Chart Nonprofit organization dedicated to ending sweatshop (Excel)

							Country Factory name IEM Date(s) in facility PC(s) Number of workers Product(s) Production processes
FLA Code/ Compliance issue

CHINA 01001528C SGS DECEMBER 6-8, 2004 ADIDAS-SALOMON 6528 SHOES CUTTING, SEWING, PRINTING, STOCKFITTING, ASSEMBLY, PACKING
Findings Country Law/Legal Reference FLA Benchmark

adidas Comment: In 2006 the adidas-Group sold the brand working with this factory. As a result of the sale, the adidas-Group stopped having a business relationship with this factory. Therefore, the SEA Team was unable to verify a successful completion of the remediation plan.

Monitor's Findings

Documentation (If Was finding was Finding corroborated/verified Corroborate through multiple d? Yes or sources, list all No sources)

Company Remediation plan

Remediation Target Factory Completion Response Date (Optional)

Company follow up (5 September 2005)

Documentatio n

Company Update (June 2006)

Documentation

Company follow up (Sept. 2006) Documenta tion

Updates Company Update (August 2007)

Documentati on

Company Update : August 2008)

Document ation

Company Update : March 2009)

Documentati on

1. Code Awareness Worker/management awareness of Code

FLA Principle of Monitoring, Obligation of Companies: Ensure that all Company factories as well as contractors and suppliers inform their employees about the workplace standards orally and through the posting of standards in a prominent place (in the local languages spoken by employees and managers) and undertake other efforts to educate employees about the standards on a regular basis. FLA Principle of Monitoring, Obligation of Companies: Develop a secure communications channel, in a manner appropriate to the culture and situation, to enable Company employees and employees of contractors and suppliers to report to the Company on noncompliance with the workplace standards, with security that they shall not be punished or prejudiced for doing so. There was not a confidential non- Workers interview, Yes compliance reporting channel for management employees to the PC company interview and on site observation PC's staff has been distributing their contact details during factory audits or visits or when they are approached by workers. Ongoing PC's staff has been distributing their contact details during factory audits or visits or when they are approached by workers. Workers have used this method to communicate grievances to the SEA Team. For example, a complaint call was received from worker in 2006 regarding his termination from factory. PC was able to properly follow up along with the factory compliance team. Worker's call A toll free number is announced to all workers of adidas suppliers. Workers can access the adidas SEA team for help on any concerns through this number. Anonymous complaints are welcome and Confidentiality is used when handling workers' communication. The factory promoted the number in public areas for workers full access. Bulletin board, poster of the adidas open letter to workers, complaints records.

Confidential noncompliance reporting channel

2.Forced Labor There will not be any use of forced labor, whether in the form of prison labor, indentured labor, bonded labor or otherwise 3. Child Labor No person will be employed at an age younger than 15 (or 14 where the law of the country of manufacture allows) or younger than the age for completing compulsory education in the country of manufacture where such age is higher than 15. 4. Harassment or Abuse Every employee will be treated with respect and dignity. No employee will be subject to any physical, sexual, psychological or verbal harassment of abuse. 5. Nondiscrimination No person will be subject to any discrimination in employment, including hiring, salary, benefits, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin. Hiring Discrimination Practices The clause 12 of China Labor Law: The employment decisions should no discrimination. Employment decisions will be made solely on the basis of education, training, demonstrated skills or abilities. All employment decisions will be subject to this provision. They include: hiring, job assignment, wages, bonuses, allowances, and other forms of compensation, promotion, discipline, assignment of work, termination of employment, provision of retirement The factory only hire workers whose age not less than 18 years old, they don’t hire young workers. Document review and management interview Yes Hiring should be based on ability to perform the job. Factory shall not discriminate against juvenile workers; identify risks for juvenile workers for each job and ensure supervision of juvenile workers as per law. 1-Jul-05 Factory has provided training to Management supervisors/managers involved interview in hiring activities on nondiscrimination against juvenile workers. Factory has provided training to supervisors/managers involved in hiring activities on nondiscrimination against juvenile workers. Currently, there are no juvenile workers working at the factory. Training record Review of factory hiring documentation and worker handbook and interview with factory management indicated factory does not conduct discriminative practices in hiring process in 2006. Hiring documenta tion, worker handbook, manageme nt interview

6. Health and Safety Employers will provide a safe and healthy working environment to prevent accidents and injury to health arising out of, linked with, or occurring in the course of work or as a result of the operation of employer facilities Health and Safety legal Article 26 of Code on Health Employer will comply with applicable health and compliance and Safety At Factory: safety laws and regulations. In any case where laws Factories should provide and codes are contradictory, the higher standards adequate drinking water will apply. The factory will possess all legally facilities at workplace. required permits.

The factory didn’t install drinking On site observation water facility at each floor, they and workers use removable water carriage interview provide drinking water to each workshop twice per half day, and some workers buy drinking water from outside. There was a door at polishing On site observation workshop, a door at EMB [embroidery] workshop and a door at printing workshop were installed opening inward instead of outward.

Yes

Factory shall install drinking water facilities on each floor.

1-Mar-05

Factory has installed drinking water at workplace.

visual inspection, photo on file

Factory has installed drinking visual inspection water at workplace. There are at least two drinking water stations on each floor, most of the time located on both sides of the floor.

Evacuation Procedure

Article 7.4.7 of Fire Prevention Code on Building Design: The doors should installed opening outward when there are more 60 person inside.

All applicable legally required or recommended elements of safe evacuation (such as posting of evacuation plans, unblocked aisles/exits, employee education, evacuation procedures, etc.) shall be complied with and workers shall be trained in proper safety, first aid, and evacuation procedures

Yes

Factory shall ensure all exit doors are designed to open outwards.

1-Apr-05

Factory has redesigned the door to open outwards.

visual inspection, photo on file

Factory has redesigned the door to visual inspection open outwards.

PPE

Article 54 of China Labour Law: the facilities should provide suitable PPE for the necessary workers in daily use.

Workers shall wear appropriate protective equipment (such as gloves, eye protection, hearing protection, respiratory protection, etc.) to prevent unsafe exposure (such as inhalation or contact with solvent vapors, noise, dust, etc.) to hazardous elements including medical waste.

Some EMB workers did not wear On site observation earplugs, and no suitable PPE and workers for the bootlace pulling workers interview to protect their fingers.

Yes

Factory shall take every effort to reduce the risk from workplace accidents. Provide workers with correct PPE for the job, train workers in the correct use of PPE, supervisors should ensure workers use PPE at all times.

1-Jul-05

Factory provided ear visual plugs/hearing protection to inspection, workers at noisy area but some photo on file workers are not wearing it properly. Management to reinforce to use of PPE. Workers were provided with gloves at booklacing area. Factory has regular training programs to workers on how to use PPE.

Factory provided ear plugs/hearing visual inspection; training protection to workers at the noisy record area and gloves at booklacing area. Factory has regular training programs for workers on how to use PPE. In addition, factory has internal SoE team to check at regular intervals the wearing of PPE at work.

Other

7. Freedom of Association and Collective Bargaining Employers will recognize and respect the right of employees to freedom of association and collective bargaining FLA Comment: The Chinese constitution guarantees Freedom of Association; however, the Trade Union Act prevents the establishment of trade unions independent of the sole official trade union – the All China Federation of Trade Unions (ACFTU). According to the ILO, many provisions of the Trade Union Act are contrary to the fundamental principles of freedom of association, including the nonrecognition of the right to strike. As a consequence, all factories in China fall short of the ILO standards on the right to organize and bargain collectively. Recently, however, the government has introduced The Amended Trade Union Act of October 2001 does stipulate that union committees have to be democratically elected at members’ assemblies and trade unions must be accountable to their members. The trade union has the responsibility to consult with management on key issues of importance to their members and to sign collective agreements. It also grants the trade union an enhanced role in dispute resolution. In December 2003,the Collective Contracts Decree introduced the obligation for representative trade unions and employers to 8. Wages and Benefits Employers recognize that wages are essential to meeting employees’ basic needs. Employers will pay employees, as a base, at least the minimum wage required by local law or the prevailing industry wage, whichever is higher, and will provide legally mandated benefits

adidas Group SEA has an essential element of adidas Key Performance Indicator (KPI) assessment, effective worker-management communication mechanism is required to be established and run systematically in all the key suppliers. Field monitors will regularly review the effectiveness of the system in each KPI audit. With the launch of the new China Employment Contract Law (ECL), trade unions have been given more responsibilities on collective bargaining, e.g. collective contract decree etc. A checklist of all trade union function was developed and is widely used in performance audit of existing suppliers to make sure

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Findings FLA Code/ Compliance issue Country Law/Legal Reference FLA Benchmark

Wage Benefits Awareness

Employers will communicate orally and in writing to all employees in the language of the worker the wages, incentive systems, benefits and bonuses to which all workers are entitled in that company and under the applicable law

Remediation Documentation (If Was Company Remediation plan Target Factory finding was Finding Completion Response corroborated/verified Corroborate Date (Optional) through multiple d? Yes or sources, list all No sources) Most workers didn’t know how to Workers interview No Factory shall re-train the workers on 1-Jul-05 calculate their production bonus production bonus calculation and monitor the training effectiveness. Monitor's Findings

Company follow up (5 September 2005)

Documentatio n

Company Update (June 2006)

Documentation

Company follow up (Sept. 2006) Documenta tion

Updates Company Update (August 2007)

Documentati on

Company Update : August 2008)

Document ation

Company Update : March 2009)

Documentati on

Factory has developed and implemented training plan in 2005 to provide training on pay system and bonus calculation to worker representatives. Representatives to communicate pay and bonus calculation to workers in their area. Those trained are aware of pay/bonus calculation method. Management to provide ongoing training to workers on pay and bonus calculation and include training in new employee orientation. Factory has developed a written policy on workers catering services and communicated to workers. Additional canteen/dining options will be available in January 2006.

Training plan and training records, management interview, worker interview

Factory continues to provide Training plan, training training on wage/bonus calculation record to workers, which is incorporated into factory annual training plan.

Factory has set up annual training plan to cover trainings on wage & bonus calculation and such training has been conducted on a monthly basis during 2006.

Training plan, training record

Training on wage payment calculation is conducted regularly in 2007. Workers interviewed stated that they understand the basic principles of minimum wage and overtime payment, and are aware of the productivity bonus scheme in the factory.

Voluntary Use of Benefits

All workers have a right to use or not to use employer provided services, such as housing or meals

During Monday to Saturday, the workers have to use factory canteen for lunch and supper (total food fee are RMB135 per month)

Workers interview and management interview

Yes

Develop written policy informing workers of the option to use on site canteen or any other dining facilities of their choice, communicate policy to all workers.

1-Jul-05

Management interview; worker interview

Factory has started to outsource Management interview, the canteen service to a worker interview professional caterer. Workers have to take meals in factory canteen during weekdays, and have the choices of dining in/out over weekends. Recently, factory management gave workers the choice of dining in/out of factory canteen during the week. However, because there were some cases of food poisoning caused by street vendors, factory management has for the time being discontinued to allow workers to eat outside of the factory canteen during the week. Factory management has been negotiating with local government in controlling food service vendors around the community, in order to allow workers the freedom of dining in/out once the outside food.

Workers are allowed to dine in or out of factory canteen over weekends. For weekdays, they still have to dine in the factory canteen, as no improvement in community food vendors was observed. Factory Management has included this issue in their Compliance Strategic Plan as outside vendors have shown to not have the proper conditions to prepare food.

Manageme nt interview, canteen manageme nt policy

Workers are not given full freedom of dining in/out of factory, i.e. for weekdays, they have to dine in factory canteen for lunch and dinner (in case of overtime work), although they are free to dine/out for breakfast and weekends. Factory management has been in contact with local government office on food hygiene of street vendors operating around factory premises. However, government officers failed to provide adequate control over the issue. Factory compliance manager is still making the efforts to convince factory management team on the fully free choice of meals for workers.

Currently, workers have the choice to eat their breakfast and dinner inside or not. However, they have to eat inside for lunch. - Factory management is taking into serious consideration the problems of food hygiene of the street vendors operating around the factory, and the shortage of the food and drink supply outside for the thousands of workers. After investigation, most workers would like to take lunch in factory rather than to go outside.

The factory continues the food service practice as before. Workers’ investigation indicated that the workers would like to take lunch in the factory canteen rather than go outside. The reasons include: There are big concerns about the food hygiene of the street vendors operating around the factory; the shortage of the meal supply outside for the thousands of workers at noon; there is only 1 hour of lunch break so it is not convenient for workers to go outside to have lunch and get back to have short rest. But the factory is now taking action to improve the food quality and service (for example, it has provided more range of regional flavors/types food and has a food committee to monitor the food service quality and follow up with action plans for improvement).

Time-recording system

Time worked by all employees, regardless of compensation system, will be documented by time cards or other accurate and reliable recording systems such as electronic swipe cards

No working hour records for new Workers interview Yes workers during the first 7 days in and management the factory (X). interview, time records and payrolls review

Factory shall strengthen working hour management by controlling access to workshop during lunch/dinner break and educating all supervisors and workers on time card swiping policy. Factory to provide time cards to new workers as well. Factory to provide training to all workers on regular working hours and time card checking policies.

1-Jul-05

Factory has provided time cards to new workers and regularly monitors the effectiveness of time card punching system. Factory has strengthened working hour management by cutting power during meal breaks and exercising regular inspection in production floors.

Time card records; management interview, worker interview; working hour report; daily inspection record

Time card records are in good compliance with PC requirement. Factory compliance team and worker committee are actively implementing floor inspection on a daily basis to ensure workers are punching in and out. In addition, factory management has set up authorization procedure in approving overtime work.

Time card records, interview with management, workers and compliance staff

Time card records are in good compliance with PC requirement. Factory compliance team and worker committee are actively implementing floor inspection on daily basis to ensure workers are properly applying time card punching system. In addition, factory management has set up authorization procedure for approving overtime work.

Time card records, interview with manageme nt and compliance team

Time card swiping policy is in place and properly implemented. Factory management and compliance team still exercise adequate control over working hours. Time card records for new hires and seasoned workers are well kept as per PC requirement.

Legal benefits

Article 73 of China Labour Employers will provide all legally mandated benefits Law: Labourers shall, in to all eligible workers accordance with the law, enjoy social insurance benefits under the following circumstances: • (1) retirement; • (2) illness or injury; • (3) disability caused by work-related injury or occupational disease; • (4) unemployment; and • (5) child bearing.

The factory (X) provided Injury insurance for about 20% of workers, and retirement, medical and unemployment insurance for about 15% of workers, not provided for all workers.

Social insurance invoice review and management interview

Yes

Factory shall cover all workers under insurance schemes to provide the benefits legally required.

Due to restrictions from local social insurance bureau, factory has difficulty in enrolling all workers under social insurance scheme. Since May 2005, factory provided private insurances to ensure all workers are protected against work accidents and/or medical expenses.

Social insurance enrollment records & private insurance plan; management interview; worker interview

Factory is covering all workers under social or private insurance scheme.

Social insurance enrollment Factory has been providing records, private insurance work injury and medical plan insurances to all workers in 2006.

Social insurance enrollment records, private insurance plan

Currently, 66% of the workforce receives work-injury insurance, and 16% medical insurance through social security system. In addition, private insurer contracted by factory covers the additional 34% of workers with workinjury insurance, and 84% with medical insurance. For female workers, they are entitled to paid maternity leave and maternity allowance.

Currently 52% workers receiving the work-injury and medical insurance, and 16% of workers receiving the workinjury, medical and retirement insurance; the rest 32% are covered by a commercial insurance for work-injury and medical which are according to the regulations of social insurance. Additionally, the female workers may receive maternity leave with pay and the nutrition allowance of 300rmb.

Through the governmental social insurance scheme and the commercial insurance that the factory provided, the coverage rates of the 5 insurances are: work-injury and medical insurances, 100%; maternity and unemployment, 87%; pension, 28%; All female workers are entitled to paid maternity leave and maternity allowance.

9. Hours of Work Except in extraordinary business circumstances, employees will (i) not be required to work more than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the limits on regular and overtime hours allowed by the law of the country of manufacture or, where the laws of such country will not limit the hours of work, the regular work week in such country plus 12 hours overtime; and (ii) be entitled to at least one day off in every seven day period
Overtime Limitations Article 41of China Labour Law: The employing unit may extend working hours due to the requirements of its production or business after consultation with the trade union and labourers, but the extended working hour for a day shall generally not exceed one hour; if such extension is called for due to special reasons, the extended hours shall not exceed three hours a day under the condition that the health of labourers is guaranteed. However, the total extension in a month shall not exceed 36 hours.

Except in extraordinary business circumstances, employees will (i) not be required to work more than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the limits on regular and overtime hours allowed by the law of the country of manufacture or, where the laws of such country will not limit the hours of work, the regular work week in such country plus 12 hours overtime; and (ii) be entitled to at least one day off in every seven day period. An extraordinary business circumstance is a temporary period of extra work that could not have been anticipated or alleviated by other reasonable efforts

1. The factory has obtained Consolidated Working Hours Approval from local government based on the period of 6 month, which defined that the overtime hours can not exceed 216 hours per half year, but based on the time cards from Jan to June 2004, found the workers OT are 20-80 hours a month, totally 234 to 371 hours and exceed legal limit 216 hours requirement, it violated the clause 41 of China Labor Law.

Time records and payrolls review, management and workers interview

Yes

Factory shall control the working hours to comply with China Labor laws and PC Codes of Conduct. Develop working hours (including overtime hours) plan; create overtime hours report and check daily that working hours do not exceed local law. Consult with production planning department to coordinate working hours and production needs effectively and as per law.

1-Jul-05

Factory has strengthened working hour control by improving coordination with production planning department and managed to reduce overtime work by supervisors/managers strictly exercising controls over working hours. Management has stressed company policy to all supervisors/managers of complying with PC CoC and local law requirement. Factory has been providing monthly working hour reports to PC and keeping files of daily floor inspection record.

Management interview; worker interview; monthly working hour report; daily inspection record

Factory management keeps good control over working hours and keeps sending in working hour reports to PC on a monthly basis. Daily floor inspection has been implemented by management, compliance team.

working hour report, daily inspection record, interview with management and workers

Factory management keeps good control over working hours and keeps sending in working hour reports to PC on a monthly basis. Daily floor inspection has been implemented by management compliance team to ensure workers are properly punching cards.

working hour report, daily inspection record

10. Overtime Compensation In addition to their compensation for regular hours of work, employees will be compensated for overtime hours at such premium rate as is legally required in the country of manufacture or, in those countries where such laws will not exist, at a rate at least equal to their regular hourly compensation rate. Miscellaneous Illegal subcontracting Possible homework

Nil Nil

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