempt will be met with firing, arrest and imprisonment.

Independent religious, political and labor organizations are not tolerated by the authoritarian government of China.  Attempts to form independent unions are met with firings, arrests and imprisonment without trial, usually for three to eight years in a hard labor camp.  Nor are strikes, demonstrations or raising grievances allowed.

When the workers in the polishing section of the Lizhan shoe factory could no longer take the excessively long mandatory overtime hours and the below-subsistence wages, they went out on a wildcat strike.  All 30 of the most active participants were fired.  After the firings, management let the remaining workers know that:  “the workers should behave.  Otherwise they too will be fired.  Strikes are not permitted in the factory, and anyone who tries will be fired."

At the Baoam factory where the workers make Huffy bikes, the delivery workers went out on strike to protest the excessively heavy workloads, the long overtime demands and the very low wages.  All the strikers were fired.

No dissent is allowed.

Better These Jobs Than None:

This is the million-dollar question that the companies like to raise as a matter of last resort when things are not going well and their factory conditions are being exposed publicly.

Fact:  There is huge unemployment and poverty in China.  But misery does not give the companies license to exploit.  What the companies are really doing is trying to pit American workers against the people of China in a race to the bottom over who will accept the lowest wages and benefits and the most miserable living and working conditions.

No one is saying that there is not enormous unemployment in China, with 20 million people,  or 10 percent of the urban population, out of work.  In rural areas, 30 percent, a staggering 250 million people are classified as redundant labor.  Young people from agricultural provinces are being pushed by joblessness to go south, to the cities, lured by the factories and the hope of finding work.

But the American companies and their contractors want us to believe that high unemployment rates and poverty--misery--gives them license to exploit people.  It does not.

And if we allow the companies to take this step, then we will have helped unleash this race to the bottom, in which the multinationals are able to pit American workers against desperately poor people in China, in a race to the bottom over who will accept the lowest wages and benefits and the most miserable working conditions.

The companies benefit from this race to the bottom, especially as they want the American people to see the people of China as the enemy.  They want us to believe that it is the people of China who are stealing our jobs, driving down wages and busting our unions, when in fact, the people of China are not our enemies, but rather our sisters and brothers.

Our focus must remain on the role of the North American companies and their contractors in China in denying worker and human rights.  We must do everything possible to support the struggle of the people of China to win those rights.  We are in the global economy together.  And together we will either hold the multinational companies accountable to respect human and worker rights and to pay a living wage, or together we will sink lower.

The only way to put a human face on the global economy is to guarantee that human and worker rights standards and payment of a fair wage are made a condition of trade, in a system that is verifiable and enforceable.