Textile trader takes aim at sweatshops
Toh Han Shih
South China Morning Post
27 October 2004
Textile trader Linmark Group has set up a joint venture with a mainland government body to audit garment factories for compliance with labour and environmental standards.
The equal joint venture expects to make a modest profit in the first year of operation from the fees it will charge mainland factories for auditing them.
Linmark and the China Textile Information Center's (CTIC) China Social Compliance will audit 2,000 to 3,000 garment makers - including all 900 that supply Linmark - by the end of next year.
This will be a small fraction of the estimated 250,000 to 600,000 apparel manufacturers operating in the mainland, but Linmark believes establishing a compliance regime is a critical step for the industry before the lifting of global textile import quotas under World Trade Organisation rules next year.
"There is a surge of orders to China from other countries, but not enough socially compliant factories," Linmark chief executive Steven Feniger said. "This is a potential bottleneck for China's apparel trade."
Mr Feniger projected the elimination of quotas would boost China's international textile orders by as much as 40 per cent, but many buyers from western countries were already under pressure to ensure that working conditions in the factories met international standards.
George Heller, the president of Hudson's Bay, Canada's largest department store, said: "If people in China think the west will buy cheap goods from China, where there's no social compliance, they're in for a shock."
Mr Heller said his company bought about US$600 million of goods from the mainland every year, but only from factories that abided by a code of conduct on labour and the environment.
The Toronto-listed company regularly faced pressure from shareholders at its annual general meetings pushing for more action on labour rights, he said.
The Canadian media frequently reported on the poor working conditions in Chinese factories, he added.
Credible certification of compliance with labour laws could give certain suppliers a competitive advantage, prompting competition among factories to clean up their operations.
"China has a real marketing problem in the west," Mr Heller said. "The certification programme could help compensate for this."
Mr Feniger said: "China has strong labour laws but they are not rigorously implemented."
Linmark had already uncovered one mainland factory that kept a list of instructions telling its workers what to say to auditors, he said.
The most frequent labour violation was the falsification of documents relating to salaries and working hours, he added.
Robin Munro, a research director of the China Labour Bulletin, a Hong Kong non-governmental organisation, said: "You'd be hard put to find a factory in south China that doesn't exceed the legal working limit [of 53 hours per week]. Local governments don't seem interested in enforcing labour laws."
Mr Munro welcomes the establishment of China Social Compliance, but his expectations are low.
"Codes of conduct and audits are better than nothing," he said. "But to improve worker conditions, there needs to be freedom of association to form labour unions.
"Most private factories in China are not unionised."