Part A: Introduction

In August 2024, China Labour Bulletin (CLB) published the research report Breaking the Mould: Germany’s Supply Chain Act as a New Approach to Global Labour Rights Accountability, The report primarily focused on the labour disputes in China’s electronics sector and highlighted CLB’s efforts to adopt a new approach to global labour rights accountability. This approach involved reaching out to international brands to conduct supply chain due diligence checks to protect workers’ rights in China.

Labour disputes in China’s manufacturing industries are widespread and persistent. Common issues include excessive working hours, unsafe and unhealthy working conditions, low wages, factory relocations without proper relocation, and the absence of independent trade unions. These challenges are not limited to the electronics sector but are also prevalent in industries such as textiles and footwear. This report documents six significant cases that CLB intensively monitored over the past 12 to 15 months, using supply chain due diligence tools to advocate for improved labour rights protections.

After identifying instances of labour law violations, CLB sought to escalate these cases to the factories' holding companies and their associated international brand buyers. Through this process, CLB has increasingly confirmed the value of engaging with global brands to encourage them to meet their supply chain due diligence responsibilities.

Among the six cases presented in this report, Shanghai Donglong Home Textile stands out. In this instance, CLB’s communication with the factory’s buyer, IKEA, resulted in the affected workers receiving the legally mandated compensation following the factory’s relocation. This outcome underscores the potential of leveraging international brand accountability to achieve tangible improvements in workers’ rights.

Part B: Supply Chain Due Diligence in Action

1.Hangzhou Deli Textile

In late October 2023, Hangzhou Deli Textile Co., Ltd. (hereinafter referred to as "Hangzhou Deli Company") faced a workers' strike over compensation issues related to factory relocation. It was not until 8 November that the company posted the "Announcement on Compensation Plan", which outlined compensation for employees whose labour contracts were terminated ostensibly following China's Labour Contract Law. However, judging from the chronology of events, one is puzzled: if the workers had not gone on strike, would the factory have offered the same compensation? Could the strike have been avoided if the company had communicated the compensation plan earlier and in accordance with the law? At the same time, there was no sign of a union representing employees in negotiations with management during this incident. Does the company even have a functioning union?

The relocation stems from a non-residential housing relocation compensation agreement Hangzhou Deli Company signed with the Office of the Urban Organic Renewal Command of Hangzhou Qiantang New District as early as 17 December 2021. Under this agreement, the Command Office purchased the company’s buildings and land use rights for 500,362,000 yuan (with 125 million yuan pre-collected as of September 2023). The agreement also set 17 December 2023 as the relocation and vacancy deadline. Since 2022, the company has issued multiple public announcements indicating plans for demotion, relocation, or name changes involving Hangzhou Deli Textile Co., Ltd. and Zhejiang Fufa Textile Co., Ltd., while simultaneously investing in Nantong Deli Textile Technology Co., Ltd. Given this timeline, Hangzhou Deli Company had ample time to devise a detailed relocation and compensation plan, inform employees, and negotiate with both workers and trade unions.

Article 4, Paragraphs 2 to 4 of the Labour Contract Law of the People's Republic of China states:

"When an employer formulates, amends or decides on rules and regulations or major matters directly related to the vital interests of employees, such as labour remuneration, working hours, rest and vacation, labour safety and health, insurance and welfare, employee training, labour discipline, and labour quota management, it shall be discussed at the employee representative conference or all employees, and proposals and opinions shall be put forward, and the decision shall be made through equal consultation with the trade union or employee representatives.

"During the implementation of rules and regulations and major decisions, if the trade union or employees consider them inappropriate, they have the right to propose them to the employer and have them amended and improved through consultation.

"Employers should publicise or inform employees of rules and regulations and important decisions that directly affect the vital interests of employees."

According to information shared online by employees, the company had begun moving production equipment as early as mid-October 2023. However, Hangzhou Deli Company's "Announcement on the Compensation Plan" on 8 November 2023 stated that consultations with employees only began after an earlier announcement on 30 October. This suggests a lack of timely engagement with employees regarding the relocation.

The compensation plan announced on 8 November 2023 raised significant legal concerns. It required employees to sign a mutually negotiated labour contract termination agreement within less than 10 days as a condition for receiving their year-end bonuses. This provision appears to circumvent the employer’s statutory obligations and undermine employees’ rights. Such terms may potentially violate Article 26 of the Labour Contract Law, which prohibits employers from using deception, coercion, or exploiting an employee’s vulnerabilities to force them into signing or amending a labour contract against their true intent.

In November 2023, CLB contacted the holding company of Hangzhou Deli in Taiwan for clarification and accountability. However, our letter was left unanswered.

2.Yangzhou Baoyi Shoe

3. Nordd Leather

For more details on this incident, read our publication on the strike at Nordd leather factory here.

Nordd International, a leather goods manufacturer based in Dongguan, Guangdong Province, faced significant labour disputes in 2024. Workers wearing Nordd International uniforms were seen protesting outside the factory gates on 8 May 2024, as documented in multiple social media posts. The workers claimed that the company had “collapsed” and owed them several months’ wages as well as a year’s worth of unpaid social insurance contributions. Subsequent social media posts in the following days corroborated these claims, with images showing workers carrying protest banners at the factory. On 19 May 2024, another post alleged that workers were beaten during protests. While there have been reports suggesting that some workers have since received partial payment of their wages, it remains unclear whether all employees have been fully compensated, including the owed salaries and social insurance benefits.

In June 2024, local government authorities fined Nordd International 10,000 yuan for failing to pay hundreds of workers’ wages on time. However, this penalty appears minimal compared to the scale of the violations and their impact on the workers.

Inactive Trade Union and Management Control

A critical issue in this case is the apparent failure of the enterprise union to defend workers’ rights. While the Nordd International Dongguan factory has had an enterprise union since 2017, CLb’s research suggests it has been largely inactive in assisting or organising workers to protect their rights. The trade union chairman, Hu Chuanbin, was not an ordinary employee but someone with extensive ties to the company. Hu is the legal representative, financial director, executive director, and manager of Dongguan Yang’en Trading Co., Ltd. (the Yang’en company), holding a 49% stake. The remaining 51% of Yang’en Company is owned by Dongguan Nordd’s Leather Products Co. Ltd. This dual role suggests that Hu is closely aligned with Nordd’s management, raising serious concerns about the independence of the trade union.

Given these circumstances, there is a prima facie case that the company management controls the trade union of the Nordd International Dongguan factory de facto.

Legal Violations

Based on CLB’s investigation, several violations of Chinese labour laws may have occurred, including breaches of:

Article 50 of the Labour Law: Mandating timely payment of wages;
Article 78 of the Labour Contract Law: Requiring employers to fulfil their obligations under labour contracts, including payment of wages and social insurance contributions;
Article 28 of the Trade Union Law: Prohibiting interference by employers in the independent functioning of trade unions.

Nordd International is a supplier of the international brand Tapestry.

According to Tapestry, Inc.'s Supplier Code of Conduct, the company and its affiliates are committed to ethical business practices and compliance with all applicable laws and regulations. Tapestry expects its suppliers to uphold these standards, act as socially responsible citizens, and adhere to all relevant laws, including those governing labour, environmental protection, and occupational health and safety. Article 2 of the Code further emphasises that suppliers must meet Tapestry’s higher standards if they exceed local legal requirements.

CLB suspected that Nordd International likely violated both China’s labour laws and Tapestry, Inc.'s Supplier Code of Conduct. In October 2024, CLB contacted Tapestry, urging the brand to conduct a due diligence investigation of the supply chain. However, no response has been received to date

4. Zhejiang Luona Fashion

Zhejiang Luona Fashion Co., Ltd. (hereafter referred to as “Luona”), established in 2021 and based in Zhejiang province, specialises in designing, producing, and selling seamless garments such as underwear, shapewear, and sportswear.

In April 2024, Wang Yongjun, a Luona worker, reportedly died suddenly in the company dormitory after work. Following his death, Wang’s family sought answers from Luona regarding the cause of death, the company’s responsibility and compensation arrangements but received no satisfactory response. A social media post in August 2024 brought the case to attention.

CLB’s investigation revealed that Luona’s recruitment ads consistently stated working hours as “8 am to 9 pm”, with “two rest days per month,” implying 13-hour workdays for 28-29 days a month. This excessive overtime appears to contravene China’s Labour Law, which requires overtime to be arranged in consultation with a trade union. However, CLB discovered that Luona’s trade union chairperson, Yao Yuanxue, also serves as the company’s deputy general manager, raising concerns that the trade union was de facto controlled by the company management.

Based on its findings, CLB believes two key labour rights violations may have occurred:

(1)Excessive Overtime: If workers are indeed subjected to 13-hour shifts for nearly the entire month, this would breach China’ Labour Law;
(2)Freedom of Association: It seems that the trade union of Luona has not been effectively engaged in the arrangement of working hours and the settlement of the dispute on Wang Yongjun’s death as required by China’s Labour Law and Trade Union Law, it is questionable whether it is because the company management de facto controls the trade union.

In addition, CLB identified four critical questions in this case:

(1)Could Wang Yongjun’s death have been linked to excessive working hours?
(2)Did Luona Handle Wang’s family’s queries and requests responsibly?
(3)Are Luona’s workers subjected to unlawful overtime?
(4)Is Luona’s trade union effectively controlled by company management?

As Luona supplies to global brands, including H&M and Victoria’s Secret. CLB contacted H&M in October 2024 and Victoria’s Secret in November 2024. H&M has not responded. Victoria’s Secret replied, stating they conducted a thorough investigation, including reviewing audit records, contacting the supplier, sending a team member to the facility, and interviewing management and workers. However, they concluded that their findings were inconsistent with CLB’s allegations without providing detailed explanations.

5. Shanghai Donglong Home Textile

On 12 August 2024, around 60 workers at Shanghai Donglong Home Textile Products Co. Ltd (hereinafter referred to as “Shanghai Donglong”) were informed that certain production workshops were being transferred to Anhui Province, resulting in the termination of their employment contracts on 12 September. After termination, workers discovered that overtime was excluded from the calculation of redundancy compensation, a violation of China’s labour law. This sparked protests, leading local government authorities to mediate negotiations between workers, union representatives, and management.

At the heart of this protest is the disproportionate share of overtime pay in the income of Shanghai Donglong’s workers. The factory sets workers’ base monthly wage at 2,690 yuan, the Shanghai minimum wage, for a statutory five-day, 40-hour workweek. For comparison, Shanghai government data puts the average monthly income at more than 12,000 yuan. To achieve higher earnings, in line with what was promised to them upon employment, workers are forced to work a significant amount of overtime, well beyond what is legally allowed. This situation creates incentives for workers to seek out as much overtime as possible, putting their health and safety at risk, and discouraging active enforcement of laws and regulations limiting overtime.

Under China’s labour law, redundancy decisions must involve consultations with workers or their union representatives. But Shanghai Donglong failed to engage workers during the announcement on 12 August, delaying the resolution of compensation errors and necessitating external intervention.

In addition to failing to consult with factory management on behalf of affected workers and identify errors in the compensation terms being offered, the trade union at Shanghai Donglong failed to protect workers from excessive overtime. It also did not advocate for higher base wages, leaving workers reliant on illegal overtime to earn a livable income.

The issues described above are directly relevant to several of the principles and requirements set out in your company’s supplier code of conduct, including lawful business conduct, protection of workers’ health and safety, and respect for fundamental labour rights.

In October 2024, CLB communicated with IKEA, a key buyer of Shanghai Donglong, urging the brand to address these labour rights risks in its supply chain. IKEA China responded promptly, raising the issues with the management of Shanghai Donglong. Ultimately, Shanghai Donglong agreed to include overtime pay in the redundancy compensation calculations. Workers subsequently accepted the termination terms and received the compensation they were legally owed.

6. Emeishan K.V.E. Sports

On December 4, 2024, hundreds of employees of Emei KVE Sporting Goods Co. Ltd Ltd., a subsidiary company of the K.V.E Group, went on strike to protest the company's failure to pay social insurance contributions. Employees on Chinese social media platform Douyin claimed that the company has not made social insurance contributions for over ten years.

At its peak, The company had between 6,000 and 7,000 employees, according to publicly available information. If Emei KVE has failed to pay social security contributions for many years, it would be a serious violation of China’s labour laws and an infringement of basic labour rights.

On the other hand, according to our findings, Zou Xiaobing, the enterprise factory chairman is also the company's deputy general manager of administration and a two-term member of the Emeishan Municipal Chinese People’s Political Consultative Conference (CPPCC). Zouis also the legal representative of another 100% holding company of Xinfa Industrial Co., Ltd., which is a 100% holding company of the KVE Group.

From the above, it is a prima facie case of lack of independence of the trade union and therefore it may amount to the interference of freedom of association. Additionally, the trade union's lack of independence may hinder its ability to effectively monitor the employer's timely payment of social insurance contributions.

From the public information released by the KVE Group, international brands including American brands Vans and REEF, were major buyers in recent years.

CLB reached out to Vans and Reef in January 2025 inviting the brands to consider conducting a supply chain due diligence check in this case. CLB then received interim replies from Vans and Reef acknowledging that they received CLB’s communications and would forward the message to appropriate departments and partners to review and follow up.

Part C: Conclusion

The labour disputes highlighted in these cases underscore the fundamental weaknesses in the current state of Corporate Social Responsibility (CSR) commitments. While it is encouraging to see international brands taking steps toward fulfilling their supply chain due diligence responsibilities, a more systematic and legally binding approach is essential to address these issues effectively.

The introduction of frameworks such as the German Supply Chain Due Diligence Act (2021) and the European Union Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) signals progress toward stronger accountability mechanisms. These developments pave the way for more enforceable tools to ensure supply chain compliance with legal standards and respect for workers’ rights.

In China, an increasing number of companies are publishing Environmental, Social, and Governance (ESG) reports in response to this global trend, committing to upholding labour laws and protecting workers’ rights. However, true progress will require not only these innovations but also international solidarity and cooperation.

Only through collective efforts can we hope to build fair and just global supply chains—where workers’ rights are upheld, and corporations are held accountable for their impact on human lives.

New Approach to Global Labour Rights Accountability applying to Chinese Textile and Shoe Factories: Lessons learned from CLB’s Global Supply Due Diligence Advocacy Work