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Group: Wal-Mart's China suppliers underpay

Several Chinese suppliers of Wal-Mart Stores Inc. fail to pay legally required wages or provide health insurance and allow poor working conditions, a Hong Kong-based labor group says.
/ Source: The Associated Press

Several Chinese suppliers of Wal-Mart Stores Inc. fail to pay legally required wages or provide health insurance and allow poor working conditions, a Hong Kong-based labor group says.

A Wal-Mart spokesman said Friday it was looking into the claims in a report issued this week by China Labor Watch. Managers at two companies cited in the report denied the accusations.

China Labor Watch said a survey of 15 Wal-Mart suppliers found that some pay as little as half the minimum daily wage, require mandatory overtime or provide no health insurance. It said one company provides a single bathroom for 2,000 employees.

The status of employees at foreign companies or their suppliers is a sensitive issue in China.

"We treat the issues as mentioned in this report seriously and will look into them. If found true, we will address them in an aggressive manner," a Wal-Mart spokesman, Jonathan Dong, said in an e-mail.

"Wal-Mart is committed to ethical sourcing and works continuously to strengthen our efforts in monitoring supplier factories," he said.

Dong said he couldn't immediately confirm whether the companies cited by China Labor Watch were Wal-Mart suppliers.

The group said its report was based on a survey of 169 employees at 15 companies.

It said one employer, Winbo Industry Co., pays as little as 2 yuan (25 U.S. cents) per hour — less than half the legal minimum of 4.66 yuan (58 U.S. cents) in Guangdong province, where its factory is located.

It said Winbo and others fined employees up to one hour's pay for being one minute late to work, are overdue in paying back wages and have threatened to fire those who fail to work overtime.

Winbo's foreign trade manager denied the accusations.

"The information you had is totally wrong and Wal-Mart is not our customer," said the manager, who would give only his surname, Zhuang.

The manager of another company cited, Yongfeng Shoe Manufacturing Co., also denied the claims.

"We never owed wages to workers and workers' wages are based on regulations," said the manager, Hu Tianfei. He said the company has been a Wal-Mart supplier for 10 years.

Phone calls on Friday to the other two companies identified by name in the report — Taishan Watch Factory and Taiqiang Manufacturing Factory — weren't answered. All the companies cited in the report are located in the southern province of Guangdong, the site of thousands of small factories that supply China's export industries.

Wal-Mart is a prominent presence in China, with 68 stores and 36,000 employees, and in 2004 bought $18 billion worth of Chinese goods, such as shoes and furniture, either directly or indirectly for sale abroad.

Worldwide, Wal-Mart audited 13,600 of its suppliers' factories last year, according to Dong, the spokesman at its China headquarters in the southern city of Shenzhen.

Wal-Mart was the target this year of a union-organizing campaign by China's government-sanctioned labor group.

After resisting unionizing efforts for two years, the company agreed in August to cooperate with the All-China Federation of Trade Unions to set up unions at all of its China outlets.

Also this year, Apple Computer Inc. was caught up in a controversy over claims of abuses at a Chinese factory run by a Taiwanese company that produces its iPod music players.

Apple issued a report in August saying it found some violations of its code of conduct at the factory run by a subsidiary of Taiwan's Foxconn Technology Group but no serious abuses.