China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher
January 15, 2014
By Kathy Chu
Deadly factory incidents in Asia are forcing more Western brands to rethink their search for low production prices.
According to new research, factory audits in Asia rose 61% in 2013 from a year earlier, a sign that more brands are investing in monitoring their supply chain, according to Sebastien Breteau, chief executive of AsiaInspection, a Hong Kong-based firm that provides auditing and product-testing services.
The research comes two months after fast-fashion brand Hennes & Mauritz introduced a plan to ensure that workers making its clothing in Bangladesh and Cambodia are paid wages that cover their cost of living.
Li & Fung, the buying agent for major Western brands including Wal-Mart Stores Inc.and Target Corp.also recently said it is seeing less of a push from retailers to lower their costs.
“On the global sourcing front, we have witnessed the price deflation trend becoming more subdued this year,” Li & Fung said in its 2013 interim report. “With the tragedies in Bangladesh, the apparel industry placed a stronger focus on workers’ safety, vendor compliance, quality control and sustainability among industry players.”
Low production costs have long been the key goal for major brands, which say they want to pass savings onto consumers. Rising wages in China and elsewhere in Asia sent companies from leather-goods maker Coach Inc. to clog-maker Crocs Inc. and Japan’s casual-clothing chain Uniqlo, operated by Fast Retailing Co., hopscotching to other countries to diversify their manufacturing bases and cut costs.
Yet now, more retailers are paying attention to how their drive for lower costs could impact worker safety after some high-profile factory disasters.
In Bangladesh, a factory fire at Tazreen Fashions Ltd. killed more than 100 workers in 2012 while last year’s collapse of the Rana Plaza building killed more than 1,100.
“It is a milestone year” for retailers, said Mr. Breteau. While major companies remain “reluctant, they’re accepting more and more of an increase” in prices from factories.
Factory safety agreements that followed the Bangladesh disasters suggest retailers and brands are trying to strike a balance between cost and safety.
More than 100 apparel companies including Esprit Holdings, Fast Retailing and Zara parent Inditex signed a five-year, legally binding Bangladesh safety agreement. Under the Accord on Fire and Building Safety in Bangladesh, participating companies commit to paying for necessary factory repairs and renovations. They also say they won’t hire manufacturers whose factories fail to meet safety standards.
Meanwhile, an apparel trade group representing companies including H&M, Inditex and Italy’s Benetton SpA published a list of the more than 1,500 factories the brands use in Bangladesh.
H&M is also polling workers and managers at factories in Bangladesh and Cambodia to determine how much wages need to be raised.
“Textile workers should be able to live on their wage,” Helena Helmersson, global head of sustainability at H&M, said in November.
A Uniqlo spokesman said the company also has a workplace-monitoring program to make sure factories offer “fair and proper working conditions” for employees, including wages.
Still, improving factory conditions remains an uphill struggle, consultants and workers-rights groups say.
Despite the increase in factory audits, only about 20% to 25% of AsiaInspection’s clients are conducting them.
“It costs money…and it doesn’t generate direct revenue,” said Mr. Breteau.
The majority of Western companies still insist on low prices and tight deadlines, which could force factories to cut corners, according to Geoffrey Crothall, spokesman for China Labour Bulletin, a worker-advocacy group.
In 2013, audits have more than doubled in India, while audits rose 58% in China and 47% in Bangladesh, according to AsiaInspection. More retailers were already conducting audits in Bangladesh, explaining why audits grew slower in the country compared with other locations, the firm said.
Some workers groups also question the value of third-party audits.
“They are basically a waste of time,” said Mr. Crothall. “Factories are well adept at hiding the worst abuses of labor rights and in coaching workers to give the correct answers.”
Local governments should bear responsibility for ensuring that factories and retailers are complying with laws on wages and safety, Mr. Crothall said.