Samsung finishes audit of Chinese component manufacturer HEG, vows long-term solutions

September 3, 2012
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A Samsung employee works in a Seoul shop in this file photo. Samsung has published its audit findings of a Chinese supplier accused of child labor. While no underage workers were found, the South Korean company still vows long-term solutions to labor issues. (AP Photo/Ahn Young-joon)

Mobile manufacturers have been repeatedly under fire for employing contractors and ODMs that don’t exactly have a good track record in terms of labor standards. Apple, for one, had been trying to improve working standards in its Chinese facilities at Foxconn. Meanwhile, HEG, one of Samsung’s component suppliers in China, had also been accused of employing underage workers and for under-paying its employees.

Chinese officials have earlier disputed claims by the New York-based China Labor Watch that HEG was employing workers below the legal age of 16, and that wages were often delayed.

Samsung says it “audited all HEG employees including face-to-face ID checks, reviewed HR records, and conducted 1:1 interviews with student workers.”  The company reports having finished its audit of HEG, and found no underage workers. However, some health-related issues were found, and Samsung demanded that HEG immediately improve its worker conditions.

The audit identified several instances of inadequate management and potentially unsafe practices. A system of fines for lateness or absences was found to be in operation. Instances of overtime beyond local regulations, or over 9 hours per week, were identified. Certain health and safety measures were inadequate, such as a failure to provide access to a medical clinic.

Samsung has demanded that HEG immediately improve its working conditions. We have formally notified the company that it must comply with all applicable labor laws and Samsung’s labor and employment right policies. If HEG fails to meet Samsung’s zero tolerance policy on child labor, the contract will be immediately severed.

In view of the potential implications of poor worker standards, Samsung has vowed long-term solutions, and will address these through the following:

  • Complete on-site inspections of all its 105 facilities and suppliers in China that produce solely for Samsung within September;
  • Review of 144 other facilities that supply for Samsung and other firms by year-end;
  • Contract with the Electronic Industry Citizenship Coalition (EICC) for regular on-site inspections from 2013 onwards;
  • Establishment of new guidelines that “include business principles, codes of conduct, contractual obligations, and management training for supplier companies.”
  • Establishment of a dedicated team within each regional HQ to oversee working conditions; and,
  • Termination of contracts with suppliers found to be in violation of policies.

Samsung has stressed that the company enforces zero tolerance to child labor, and says it does its best to comply with the laws in the jurisdictions where it operates.

Are worker conditions in China improving? The fact that Apple, Samsung and other big names are outsourcing manufacturing to the region is reportedly resulting in overall improvements in worker income and skills. But there are still kinks to be worked out, and the big brands need to be involved in order to improve goodwill.

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