Tech giants on trial as report reveals more Chinese factory abuses
VTech in the firing line as attention shifts from Foxconn
Analysis First it was Apple and Foxconn, now Motorola, AT&T, Sony, Deutsche Telekom and others have come under the spotlight after a new report made shocking allegations of human and labour rights violations at the Chinese factories of technology supplier VTech.
Not-for-profit the Institute for Labour and Global Human Rights said it commissioned a private research firm to gather evidence and interview staff from one of VTech’s three factories in Dongguan City, Guangdong province, where around 10,000 workers produce cordless and corded phones, phone components and circuit boards.
VTech products made at the factory and its two other plants in the city are sold all over the US by big name retailers such as Staples, Wal-Mart, Costco, Sears and Kmart.
The firm also supplies all of Deutsche Telekom’s corded and cordless telephones in Germany; all of Telstra’s fixed line phones; is a major OEM for Sony and Philips; and it produces kit for Motorola and AT&T, the report said.
The VTech Sweatshop in China  report alleges widespread abuses which even manage to top some of those levelled at Apple and Foxconn, including forced and excessive overtime; exposure to harmful chemicals; sub-standard living conditions; violence and bullying towards staff; and below subsistence wages.
During the peak season, staff work 68 to 71 hours a week, including 28 to 31 hours of forced overtime, apparently exceeding legal limits by 237 to 273 per cent. Those failing to meet targets are forced to work on without pay, while wages start at the basic legal minimum of 1,200 yuan per month – less than Foxconn’s basic of 1,800 yuan – and are soon eaten up by living costs, the report argues.
The Institute also accuses VTech of delaying the enrolment of its employees in government-mandated social security schemes for months on end, thus short changing them of up to $12m (£7.7m) a year.
Conditions force workers to flee
The most shocking allegations, though, involve treatment of staff and living conditions.
Staff are forced to stand for 12 to 15 hours a day, minus an hour’s lunch break where they are fed miserable looking victuals, and live in prison-like dorms with no curtains, air-conditioning or mattresses, according to the report. There are no showers and staff have to queue up to take sponge baths using buckets of water, it adds.
There is a strict disciplinary system at the factory. Erring staff apparently run the risk of being handed an Employee Criminal Record which could lead to docked wages, while managers are rewarded for reporting others’ mistakes, the report alleged.
Also detailed are what the Institute claims are first person accounts from workers describing their miserable lives at the plant, including suicides by co-workers and physical abuse of staff by security guards, although most of these seem to date from 2010.
Given the harsh conditions described above, it’s not surprising that as many as 80 per cent of staff leave each year, according to the report, even though doing so means they forfeit that month’s wages.
The report then rubbishes VTech’s own Code of Conduct – which talks of valuing employees, harmonious relations and open communications – with some pithy but unattributed responses from “VTech workers”.
The report urges action from VTech’s big name tech clients to improve living conditions; allow staff to sit during their shifts; reduce excessive production goals and stop physical abuse and bullying of staff, for starters.
Something has gone so terribly wrong at VTech’s manufacturing plants in China that it is difficult to know even where to begin to clean up the mess. VTech has a glossy code of conduct, which reads well and guarantees every labour right under the sun. But in reality, these factories are run like prisons, where workers have no rights, no dignity and no voice.
The good news is that there are so many corporations and retailers across North America, Europe and Australia sourcing production at VTech, that these companies have the power to speak out and demand change. Imagine if AT&T, Motorola, Wal-Mart, Sony, Philips, Deutsche Telekom in Germany and Telstra in Australia demanded improvement, this could make a world of difference for VTech’s exploited workers.
VTech standing firm
Rather disconcertingly, several of the not-for-profits working in the region contacted by The Reg had not heard of the Institute for Global Labour and Human Rights, which says on its web site it was founded in 1981 as the National Labor Committee.
However, it seems to have been pretty active over the past few years, targeting alleged sweatshops in Bangladesh, El Salvador, Jordan and elsewhere using the same blend of confrontational language and shocking revelations backed up by photographic evidence and heart-rending first person accounts, designed to garner maximum publicity and shame Western companies into action.
Hong Kong-based VTech, which reported revenues of $1.78bn (£1.1bn) in fiscal 2012, released a strongly-worded statement last Friday rejecting all allegations and saying it is considering legal action against the Institute for Global Labour and Human Rights.
It maintained that it has a long track record of good labour relations in mainland China:
VTech is a responsible and caring employer wherever it has operations, and this includes mainland China. The group and its subsidiaries abide strictly by the legal requirements relating to employment in all jurisdictions where it operates, including mainland China. Emphasis is placed on people-oriented management to ensure harmonious staff relations, especially in the group's manufacturing facilities. VTech takes care to ensure that the work environment is safe and that employees are adequately housed and cared for.
VTech confirmed to The Reg that it had no updated statement since then, despite Aussie telecoms giant Telstra's decision to suspend sales and rentals of all of its VTech-built products until further notice.
"Telstra is deeply concerned by the report," noted a statement sent to The Reg.
"Compliance with the law is mandatory for all our suppliers and labour misuse is totally unacceptable to us. We have asked VTech to respond urgently."
Motorola clarified to The Reg that while VTech is not a contract manufacturer or trademark licensee, it does “manufacture on behalf of some of our trademark licensees”.
We have asked our licensees [to look] into the matter. We place a high priority on the safety and welfare of our employees and our suppliers’ employees. We expect all suppliers and licensees to adhere to our Supplier Code of Conduct, which is publicly available on our website, and to comply with local laws and regulations.
What has become clear from the scrutiny placed on Apple and Foxconn, however, is that having a code of conduct alone is not enough.
No easy solution
Debby Chan, a project officer at Hong Kong-based SACOM, which released several critical reports  into abuses at Foxconn factories, argued that successful reform of VTech will require employees to be given a democratic voice in the running of their workplace.
“SACOM knows very well that the factory inspections are always bogus or fail to find out and fix the problems in the factories,” she told El Reg.
“As such, the workers should have the right to organise themselves through democratic trade unions. The unions are the prerequisite for workers to channel the grievances and report the abuses.”
The problem in mainland China, however, is that unions rarely represent workers’ interests and the government has little desire to change this.
Geoff Crothall, a spokesman for Hong Kong-based rights group China Labour Bulletin, argued that the conditions highlighted in the report are common among electronics companies situated along the Pearl River Delta.
“I'm sure all of the complaints in the report are genuine and do come from the workers themselves but I'm equally sure if you talk to other workers at VTech they will not be talking about suicide as a way out,” he told The Reg.
“If you look at the response of most factory workers now to bad conditions, it is to go out on strike or stage a protest. I think this is where I would take issue with the report, in its portrayal of workers as helpless victims.”
Philips had yet to reply at the time of writing. ®