Hong Kong Groups Respond to Nike

October 3, 1997

[In September, two Hong Kong-based nongovernmental organizations released a report (via Global Exchange) detailing labor abuses in Chinese factories producing for Nike, Reebok and other shoe companies. Nike has responded to this report and to other criticisms of its labor practices by undertaking a major public relations blitz - not by substantially reforming its labor practices. The following alert is a response by the two Hong Kong groups to Nike's statements about their report. The Hong Kong groups refer to Nike's policy that employees will not work more than 60 hours per week. This is in fact a provision of the accord released in April by the Apparel Industry Partnership. Since Nike is a signatory to the accord, its provisions can rightly be considered as Nike policies.]

Enough Nike PR. Let's see what is really going on

Asia Monitor Resource Center Ltd. and the Hong Kong Christian Industrial Committee feel compelled to respond to Nike's erroneous and misleading press release rebutting our findings regarding shoe factory conditions in five shoe factories in Southern China.

The Asia Monitor Resource Center (AMRC) is an independent non-governmental organisation which has been located in Hong Kong for over 20 years researching, documenting and supporting workers rights and labour rights throughout Asia. We have done extensive research into the working conditions in Southern China, as well as in other areas around Asia, and have been committed to learning about and understanding labour issues in the region for over two decades. Christian Industrial Committee (CIC) is a local church related labour service organisation advocating labour rights in Hong Kong and China for the last 30 years. We have issued reports on working conditions in garment, toy and electronics factories in China, other labour intensive industries where working conditions tend to be particularly poor, and where the predominately migrant woman workforce is in a difficult position to exert their legal rights. Neither group makes a practice of targeting particular companies or multinationals, like Nike. Rather, we seek to identify unfair working conditions or dangerous health and safety conditions, help workers exert their legal rights, provide education and training materials for workers and hopefully raise awareness about the plight of these unskilled women workers.

It is within this context that we have investigated ongoing labour and health and safety problems at several factories that are contracted by Nike and other shoe companies to produce their shoes. This is the second report on conditions in shoe factories in Southern China. We take great care to interview workers outside the confines of management, in a safe environment, where they are free to answer our questions without fear of reprisal. These reports have been well received by academics, journalists, business groups, trade unions and other labour and human rights organisations as reliable and valuable, as this kind of research in China is quite difficult to do within the current environment. We have worked hard to become a credible and reliable resource.

In two press releases issued September 19 and 22, Nike says that those who "have taken the time to learn and understand the facts", such as Andrew Young, recognise the progress Nike has made in improving working conditions.

So who does Nike say has not taken the time to learn and understand the facts? AMRC and CIC, with over 20 years of experience each and whose researchers have visited the same factories over a period of several years to chart working conditions, or Andrew Young, who in his own report says that he had only spent three days in China, three to four hours at each factory, was taken around by management and did not speak to workers outside of management's presence, as they were always there to interpret? Mr. Young admitted knowing little about the labour situation there before embarking on this report, and visited AMRC and CIC to learn from our expertise about working conditions in China. Mr. Young's "findings" that conditions are good fits well with the company's public relations agenda. Our report, on the other hand, was not paid for by Nike and does not fit within Nike's public relations campaign.

Nike's response to our report shows that it either does not fully understand the typical labour environment in the factories where its shoes are made, or is trying to mislead the public. We will try once again to set the record straight on the practices of two of its China-based subcontractors.

1. FACT: Both factories violate the law with regards to wages, overtime compensation and making workers work more than the legally allowable hours per week.

Both Yue Yuen and Wellco violate the Chinese Labour Law regulations on wages, as workers are not properly compensated for overtime work. For example, our report states that at Yue Yuen, half of the workers interviewed received between Rmb 400 and 500 and 30% received between Rmb 500 to 600 per month. The minimum wage level of 350 is set in Donguan. But, the Rmb 350 minimum is for working 40 hours per week, or 160 hours per month. During the non-peak season when our interviews took place, Yue Yuen workers reported working a standard 10 - 12 hours per day, not including lunch or dinner, six or seven days per week. Seventy percent said they were paid by piece rate and did not receive any extra pay for overtime work. Nike did not question these findings when it "corrected the record".

According to the Chinese Labour Law, workers should be paid 1.5 times the regular wages for each hour over 40 hours worked during regular working days (i.e. in this case 6 or 7 hours of overtime per day), and double time for hours worked during the two rest days per week. A regulation that went into effect this past May now designates two rest days per week. Therefore, using the schedule reported by many of the workers interviewed at Wellco, workers should receive Rmb 350 for the first 40 hours (or Rmb 2.18/per hour), Rmb 262.4 (Rmb 65.6 per week) for the overtime during regular work days (4 hours per day, 5 days a week at time and a half), and Rmb 418.6 for the hours worked on Saturday and Sunday, compensated at double time (12 hours per day for four weeks). Therefore, most workers we spoke with should receive Rmb 1031 for the hours worked. Nike's stated average wage of Rmb 650 does not come close.

Nike did not rebut our findings that both Yue Yuen and Wellco violate the labour law by: 1. compelling workers to work overtime, 2. having workers work more than the allowable hours per week, and 3. not providing the required rest days. It is also a violation of China's Labour Law for workers to work more than 36 hours overtime over per month over the standard 40 hour week. The long working hours at these factories also violate Nike's own Code, which stipulates that workers work "no more than 60 hours of work per week".

2.FACT: On Health and Safety

In fact, many sneaker factories continue to use a highly toxic glue containing benzene, the use of which has been banned in the US. In late1995, we conducted research into the glues used by 12 shoe factories in Putian located in Fujian province. All but one factory used benzene in the production of its shoes. Other common solvents used are not carcinogenic like benzene, but still toxic and can cause health related problems. Many workers we spoke with reported that the fumes were particularly bad in the factory, so much so that workers reported feeling dizzy and ill. We do not know in fact what chemicals are being used, as the factory does not tell the workers or label the chemicals as is required by International Labour Chemicals Convention 170 to which China is a signatory.

3. FACT: Most Workers Do Not Know About Nike's Code of Conduct

As stated in our report, no worker interviewed from Yue Yuen at the end of June knew about Nike's code of conduct. Seventy percent of workers at Wellco did not know about the code of conduct. Several at Wellco knew about it but did not feel it was implemented or made any difference. In its response, Nike says this is a "myth" and further evidence of our "erroneous report". They should have looked at their own audit reports and Mr. Young's report before attacking our claim.

In footnote 10 of his report, Mr. Young says that improving awareness of the code "deserves attention and focus as less than half of the workers making Nike products (according to the audit reports and to my own personal "survey") knew what the code was." Though looking for the Code, Mr. Young also found that "the Code is not visible on the factory floors and not well understood".

Our report, its own audit reports and Mr. Young's survey all contradict Nike's claim that these workers have known about the Code for several years; it just is not true.

Nike claims that it has since provided each employee at Yue Yuen with a pocket size version of the code. As we have not spoken with Yue Yuen employees since June, we can not corroborate this. But, after reviewing a copy of this "pocket size" code, we feel Nike still has a way to go.

The pocket size Code given to the workers tells them to "wash their hands after using the toilet" and "before eating", advises workers not to "share drinking water or cups with other workers", and a vague statement that "full and fair compensation" will be paid. However, it is lacking in several significant areas, and is not as specific as the original Code. It does not include the original Code's directive on hours and overtime that workers work a maximum of 60 hours per week. It does not tell workers they must be paid at least the minimum wage. It does not state that children under 15 will not be employed. In general, it does not clear up any confusion or uncertainty about requirements to which the subcontractor is bound. The original Code is only a page in total. The pocket size code has not clarified its contents, but made the Code more ambiguous.

4. Fact: Wellco has hired child labour

We spoke at length with one worker who had been working at Wellco since she was 15, below the Chinese legal limit of 16. Four other workers reported that underage workers had been employed in sewing, handwork and cutting departments at Wellco.

Nike does not deny that Wellco has employed underage workers, as they vehemently deny other findings. Nike does not state that their subcontractors have not or do not hire child labour. It merely states that "if anyone [ underage ] has slipped through this process" it is not through lack of a genuine program to disallow child labour; they have an "unequivocal" standard.

Is this enough? Since when is ignorance a defense to violating the law? Our staff spoke in depth with one worker in particular at Wellco who was employed when she was 15. Whether Nike wants to call this an anecdotal report or part of a research study, the fact is that Nike's subcontractor violated the law by hiring this worker. 'We tried' just is not an acceptable excuse.

5.FACT: Nike does not refute many violations of the law contained in the report, including:

• Workers making Nike shoes work significantly longer hours than is allowed under China's Labour Laws and Nike's Code of Conduct, and are forced to work overtime.
• Workers are not allowed the designated two rest days per week off.
• Workers are not properly compensated for the number of hours worked.
• When workers cannot finish their quota, they must stay behind and work without pay until their quota is finished.
• Workers are routinely required to give as deposit one month's salary, which they often never see. This is in violation of China's labour laws.
• Workers are improperly fined.
• Workers have not been provided with written labour contracts as is required under the Labour Law.

As a small non-governmental organisation working with a very small budget, we can only try to compete with Nike's polished and well funded public relations campaign. Nike can continue to try to convince their consumers that they are creating opportunity for workers around the world, but, let's face it: they are a company in business to make a profit, and they use their huge purchasing power to get their goods manufactured at the cheapest price. They are producing in countries like China, Vietnam and Indonesia precisely because labour costs are cheap and workers' rights are limited.

We are dismayed that Nike's efforts at saying how much they are doing for workers far outweighs their commitment to actually improve conditions. We welcome any sincere and constructive dialogue with Nike and any company ready to commit to improving workers' rights.

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