Sacom

(op-ed submission & feel free to circulate)

Dec 2007

Jenny CHAN
Chief Coordinator
Students & Scholars against Corporate Misbehavior (SACOM)
Tel: (852) 2392 5464 or 2392 5463
Fax: (852) 2392 5463
Skype: wlchanskype
Website: www.sacom.hk
Mailing Address: P.O.Box No. 79583, Mongkok Post Office, Hong Kong

The Wal-Mart Connection

Amidst the holiday shopping season and on the heels of massive toy recalls, products manufactured in China are a hot topic. In recent Congressional hearings, blame was cast on entities ranging from the Consumer Product Safety Commission (CPSC) to manufacturers to the Chinese government. Oddly, retailers and specifically Wal-Mart were rarely mentioned.

With Wal-Mart as the U.S.’s largest toy seller and China’s seventh largest trading partner, it is disturbing that the retailer takes no responsibility for the negative impact of its cost pressures on manufacturers. For years manufacturers have shifted jobs overseas, where labor is cheaper and safety regulations are lax. The result is no secret: Wal-Mart’s cost pressure on manufacturers and the Chinese factories which supply them is manifesting itself in the form of both unsafe working conditions and unsafe products.

As the Mattel toy recall drama unfolded this summer, Hong Kong-based organization Students and Scholars Against Corporate Misbehavior (SACOM) released a report regarding appalling worker conditions at five toy factories in China. Kam Long toys, one of the surveyed factories and a direct supplier to Wal-Mart, was found an unsafe and inhumane workplace for thousands of Chinese toy factory workers.

The report came and went with little fanfare, but it isn’t a stretch to draw a connection between both the tremendous pressure Wal-Mart puts on its suppliers to provide toys at the lowest possible costs, the abysmal working conditions for the factory workers who make those toys and the corresponding safety problems with the toys themselves. The inflexible directive by Wal-Mart to cut costs results in factories’ cutting corners on both product and workers’ safety. If a factory is mistreating the very workers under its roof, can we really trust that the toys they’re shipping across the world are safe?

Our report, which documents such abuses as “excessive, forced overtime,” “unsafe production environment[s]” and “inferior living conditions,” exposes the failure of Wal-Mart’s policy to prevent labor abuses. It also illustrates how Wal-Mart consistently either fails to catch and stop serious labor violations in its Chinese supplier factories or simply looks the other way.

Consider Wal-Mart’s auditing program where factory managers often use intimidation and bullying tactics to prepare workers ahead of time. Workers in at least one factory were forced to memorize a management-distributed answer key to recite during inspections, or risk losing their jobs. Several factory mangers have even gone so far as to say that each worker should behave “naturally,” and not volunteer to answer the auditors’ questions. Such explicit control of the workers’ emotions and actions robs workers of their dignity as human beings.

These examples cited in our report go beyond a few “bad apple” managers and illustrate a larger problem; factory managers in China are often just as constrained by Wal-Mart’s price pressure as the workers they supervise. While many other U.S. companies source from China due to the country’s cheap labor, Wal-Mart is unique in the ruthlessness with which it pressures suppliers. Chinese officers in the Toy Association in Guangdong remarked in a December 2006 USA Today article that it’s true “U.S. buyers demand prices that are not reasonable” but also that “Wal-Mart in particular puts a lot of pressure on prices” since the company, more than any other, is famous for its inflexible cost-cutting business model.

Inflexibility toward suppliers, who are often already struggling to stay afloat, effectively forces managers and owners to lie on audits, since they cannot afford to provide the kind of working environment or to pay the kind of wages that would ensure genuine compliance with Wal-Mart’s own supplier code, let alone internationally recognized labor standards.

In August, Wal-Mart just released its glossy “ethical sourcing” report, laden with staged factory worker photos and fancy charts and statistics that didn’t come close to telling the real story. Its recent “sustainability” report is more of the same. In reality, Wal-Mart audits only a small percentage of the tens of thousands supplier factories it sources from each year. Wal-Mart’s Global Ethics Office, responsible for the audits and inspections of tens of thousands of factories in over 70 countries, itself only employs around 200 people – less than the number of associates in one Supercenter. In comparison, the Gap, whose sales are less than one-tenth of Wal-Mart’s, has a 90 person inspection team.

Sadly, Wal-Mart’s labor woes are not confined to China. The company has shown a blatant disregard for labor rights around the world, from Bangladesh to the Philippines to the Dominican Republic. A report by Human Rights Watch in May explained that “Wal-Mart stands out [among U.S. companies] for the sheer magnitude and aggressiveness of its anti-union apparatus and actions.”

During this holiday season, Wal-Mart and other retailers will spend millions to lure shoppers into stores. Unless consumers around the globe hold Wal-Mart accountable for its actions, the vicious cycle will continue. Wal-Mart will keep pushing manufacturers overseas, perpetuating unsafe and illegal working conditions in its suppliers’ factories, and putting our children at risk with unsafe products. It’s easy for consumers to have an “out of sight, out of mind” approach to the factory workers in China and elsewhere, but in this global economy nothing is as far away as it seems – especially when these toys come wrapped as gifts for our children during the holiday season. Maybe it’s time to send the message that Wal-Mart’s low-cost goods aren’t worth the high price that many of us around the globe are really paying.

Jenny Chan is chief coordinator of SACOM, a new Hong Kong-based nonprofit organization founded in June 2005. SACOM aims to monitor corporate behavior and to advocate for workers’ rights in mainland China.

The 35-page report entitled “Wal-Mart’s Sweatshop Monitoring Fails to Catch Violations: The Story of Toys Made in China for Wal-Mart” (June 2007) is downloadable from www.sacom.hk (For more info, see also Wal-Mart Watch at http://walmarwatch.com).