New war of the flea: CSR and labor activism in China

By John Sexton
0 CommentsPrint E-mail, October 22, 2009
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Production is at bottom of the food chain in the modern division of labor. Globalization allows multinationals to focus on product development and marketing while outsourcing the messy business of making things to contract manufacturers in the developing world.

Your Hewlett Packard computer may have been manufactured in the same factory as your friend's Fujitsu. Quite likely the factory is in the southern Chinese province of Guangdong and owned by a Taiwan, Hong Kong or South Korean company. The workers are probably recent migrants from the countryside and the majority will be women living in factory dormitories.

Off-shoring is controversial. Unions in developed countries protest job losses and pressure groups accuse multinationals of exploiting third world workforces. Labor rights controversies have helped create a massive Corporate Social Responsibility (CSR) industry as companies answer critics of their ever more convoluted supply chains.

Critics see CSR programs as window dressing – a subset of public relations and advertising. CSR practitioners on the other hand, are almost by definition masters of spin and presentation. It is difficult to find a balanced view.

But a small but growing group of labor activists operating on China's mainland, some based in Hong Kong, have moved beyond criticism to action and are using CSR programs as a lever to improve working conditions and, increasingly, to raise workers' awareness of their rights.

Jenny Chan of SACOM (Students and Scholars against Corporate Misbehavior), a Hong Kong-based pressure group, is celebrating what she sees as a significant victory. Over the past year, two major contract manufacturers in the Guangdong city of Dongguan have invited radical Hong Kong-based NGOs to conduct innovative training courses on workers rights including coaching workers in how to raise grievances with management.

Dongguan's central business district shows off its bright lights. Dongguan, which has a population of 7 million and is 100 kilometers from Hong Kong, owes much of its prosperity to contract manufacturing for major brands and multinationals. [File photo]

Dongguan's central business district shows off its bright lights. Dongguan, which has a population of 7 million and is 100 kilometers from Hong Kong, owes much of its prosperity to contract manufacturing for major brands and multinationals. [File photo]

"This is a new worker-centered model of Corporate Social Responsibility, which involves joint monitoring of conditions in the workplace through empowerment of the workers themselves," says Chan.

At Taiwan-owned Delta Electronics, the Hong Kong-based Labor Education and Service Network (LESN) provided labor rights training to more than 1,500 workers between March and June 2009. Each worker was given a booklet explaining China's labor laws and the Electronics Industry Code of Conduct – an international standard adhered to by many employers in the industry.

From September 2008 to March 2009, another NGO, the Chinese Working Women Network (CWWN), provided similar training to 2,700 machine operators at another Taiwan-owned manufacturer, Chicony Electronics. CWWN also laid on a special course for 30 members of the factory’s worker committee, and helped establish a hotline service for workers to report problems in confidence.

Jenny Chan sees the courses as a move towards an entirely new model of "worker-based" CSR. Her vision is that multinational brands can be pressured into giving the workers themselves a significant degree of control over CSR programs.

Currently brands exercise control over suppliers by hiring consulting firms to carry out audits. But campaigners say the audits are stacked in favor of the companies. SACOM says they involve "minimum participation of workers if any at all. Only selected workers are questioned during the auditing process." Neither workers nor consumers receive copies of the reports. SACOM suggests audits are open to manipulation. Others are more straightforward. New York based activist, Li Qiang, says the auditing system is "riddled with corruption."

Li has obtained documents that show a Walmart supplier, the Huasheng Packaging Factory, prepared "cheat sheets" for its workers to memorize in advance of a visit by Walmart inspectors. The sheets included false information about wages, benefits and hours. The documents also show the company adjusted or concealed company records, especially "documents, forms or rules pertaining to the details of fines or punishments." The documents even included a plan to conceal the existence of a second Huasheng plant nearby.

Chan calls the training courses in Dongguan "a significant step in the history of CSR programs, a milestone to a large extent. We have gone beyond the brand-supplier partnership framework. NGOs […] have been brought in to the workplace to meet with workers, the key stakeholders."

The common factor that led to Delta and Chicony's participation in the training programs is that they are both suppliers to Hewlett Packard, the world's largest IT company. HP is 9th in the Fortune 1000 list, 26 places above Microsoft. In 2008 it made more than US$8 billion profit on revenues of US$118.4 billion. To put those figures in perspective, the combined GDP of the Baltic States of Estonia, Latvia and Lithuania is US$105 billion.

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