Doctored records on working hours and pay are causing problems for consumer multinationals as they source more of their goods in Asia, writesAlexandra Harney Why ethical sourcing means show and tell LONDON 1ST EDITION

Even the biggest companies that source from China say they are confronted with falsified records at Chinese factories. Beth Keck, director of international affairs at Wal-Mart, says the world's largest retailer is aware of the problem. Nike's 2004 corporate responsibility report, released...

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Bibliographic Details
Published inThe Financial times (London ed.)
Main Author LAUREN FOSTER and ALEXANDRA HARNEY
Format Newspaper Article
LanguageEnglish
Published London (UK) The Financial Times Limited 22.04.2005
Subjects
Auditors
Audits
Compliance
Economic reform
Employees
Factories
Forgery
Labor law
Payroll records
Social responsibility
Workers
Working hours
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Summary:Even the biggest companies that source from China say they are confronted with falsified records at Chinese factories. Beth Keck, director of international affairs at Wal-Mart, says the world's largest retailer is aware of the problem. Nike's 2004 corporate responsibility report, released by the footwear maker this month, says of Chinese factories: "Falsification of information by factories often related to wages and hours of work is common. This extends to the practice of coaching of workers by factory managers trying to deceive compliance auditors." These audits are a chilling prospect for many Chinese factories. Failing an audit means a potentially crippling loss of business but compliance often requires a costly overhaul. When audits began, "we'd go to the factory, we'd see they did not meet lots of standards", says Steve Li, executive director of Hong Kong-listed Yue Yuen Industrial, the world's largest manufacturer of branded footwear, for customers including Nike, Reebok, Adidas and New Balance. Mr Li adds that improving social compliance is a continuing effort at his factories. "This is a pretty long journey. It's not ended. There's lots of room to improve." More auditing has not helped the problem. Big companies that buy a lot from China rely on both internal and outside auditors, in order to inspect more of the facilities they use and to show that independent observers had come to their own conclusions about the factories. As the social compliance auditing industry has grown in response to increased demand it has left many auditors with less time to spend at each factory. "I tell auditors that I cannot tell them the truth in relation to some of their questions. They smile and move on to something else," a manager at one large garment factory in Dongguan told CSR Asia, a Hong Kong-based research group. "They are complicit in the deception."
ISSN:0307-1766