Labor Rights and Wrongs: Some U.S. firms work to cut abuses in Chinese factories

By Robert Collier, The San Francisco Chronicle, Wednesday 17 May 2000

She is part of a new attempt by some leading American firms to improve working conditions in China's notoriously harsh factories. The success or failure of their work is central to the debate in Washington over whether to give permanent trade benefits to China.

Do trade and corporate investment help improve the human rights situation and pave the way for democracy in China, as the Clinton administration and the trade bill's backers say? Or, as opponents contend, are U.S. firms simply profiteering from communist repression, taking advantage of 20-cents-per-hour wages and the Chinese government's denial of workers' rights?

During recent travels by two Chronicle journalists throughout the vast Pearl River delta industrial zone of southern China's Guangdong province, interviews with dozens of workers, company and government officials uncovered plenty of evidence to support both conclusions.

It was clear that Reebok and (to a lesser extent) other American firms are making changes for the better. They provide jobs, improve working conditions and set a relatively good example for Chinese and other foreign firms, whose factory conditions are generally draconian.

But it was equally clear that some of the U.S. firms' own practices do not meet the corporations' own codes of conduct or international labor-rights norms. Nor have they prompted the Chinese government to improve enforcement of its own labor laws or international workers' rights standards.

In Zhongshan, Tucker's reform plans are complicated by the fact that she is not really in charge. As in nearly all other plants producing for U.S. brands in southern China, the factory is owned and operated by a subcontractor—in this case, Yue Yuen, a Taiwanese firm. Yue Yuen, which also makes shoes for New Balance, Timberland and Dr. Martens at the same factory, produces for nearly all other American brands at other plants.

Yue Yuen may be unknown to U.S. consumers, but it is a colossus in the wholesale footwear industry. The firm's factories in China, Indonesia, Vietnam, Taiwan and Los Angeles produced 14 percent of all branded athletic footwear sold worldwide in 1999, as well as 14 percent of casual shoes—adding up to a total of 87 million pairs.

The Zhongshan factory, for example, is as big as a small city, with 35,000 workers, nearly all of whom live on site in highrise dormitories.

During Tucker's visit to Zhongshan with a Chronicle reporter, it was apparent that her frequent outbursts—pointing out missing gloves here, missing goggles and the wrong kind of solvent there—were not just a show for the press.

In December, because of similar problems, Reebok punished Yue Yuen by transferring about $40 million in annual sneaker contracts from the Zhongshan plant to one elsewhere in China owned by another firm.

And because of pressure from Reebok and other American firms, Yue Yuen has ended several practices that had earned harsh criticism from human rights groups—including its system of fining workers for misbehavior and its practice of paying mainly by piece rate.

Reebok's concerns have helped us pay more attention to human rights issues, said Edward Ku, executive director of Yue Yuen. He said that within a year, the company would switch completely to less toxic, water-based glues on all its factories' production lines—another longtime demand of activists, who say the chemicals cause health problems among workers.

Evident throughout the factory is a strange mix of Reebok's idealism and Yue Yuen's stern paternalism. Slogans everywhere exhort workers: Work diligently because life is hard and short (The spirit of Yue Yuen).

But Wang Pingli, one of the 35,000 workers, says she is happy she made the trip late last year from her village in Shaanxi province, 800 miles to the northwest.

Yue Yuen is the best place to work in the area, because the factory takes care of me, she said.

To Wang, what makes Yue Yuen a desirable place to work is its zhi du -- a system of rules partly derived from Reebok's code of conduct and partly from Yue Yuen's own Confucian ethos.

Zhi du regulates the conduct of both management and workers. It means, among other things, that Wang works a maximum of 60 hours per week, with five days of paid vacation a year, three months of maternity leave if she gets pregnant, the services of a company clinic and a pair of Reebok shoes as an annual bonus. Most important (and most unusual in Guangdong), she is paid on time, once a month.

Wang gets three meals a day and a bunk bed in a 12-woman room in a high-rise dormitory. Factory regulations stipulate that she place her toothbrush in just the right angle in her rinse cup, hang her face towel just so, participate in early-morning drills and obey the 11:30 p.m. curfew.

In return, Wang is paid 650 yuan, or about $80, per month. To her, it's a good deal, because back in her village she earned nothing. In a few years' time she will have saved enough for a dowry, she said. Or maybe enough to start a shop of my own, she added brightly.

But there are sticky details, which seem to show the limits of Tucker's good intentions.

For one, the 60-hour week violates Chinese federal labor law, which sets a maximum of 49 hours. Though the law is ignored throughout Guangdong and other export- production zones in China, Reebok's corporate code of conduct, as well as those of other U.S. companies, pledges compliance with national labor laws in all countries they operate in.

More important, from the point of view of the AFL-CIO and human rights activists who oppose U.S. trade concessions to China, is the violation of internationally recognized labor organizing rights.

At the Zhongshan factory and everywhere else in China, labor peace is guaranteed by the only union allowed, the All-China Federation of Trade Unions, controlled by the Communist Party and factory management. Strikes are banned and union functions are mostly limited to organizing after-hours recreation programs.

The union president is invariably a management executive. The union boss at the Reebok section of the plant, Xu Lan Ying, is also the section's personnel director. She said her main purpose as union chief is to help the factory run smoother and more productively.

Although Xu said she had been chosen in a democratic union election, she could produce no documentation to prove it. When asked about the union outside the factory gates, Wang and her co-workers said no such election ever occurred. Several were even unaware of the union's existence.

When first asked about the union, Tucker also was unaware that it existed. Later, she said it was not really a union, and Reebok had never communicated with it.

Human rights groups say that elsewhere in China, workers who disobey their union chiefs or try to organize independent unions are automatically fired or worse. Dozens of labor activists are languishing in prison on charges of disrupting public order or counterrevolutionary crimes.

If you try to compare Yue Yuen with many small companies, it's paradise, said Chan Kawai, executive director of Hong Kong Christian Industrial Committee, a labor-rights group that has carried out extensive studies in Zhongshan and at other south China factories.

But the fundamental rights of workers—the right to freedom of organization and the right to collective bargaining—are still repressed. Because they are so big, Reebok and Yue Yuen should do more to give a voice to workers.

Whatever the limits of its efforts in Zhongshan, Reebok is undeniably a leader of the corporate reform movement. Along with other European and American firms such as Adidas, Levi Strauss, Nike and Mattel, it has hired dozens of inspectors to check factories for substandard conditions.

Tucker is an example. Formerly the director of International Development Exchange, a liberal San Francisco group that carries out small-scale aid projects in poor nations, she also worked at the Asia Society in Indonesia before being hired by Reebok.

Tucker seems torn by the criticism, defending her record while agreeing with much of what her detractors say. Shoes are going to be made in China no matter what, she said. It's the reality of the industry. I think we just have to do whatever we can to improve things.

But where there are no Jill Tuckers or zhi du, working conditions are grim indeed.

Workers at other factories in Guangdong say rampant exploitation and poor conditions are routine. Workers are forced to toil 70, 80 and even 90 hours per week, protective equipment is rare, physical abuse common, dorms filthy and unexplained penalties often reduce paychecks to near zero.

U.S. human rights groups have harshly criticized Disney, Wal-Mart, K-Mart and the Gap for conditions in their Chinese factories. They say these companies, and others like them, will be big beneficiaries of China's expected entry this year into the World Trade Organization, which will phase out U.S. apparel and textile import quotas and stimulate yet more foreign investment in Guangdong.

Zhongshan's deputy mayor, Wu Rui Cheng, said he wants to attract more companies like Reebok—or DuPont and Union Carbide, and many others that have local factories. But when asked about Reebok's human rights pressure, he wrinkled his nose. We have our own laws about how to treat workers, he said.

In fact, many U.S. firms seem to give the Chinese government contradictory messages about reform. The American Chamber of Commerce in China recently distributed to all top government officials in Beijing a 97-page white paper proposing extensive changes to Chinese laws and regulations that affect foreign investors. The government has already made some of the requested changes.

But the report fails to mention any of the U.S. critics' concerns -- enforcement of workplace health, safety, environmental and labor laws, and union rights. And the report goes so far as to ask the government to cut labor costs—especially in coastal areas such as Guangdong -- because it says wages there are among the highest for developing countries in Asia. . . . These high labor costs have already discouraged some potential investors.

That raises the hackles of Medea Benjamin, director of Global Exchange, a San Francisco group cooperating with Reebok, Mattel, Levi Strauss and other organizations to create a common set of rules for U.S. firms' factories in China.

Unlike the rhetoric that companies have a democratizing effect, most U.S. companies are not only taking advantage of China's low wages and repression, but they're actually pressing the government to lower standards, Benjamin said.

Chamber Chairman Timothy Stratford defended his group's stand. I don't see any contradiction with our members' codes of conduct, he said. We're upholding the highest standards, and we're living by them.