China Labor Watch: labor violations, bogus standards in Wal-Mart’s Chinese supply chain

by Ron Moore

Wal-Mart executives and Chinese Communist Party officials

The China-U.S. Economic and Strategic Dialogue in Washington will focus on economic, environmental and security cooperation. The human rights group China Labor Watch is calling on senior officials of both governments to encourage multinational companies to improve labor conditions and promote effective implementation of China’s Labor Contract Law.

Any casual visitor to a Wal-Mart store makes it clear that the world’s lone retail superpower is a big fan of China’s Communist Party. In response to consumer scrutiny, Wal-Mart has established corporate responsibility standards, enforced through factory audits. The group has noted that despite rising production costs, Wal-Mart has not increased prices it pays for goods. As a result, factories exploit and cheat on environmental commitments. The group asserts that during Wal-Mart inspections, records are hidden and workers are forced to lie about conditions. Like Wal-Mart’s standards, these inspections are a PR performance. China Labor Watch has published a report on its long-term investigation of Wal-Mart’s Chinese supply chain. The report is based on CLW’s investigations from April to June 2009 of Wal-Mart suppliers Huasheng Packaging Factory and Hantai Shoe Factory.
The group lists violations at Huasheng including:
  • Elaborate system to cheat Wal-Mart audits
  • Some workers make only $0.51/hour, 60% of the minimum wage
  • Poor working conditions: workers inhale large amounts of paper particles and other debris
  • Twelve workers live together in cramped dorms
  • Workers not paid overtime wages
  • During busy season, workday is 11 hours or 77 hours per week, and overtime is mandatory.
CLW first investigated Hantai Shoe Factory in July 2008. Although Wal-Mart pledged that it would address violations, no public update materialized. CLW’s follow-up reveals new violations, and old problems have also persisted.
The group lists violations at Hanti including:
  • Overtime only paid up to Wal-Mart’s limits. When overtime surpasses the limit, extra wages are not paid until the following month.
  • Workers forced to lie to Wal-Mart inspectors 3. 5 hours overtime daily. If workers request not to work overtime once they will be denied any overtime for a month
  • Disguised layoffs to avoid paying severance payments to workers. Workers are abused by management or switched to undesirable jobs until they quit voluntarily.
CLW says that as the world’s largest retailer, Wal-Mart has the responsibility and ability to implement basic standards. CLW Executive Director, Li Qiang, stated, “Wal-Mart’s Social Responsibility standards are merely a public relations gimmick and have not actually been implemented; they are a cost-free way to improve public perceptions of Wal-Mart.”
Although Chinese workers lack recourse against abuses suffered in Wal-Mart’s supply chain, the world can be their voice and condemn Wal-Mart’s unethical behavior.

Ron Moore is a freelance writer living in Silver Spring, Maryland with decades of service in the grassroots community as a local union president, union organizer, national AFL-CIO staff, and writer for the A. Philip Randolph Institute.  Moore writes on labor and other issues at The Examiner, a citizen’s journalism site.

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3 Responses

  1. This is a useful and interesting report. To supplement it for Wal-Mart’s own direct employees in China, China Labor News Translations has recently published a critical report (to which I contributed) on the “collective agreement” between Wal-Mart and the ACFTU at http://www.clntranslations.org/article/38/wal-mart-contract.

  2. [...] claim that Wal-Mart helps Chinese workers is further disputed as just a PR stunt, by this blog which cites a study [...]

  3. See the above link for longer discussion on how Wal-Mart creates market imperfections in supplier markets and domestic retail.

    The end result of this is Wal-Mart profits through using its size to create market inefficiencies (rather than creating savings by lowering prices for consumers).

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