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Labour standards in the Chinese electronics industry are reported to be still a critical risk for manufacturers with operations in the country, while a group of investors has urged stricter supply chain compliance.
A report from the Maplecroft ratings consultancy says the many recent negative stories about electronics manufacturing highlight the continuing labour violations and reputational risks in China. It finds the Special Economic Zones (SEZs), areas operating outside China’s normal economic laws, are the biggest problem thanks to their weak and sometimes corrupt enforcement of labour laws.
The most high-profile recent reports of labour violations concerning Foxconn, which makes iPhones and iPads for Apple, involve forced overtime and poor wages after a number of suicides in the Shenzhen SEZ. Other companies, such as suppliers for Microsoft, IBM and Hewlett-Packard, have been accused of similar violations.
Maplecroft said: ‘Companies must perform due diligence when sourcing from local suppliers, especially in high-risk regions. These suppliers may ignore or attempt to circumvent labour laws [by] reducing overtime pay or using doctored contracts that employees don’t understand.’
A coalition of 40 investors, led by the Interfaith Center on Corporate Responsibility, recently called for electronics manufacturers to up their commitment to labour rights in supply chains.
It said the main problem is brands’ reluctance ‘to disclose the nature and severity of many of the problems found at these facilities, and what they are doing to address them’.
A report from the Maplecroft ratings consultancy says the many recent negative stories about electronics manufacturing highlight the continuing labour violations and reputational risks in China. It finds the Special Economic Zones (SEZs), areas operating outside China’s normal economic laws, are the biggest problem thanks to their weak and sometimes corrupt enforcement of labour laws.
The most high-profile recent reports of labour violations concerning Foxconn, which makes iPhones and iPads for Apple, involve forced overtime and poor wages after a number of suicides in the Shenzhen SEZ. Other companies, such as suppliers for Microsoft, IBM and Hewlett-Packard, have been accused of similar violations.
Maplecroft said: ‘Companies must perform due diligence when sourcing from local suppliers, especially in high-risk regions. These suppliers may ignore or attempt to circumvent labour laws [by] reducing overtime pay or using doctored contracts that employees don’t understand.’
A coalition of 40 investors, led by the Interfaith Center on Corporate Responsibility, recently called for electronics manufacturers to up their commitment to labour rights in supply chains.
It said the main problem is brands’ reluctance ‘to disclose the nature and severity of many of the problems found at these facilities, and what they are doing to address them’.
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