Wal-Mart Dungeon in China

These are the statistics of the Qin Shi Handbag Factory in Sanxiang Town, Zhongshan City, Guangdong Province, China. This information was provided through the National Labor Committee for Worker and Human Rights.

There are 1000 workers at the Qin Shi Handbag Factory in Zhongshan City. 90% of them are young men 16 to 23 years of age; almost all migrants are from rural areas. 

Wal-Mart started producing Kathie Lee handbags at the Qin Shi factory in September, 1999. The workers passed the NLC a Qin Shi/Wal-Mart invoice form dated September 2, 1999 which calls for the production of 5,400 Kathie Lee handbags (style #62657 70575) to be delivered no later than October 20, 1999. 

Before that, Qin Shi produced handbags for Payless carrying the Predictions label. (In 1999, Payless was the eighth largest importer by weight of goods entering the United States. Wal-Mart was, of course, the first. In the latest six-month period available—October 1999 to March 2000-a search of U.S. Customs Department shipping records made available in the PIERS database, show that 53 percent of Wal-Mart’s total imports worldwide come from China.)

Qin Shi Factory/Wal-Mart: Indentured Servants held under prison-like conditions

The daily work shift at the Qin Shi Factory is 12 to 14 hours, seven days a week, 30 days a month.At the end of the day the workers return “home” to a cramped dorm room sharing metal bunk beds with 16 other people. At most, workers are allowed outside of the factory for just one and one half hours a day. Otherwise they are locked in.

Working up to 98 hours a week, it is not easy to find the time to go out. But the workers have another fear as well. Before entering the Qin Shi factory, management confiscates the identification documents of each worker.When someone goes outside, the company also takes away their factory I.D. tag, leaving them with no identification at all. If you are stopped by the local security police you could be detained and deported back to your rural province as an illegal migrant. 

When you need to use the bathroom the company again confiscates your factory I.D. and monitors the time you spend. If you are away from your workstation for more than eight minutes you will receive a severe fine. 

All new employees are illegally charged a deposit of 80 rmb ($9.64 U.S.) for a three year work contract, along with another 32 rmb ($3.86) for the first 10 days living expenses, which includes two dismal meals a day. 

Further deductions from the workers’ wages are made for the temporary residency and work permits the workers need, which the factory management intentionally delays applying for for several months.  This also leaves the workers trapped and afraid to leave the factory grounds, since without these legal permits they can be deported at any minute. 

Qin Shi management also illegally withholds the workers first month’s wages, so it is only at the end of the second month that the workers receive, or may receive, their first pay. Because of all of the deductions and fines, many workers earn nothing at all after two months work, and instead, are actually in debt to the company. 

Fines for violating any of the strict company rules are severe, a practice made even worse by the fact that armed company security guards can keep 30 percent of any fines they levy against the workers. 

The workers making Wal-Mart Kathie Lee handbags report being subjected to body searches, as well as physical and verbal abuse by security guards and quality control supervisors. 

The workers are charged 560 rmb ($67.47 U.S.) for dorm and living expenses, which is an enormous amount given that the highest take home wage our researchers found in the factory was just 10 cents an hour. There were others who earned just 36 cents for more than a month’s work, earning just 8/100th of a cent an hour. Many workers earned nothing at all and owed money to the company. 

Seventy percent of the workers said they lacked money for even the most basic expenses, and were forced, for example, to go without even bread and tea for breakfast. 

Lacking money and with constraints on their freedom of movement the Qin Shi workers making Kathie Lee handbags were being held in conditions resembling indentured servitude. 

In a vicious trap, they did not even have enough money to travel to look for other work.

A Wal-Mart Production order was carried out of the Qin Shi Handbag Factory by the workers.  The production order was signed on September 2, 1999 by Yu Lin Chen and Su Chun Wong.

  The Qin Shi Handbag Factory was to produce 5,400 Kathie Lee handbags, style #62557 70575 with a delivery date of October 20, 1999.  The invoice notes that Wal-Mart will accept no late deliveries.

Label notes:  “A portion of the proceeds from the sale of this product will be donated to various children’s charities.”  

The Qin Shi factory has such a notorious reputation for cruelty and exploitation that the workers admit they are ashamed to tell anyone where they actually work – to endure such conditions must mean that you are very, very poor and down on your luck. 

Wal-Mart carried out an inspection/audit at Qin Shi in early November 1999 and the factory passed with flying colors.  The audit was obviously a farce – as will become clear later – and one can only conclude that Wal-Mart simply does not know and does not care what its contractors are doing. 

Eventually the workers at Qin Shi could stand no more abuse, and fought back.  Eight hundred workers were fired in December, but they did at least win some of their back wages.

Hours: 12 to 14 Hours a Day, 7 Days a Week, 30 Days a Month

The “regular” daily work shift is:

·        7:00 a.m. to 12 noon

·        1:30 to 5:30 p.m.

·        6:30 to 9:30, 10:30 or 11:30 p.m.

The workers are at the Qin Shi factory up to 115½ hours per week, from 7:00 a.m. to 11:30 p.m., or 16 1/2 hours a day, seven days a week.  This was the schedule in September, which is their busy season, when they were making the Wal-Mart handbags.

But they were paid for only 14 hours a day, and 98 hours a week.

Working seven days a week and 30 days a month, essentially the workers would receive one day off every other month.

All overtime work is mandatory.  The 98-hour workweek at Qin Shi exceeds the legal limit on total overtime by 200 percent.  (China’s labor law states that overtime cannot exceed 36 hours a month, or 9 hours a week over the regular 40-hour, 5-day workweek).
Despite these excessively long hours, the workers receive no overtime premium, earning always the same standard piece rate.

Wages:  Average wage - 3 cents an hour!  Highest wage 10 cents an hour, 46% of the workers earn nothing at all and in fact owe the company money.

All the workers at Qin Shi are paid according to a piece rate system, which varies given the type of operation required.   Piece rates per unit completed ranged from 1/10th of a cent to 4/10ths of a cent, with the average being just a little over 2/10ths of a cent.  So, for example, if a worker sewed 100 pieces for the Kathie Lee handbags, he or she would earn 24 cents.

In September and October, when the factory was producing Wal-Mart, the range of the workers wages varied wildly, but no one came even remotely close to making the already below-subsistence legal minimum wage of about 31 cents an hour, on which no one can possibly survive.

The highest take-home wage we found in the factory was just 10 cents an hour, or $1.20 a day -- $44.22 for 37 days of work.

The average wage in a sample of 24 workers amounted to only 3 cents an hour.  However, of that sample 46 percent of the workers earned nothing at all after more than a month’s work, and in fact owed the company money due to all the deductions for company dorm and food expenses, fines and other illegal withholdings.

One worker earned 36 cents for the entire month of August, which would amount to 8 cents a week, or 8/100ths of a cent an hour. 

The Kathie Lee handbag the workers make at the Qin Shi Factory retails at Wal-Mart for $8.76, which by American standards is quite cheap.  However from the perspective of the average worker in the factory, earning just 3 cents an hour, the Kathie Lee handbag is very expensive indeed.  At 3 cents an hour, he would have to work 299 hours to purchase such a handbag for his girlfriend.
Because of the pitiful and illegally low wages at the Qin Shi factory the workers were forced to go without even the most basic necessities.  Seventy percent of the workers reported lacking the money for even a tiny breakfast.  Kept in the position of indentured servants, the workers had no money or savings even to leave the factory to look for other work.

Working for Wal-Mart in China…For Nothing  
 10 cents an hour is the highest wages

Nearly half the workers surveyed (46%) actually owed the company money after a month’s work!

The pay records below were drawn from a sample of 24 workers from the Qin Shi Handbag Factory in Zhongshan, China, where they sew Kathie Lee handbags for Wal-Mart.  The workers are paid according to a piece rate.  They work 12 to 14 hours a day.  The paycheck they received on October 31, 1999 covered the 37-day period from August 20 to September 27.  The  names of the workers are being withheld to protect their security.  Since Qin Shi factory management fines the workers $2.49 for failure to return their pay records, the workers had to take advantage of their one-hour supper break to sneak out and xerox their pay stubs.

 19 Workers Surveyed from the Sewing Department 

 Note:  The monthly payday is on an irregular schedule, varying according to production volume and delivery date.  Deductions are withheld from the workers’ wages for living/dorm expenses, food, job placement fee, temporary residency permit and various fines (e.g.-for not returning ones pay record).  The exchange rate is 8.3 rmb to $1.00 U.S.

The Wal-Mart Audit: A True Farce

After having begun production at the Qin Shi factory in September, Wal-Mart sent an inspection team to visit the factory in early November to conduct an audit.

The visit was announced in advance and Qin Shi management was well prepared.  Before Wal-Mart arrived, management split the factory in two.  Those still working on the first and second floors of the building remained Qin Shi employees, while those working on the third and fourth floors would now be working for a separate front company called the Yecheng Leather Parts Factory. This factory was illegal and unregistered, and in fact the 800 workers there still continued to do the same work producing the Kathie Lee handbags.  The Yecheng Leather Parts Factory was simply a front company set up to fool or appease Wal-Mart.  On the third and fourth floors conditions remained wretched with excessively long overtime hours till 11 p.m. and criminally low wages, since the workers had to strain to also finish uncompleted production quotas from the first two floors, which were now turned into a “model” factory of sorts.

Meanwhile, in November, the 200 workers left on the first and second floors started to receive 350 rmb ($12.17 U.S.) a month in back wages, to make up for the below-minimum wages they had been earning since September when the Wal-Mart work began.  Also, from November onward these workers were to be paid the legal minimum wage $12.51 a week, even if the company continued to cheat and fudge on the amount of overtime actually worked.

The first and second floors were cleaned, and fancy high quality toilet paper was installed in the bathrooms.  Wal-Mart’s Code of Conduct went up on the wall. Even Wal-Mart’s human rights hotline numbers were posted: 1-800-WM-ETHIC for the U.S. and 1-800-963-8442 for outside the U.S.

Any serious auditor would realize rather quickly that those 200 workers alone could not be producing the amount of goods Wal-Mart ordered, and might even have walked up the flight of stairs to see the other 800 workers doing the vast majority of the work.

But Wal-Mart’s audits are a farce, and one can only conclude that Wal-Mart does not care, and really does not know what its contractors are doing.  Wal-Mart then covers this farce by threatening to pull out of any factory violating Wal-Mart’s Code of Conduct --that is, in the unlikely event that they are actually exposed by a handful of tiny NGOs searching for the estimated 1,000 hidden contractors Wal-Mart uses in China alone.  Of course, Wal-Mart refuses to publicly disclose to the American people even the names and locations of the factories they use in China.  They claim this information is a trade secret.

The Workers Fight Back and 800 are Fired. 
But They Did Win a Significant Victory.

 On November 28, Qin Shi management posted an announcement stating that the 800 workers on the third and forth floors would, as of December 10, have to start purchasing food coupons in order to eat in the factory canteen.  But the workers were already penniless and miserably underpaid, and lacked even the money to purchase the food coupons.  It was another way of saying that many of the workers would now have to starve.

That was the last straw. A group of workers went on the offensive publicly denouncing the exploitive conditions at the Qin Shi factory including:

• The use of child labor
• Body searches
• Confiscating worker identification documents
• Fines
• Below-minimum, starvation wages
• Excessively long overtime hours, working until 11:00 p.m., seven days a week
• Physical and verbal abuse
• Recruitment fees and other illegal deductions
• The total repression of all human and worker rights, even the right to complain or raise a grievance, which were immediately met with firings

In mid-December, Qin Shi management shut down the third and fourth floors, firing all 800 workers.

But the workers refused to leave until they received their back wages and the deposits which they were owed – and they won!

This might not seem like much of a victory, unless one understands the climate of total suppression of all worker rights in China.

A Worker Tries to Call Wal-Mart’s Hotline

A worker at the Qin Shi factory tried to call Wal-Mart’s human rights complaint phone number: AT&T Direct 1-800-963-8442 (outside the U.S.).  The worker could not get through.

Later a letter was sent to Wal-Mart headquarters on Bentonville, Arkansas.  It is not known if that got through.  At any rate, there has been no response from Wal-Mart.

As of our last contact with the workers in mid-January 2000, Wal-Mart production continued at the Qin Shi factory.

Wal-Mart Discloses Factory Locations to Government in China

Why does Wal-Mart refuse to provide this same information to the American People?

The National Labor Committee recently purchased a Disney garment in a Wal-Mart Supercenter in Shenzhen in the south of China.  A hangtag on the garment identified the specific name and location of the factory in China where the Disney child’s sweatshirt was made.

The question is:  If Wal-Mart and Disney will provide the authoritarian government in China with the names and addresses of the factories in China where they are making their goods, then why do they continue to refuse to release this very same information to the American people?  

In China, under the Law of Consumers Rights (Chapters 2 and 3), consumers have the right to know the origin of the products they purchase, including supplier information.  Of course, like all laws in China, implementation can be weak and spotty.  Still, the principle exists and in some cases Wal-Mart and Disney respect the law and make available their suppliers’ names and locations.   

Why is it that Wal-Mart can trust the Chinese government, but it will not trust the American people?  

From the hangtag on the Disney garment we learn that it was sewn at the Midway Daily Products Factory, located in Guangzhou, Guangdong Province, China.  

Not that Wal-Mart or Disney would have much to brag about regarding conditions at the Midway factory.  During the busy season, workers will be at the factory up to 14 hours a day, seven days a week, from seven a.m. to 10 p.m. earning just 33 cents an hour.  Ten workers share a single dorm room.  Any attempt to form an independent union will be crushed.  If a worker is absent for three days, he or she is fired.  Arriving at work 15 minutes late is punished with a fine amounting to more than a full day’s wages.  

During the slow season, when workers are in a 50-hour weekly schedule, they earn $16,68.  Overtime is rewarded with an extra 10-cent-an-hour premium.    

Another example of wages at the Qin Shi Factory, where they sew Kathie Lee handbags for Wal-Mart, is outlined below.   At Qin Shi, the regular shift is 12 to 14 hours a day, seven days a week, with one day off per month.

1.) Mr. X, Shandong Province:  Started working in the trimming section of the factory in March 1999, earning just 65 cents an hour (5.4 rmb) in August and around $6.02 (50 rmb) in September.  This would put Mr. X’s average wage for these two months at 77 cents a week—8/10ths of a cent per hour. 

2.) Mr. Y, Guangxi Province:  Started working in the factory on April 30, 1999 and by October 29, after working 5 months and 29 days—had earned a total of $19.52 (162 rmb).  This amounts to 75 cents for a full 91-hour workweek, or 8/10ths of one cent per hour. 

3.) Mr. A, Guangxi Province:  Started working in the factory May 4, 1999, and after nearly six months of work, on October 30, was paid a total of $42.17 (350 rmb).  This would come to $1.62 a week—2 cents an hour.  

4.) Mr. B, Guizhou Province:  Was able to earn just $39.76 (330 rmb) in five months of work, and received his first pay only after completing three months of work.  His pay averaged $1.84 a week—2 cents an hour.  

5.) Mr. C, Henan Province:  Started working on July 22, 1999, receiving his August wages on September 30, earning $30.24 (251 rmb).  This was the highest wage in the group, coming to $6.98 a week—8 cents an hour.  However, the following month, he received only partial payment. 

6.) Mr. D, Henan Province:  Started working on June 18, 1999 and received just 36 cents for the full month of August.  This amounts to earnings of 8 cents a week, or 1/10^th of a cent (.09 cents) an hour.  The following month, Mr. D did much better, earning $14.46 (120 rmb) for September.  His 4-cent-an-hour wages, $3.34 for the week—ranked him among the top 30 percent of wage earners in his production team of 80 people. 

7.) Mr. E, Henan Province:  Started working on June 7, 1999, but by the end of October had earned nothing at all, and in fact owed the factory $12.05 (100 rmb).  After 19 weeks of work, Mr. E had actually lost money. 

8.) Mr. F, Henan Province:  Started working on June 14, 1999 and received $24.14 (200.4 rmb) for July, ranking him 10^th in earnings among his 100-member production section.  For August, Mr. F received $12.05 (100 rmb) which still ranked him in the top 14 percent of his team.  For the two months, Mr. F’s average weekly wage was $4.18—5 cents an hour.   

Kathie Lee Gifford sponsors this line of merchandise, produced by slave labor in China. Previously she had been involved in a controversy that her goods were made in Central America by child labor.

Bullet points:

• 14-hour shifts, 7 days a week, 30 days a month.
• Average take-home pay of 3 cents an hour, $3.10 for a 98-hour workweek
• One worker earned 36 cents for an entire month’s work.
• 46 percent of the workers earned nothing at all and were actually in debt to the company.
• Housed 16 to a room and fed two dismal meals a day.
• Physical and verbal abuse.
• Held as indentured servants, identification documents confiscated, allowed to leave the factory just 1½ hours a day.
• 800 workers fired for fighting for their basic rights.
• Wal-Mart audits a total farce. 

Average Wage at Qin Shi

• 3 cents an hour

• 44 cents a day (for a 14-hour workday)

• $3.10 a week (for a 7-day, 98 hour work week)

• $13.43 a month

• $161.16 a year

Highest Wage at Qin Shi

• 10 cents an hour

• $1.40 a day (for a 14-hour workday)

• $9.80 a week (for a 7-day, 98-hour work week)

• $42.47 month

• $509.60 a year

Legal Minimum Wage in Zhongshan City
(Which is already below subsistence levels)

• 31 cents an hour

• $1.79 a day (for an 8-hour workday)

• $12.51 a week (for a 5 day, 40 hour work week)

• $54.22 a month

• $650.60 a year

Wal-Mart’s audits are a farce, and one can only conclude that Wal-Mart does not care, and really does not know what its contractors are doing. Wal-Mart refuses to publicly disclose to the American people even the names and locations of the factories they use in China.  They claim this information is a trade secret.

During the busy season, workers will be at the factory up to 14 hours a day, seven days a week, from seven a.m. to 10 p.m. earning just 33 cents an hour

Working for Wal-Mart in China: Earning 36 cents a month, 8 cents a week or, 1/10^th of a cent per hour.

Footwear Factory in China. China accounts for 60% of all the shoes imported to the U.S., with a retail value of  $16.9 billion a year.

Labor Law in China

Wal-Mart, Nike, Huffy, Timberland, New Balance and many other U.S. companies routinely violate China’s labor laws. It must also be noted that the government of China does nothing to implement its own labor laws

China’s Labor Code
An 8-hour workday, 5 days a week, a 40 hour work week

Article 36: The state shall practice a working hour system under which laborers shall work no more than eight hours a day and no more than 40 hours a week on average (as of May 1, 1997)

Prohibiting Excessively High Daily Production Quotas

Article 37: In the case of laborers working on the basis of piecework, the employing unit shall rationally fix quotas of work and standards on piecework remunerating in accordance with the working hour system stipulated in article 34 of this law.

No Forced Overtime/Overtime Strictly Limited to Nine Hours a Week/ Legal Work Week Capped at 49 hours.  
Article 41: The employing unit may extend working hours due to the requirements of its production or business after consultation with the trade union and laborers, but the extended working hours for a day shall generally not exceed one hour; and such extended hours shall not exceed three hours a day and only under the condition that the health of the laborer is guaranteed.  However, the total extension in a month shall not exceed thirty-six hours.  

This means that overtime work should never exceed three hours a day, making the longest legal shift permitted 11 hours.  It is illegal to work more than 9 overtime hours a week.  That caps the longest legal workweek allowed at 49 hours.

All Overtime Work Must Be Paid at a Premium

Article 44:  The employment unit shall, according to the following standards, pay laborers remunerations higher than those for normal working hours under any of the following circumstances:

1.      to pay no less than 150 percent of the normal wages if the extension of working hours is arranged;

2.      to pay no less than 200 percent of the normal wages if the extended hours are arranged on days of rest and no deferred rest can be taken;

3.      to pay no less than 300 percent of the normal wage if the extended hours are arranged on statutory holidays.   

·        After one year, all workers are entitled to paid annual vacations
Article 45:  Laborers who have kept working for one year and more shall be entitled to an annual vacation with pay.

·        Detaining Workers Wages, Fines or Mandatory Deposits is Illegal
Article 50:  Wages shall be paid monthly to laborers themselves in the form of currency.  The wages paid to laborers shall not be deducted or delayed without justification

.  

·        Companies Must Join and Pay into Social Security
Article 72:  The employing unit and laborers must participate in social insurance and pay social insurance premiums in accordance with the law.

·        No Discrimination Against Women
Article 12:  Laborers shall not be discriminated against in employment, regardless of their ethnic community, race, sex, or religious belief. 

·        The Right To Organize Independent Unions
Article 7:  Laborers shall have the right to participate in and organize trade unions in accordance with the law.

·        Every Worker Has the Right to a Written Work Contract
Article 16-19:  A labor contract is the agreement reached between a laborer and an employing unit for the establishment of the labor relationship and the definition of the rights, interests and obligations of each party.  A labor contract shall be concluded in written form and contain the following clauses [including]:  wages, working conditions, type of work.

·        Safe and Healthy Working Conditions
Article 52:  The employing unit must establish and perfect the system for occupational safety and health, educate laborers on occupational safety and health, prevent accidents in the process of work, and reduce occupational hazards.

·        Protecting Juvenile Workers
Article 58:  The State shall provide female and juvenile workers with special protection. 
[For example, 16 and 17- year-olds cannot work more than eight hours a day or at night.]