The global electronics supply chain: Who's responsible for cleaning up Chinese sweatshops?

A student group in Hong Kong recently published a blistering report about conditions at several Dell suppliers in China. The report, "The Manufacturing of Sweatshop Computers: Behind the Zero-Inventory Strategy," is enough to make any Dell customer, from a home user to a corporate IT shop, feel uncomfortable. It claims that Dell's build-to-order manufacturing processes have resulted in "shameful" working conditions in factories in southern China.

Students and Scholars Against Corporate Misbehaviour (SACOM) singles out assembly-line workers at the TERA Plastic Electronics Factory in Guangdong Province as having it particularly bad: At the plant, which allegedly makes keyboards for Dell, shifts of 12 hours are common, and some workers are on the job for 16 hours when workers change from day to night shifts. One of the assembly lines is in a poorly ventilated room. Boys under 16 from poor interior provinces are working at TERA's factory, using forged ID cards. Wages are 17 renminbi per day (US$2.29), plus overtime of 3.5 RMB per hour (US$0.47), below the legal minimum wage. It used to be worse, says the report -- at one time, workers were paid 16 RMB per day and only got a raise after holding a strike. All of the strike leaders were supposedly fired afterwards.

There's more in the SACOM report. It says wages at TERA are held one month in arrears, and if a worker decides to leave, there is a steep price: Those who quit "sacrifice 30% of their wage as qusai [sic] penalty for un-approved resignation," it states.

This is not the first time Dell has been accused of supporting sweatshops in China. Nearly four years ago, The Catholic Agency for Overseas Development in the U.K. released a report entitled "Clean Up Your Computer." In it, Dell, IBM, and HP were taken to task for allowing similar abuses to take place at suppliers' factories in China, Mexico, and Thailand. Dell quickly promised to address the issues raised in the CAFOD report, instituting a "code of conduct" in March 2004 that would supposedly be applied to its suppliers.

Fast-forward to the present day. The policy has been in place for more than three years, and presumably all of the related processes have been worked out with suppliers. Yet sweatshop conditions still persist at some Dell suppliers, says SACOM.

Why is this so? The organization claims that Dell's own policies don't go far enough. The group further demands that Dell "implement concrete and constructive plan of action with their business partners" to address these issues.

A Dell spokseman would not confirm whether or not TERA is one of Dell's suppliers, but said the company had "great concern" about the allegations and would investigate. "[Suppliers] have the same workplace policies and worker protections that we have in our own facilities," he said. "We expect no difference in Dell facilities and supplier facilities."

He also noted that many Chinese electronics factories often serve multiple international clients, which complicates how suppliers implement policies, and how U.S. companies (or Chinese partners) check to see how they are carried out. Dell and other manufacturers in the computer industry have attempted to address this issue by creating an "Electronic Industry Code of Conduct" (EICC) for suppliers. The code has all of the things you'd expect -- prohibitions against child labor, unsafe and illegal workplace conditions, wage abuses, etc. It calls on participants to be in compliance with local laws, and "at a minimum ... require its next tier suppliers to acknowledge and implement the Code." The EICC also references a slew of international guidelines from the United Nations, the International Labor Organization, the ISO, and the OECD (although it notes that the standards "may or may not be endorsed by each Participant.")

But here's the main problem with the EICC: There is no easy way to address abuses or code violations in a way that improves the situation for the workers at the bottom of the supply chain. A multinational could cut off the relationship with a rogue supplier, but what good would that do? The workers would likely lose their jobs or continue to toil under the same conditions. The SACOM report recognizes this danger in the first two sentences of its report:

"SACOM strongly opposes termination of business relations adopted by computer brand companies as a penalty with business partners for labour rights violations. Cutting and running is not a constructive solution to the labour problems mentioned in this report but an evasion of social responsibility."

However, SACOM itself avoids addressing a major area of concern: The omplete failure of the Chinese government and legal system to respond to workplace abuses in China. If the report is accurate, TERA is violating a number of Chinese laws. Yet the report hardly mentions them, and makes no attempt to blame authorities for allowing the situation at TERA to persist.

In China, it's a well-known fact that central ministries, as well as provincial and local agencies, are very efficient at drafting and publicizing laws. When it comes to enforcement, however, authorities have generally been unable or unwilling to crack down on offenders. SACOM doesn't delve into this issue, but it should be central to any discussions about Chinese workplace conditions. Of course Dell and other multinational vendors have a responsibility to monitor their suppliers' treatment of workers and help bring them into compliance with local laws. But China's government needs to do more to ensure its citizens are protected and provided for.

Copyright © 2007 IDG Communications, Inc.

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