Wal-Mart's influence on the U.S. economy has reached levels not seen by a single company since the 19th-century rise of Standard Oil, economists and historians say. Even if you don't shop at Wal-Mart, the retail powerhouse increasingly is dictating your product choices -- and what you pay -- as its relentless price-cutting helps keep inflation low.

Wal-Mart is the top seller of groceries, jewelry and photo processing. It is moving into banking, used-car sales, travel and Internet access. It averages 100 million customers a week.

Anyone whose stocks rose in the late 1990s owes Wal-Mart, the world's biggest company. It alone accounted for as much as 25 percent of the U.S. productivity gains from 1995to 1999, says consultant McKinsey & Co. Such gains drove corporate profits, thus stock prices. Wages in retailing, one of the biggest sources of new jobs in the '90s and current decade, are also affected by Wal-Mart.

"I joke we're all going to be working for Wal-Mart someday," says economist Mark Zandi of consultant Economy.com.

Although Wal-Mart is hitting speed bumps because of growing labor challenges, employment lawsuits and higher costs, few doubt it will stop besting competitors as it expands. While other retailers such as Home Depot, tech giants such as Microsoft and manufacturers such as General Electric played big parts in the 1990s productivity gains, Wal-Mart, with its massive buying power and technology advantage, played the biggest role, economists say. As it grows, its influence, largely unknown to consumers, will continue to seep into more parts of the United States and the global economies.

"Everyone knows Wal-Mart," says Jim Hoopes, a business history professor at Babson College, "but nobody has a real sense of how big and how powerful it is."

Few companies have moved so far so fast. Founded 40 years ago in rural Arkansas by Sam Walton, Wal-Mart has swelled to 4,300 stores in nine countries and annual revenue near $250 billion. Its computer network, a critical part of its success, rivals the Pentagon's.

It is now the biggest customer for many of the world's leading consumer-products companies, including Kraft, Gillette and Procter & Gamble. At P&G, Wal-Mart accounts for 17 percent of annual revenue, up from 10 percent just five years ago. That makes those companies more dependent on Wal-Mart's success, more vulnerable should it stumble and more likely to respond to Wal-Mart's requests for lower prices and product changes.

The chain's buying power is so immense that 450 suppliers have opened offices -- many in the 1990s -- near Wal-Mart headquarters in tiny Bentonville, Ark. As many as 800 more such offices are expected in the next five years. Sales representatives want to be near Wal-Mart buyers to beat the competition, says Rich Davis, a local economic development official.

# PRODUCT CHOICES. P&G is dumping weak brands, such as Crisco and Jif peanut butter, sold to J.M. Smucker last year. It wants to focus on heavy hitters, such as Tide detergent, most desired by Wal-Mart and other big retailers, P&G says. That strategy helped P&G boost fiscal second-quarter net income 14 percent year-over-year to $1.5 billion, it said.

Other companies have tweaked products so that they pass muster with Wal-Mart. Video-game maker Planet Moon Studios two years ago wanted an industry group to give its "Giants" game a teen rating. Why? So it would be carried by Wal-Mart and others. Planet Moon changed the color of blood in the video to green from red, toned down the language and put a bikini on a topless character, says CEO Bob Stevenson. Without those changes, he says, "The risk to sales was too high."

Wal-Mart is also challenging its suppliers by developing more of its own products, called "private labels." It stepped up that effort in the mid-1990s as it expanded into vitamins, batteries and bathroom tissue. Its Great Value grocery line has 1,475 items, up from 194 two years ago.

Wal-Mart says it is committed to keeping shelves full of well-known brands such as Kellogg' cereal and Tide. But, in general, private-label profits run as high as 30 percent, vs. 15 percent on brand-name items, says Burt Flickinger, managing director of consultant Reach Marketing.

Private-label products also promise Wal-Mart more profit as the chain expands abroad, because U.S. brands don't have the same clout there. In Europe and the United Kingdom, where Wal-Mart is battling for Britain's Safeway grocery chain, private-label goods are 50 percent of its sales vs. 25 percent in the United States.

# PRODUCT PRICES. Big food companies including Kraft, which gets 10 percent of its revenue from Wal-Mart, have not been able to raise prices as quickly as they once did because of Wal-Mart's demands, says Jonathan Feeney, a consumer products analyst at investment firm SunTrust Robinson Humphrey. Kraft declined to comment.

History has shown that suppliers suffer if they run afoul of Wal-Mart. Rubber-maid raised the prices it charged Wal-Mart in the mid-1990s because of an 80 percent jump in the cost of a key ingredient in its plastic containers. The retailer responded by giving more shelf space to lower-priced competitors, helping drive Rubbermaid into a 1999 merger with rival Newell, says John Mariotti, a former Rubbermaid executive. "Rubbermaid earned Wal-Mart's wrath by not giving it the best deal," he says.

# EMPLOYMENT. Wal-Mart's impact on wages was first felt in rural towns in the South and Midwest where Wal-Mart got its start. Often, it became the biggest employer overnight, setting wage rates for all retailers, experts say.

Now, its impact on retail employment has spread nationwide, contributing to slower wage growth throughout the sector, economist Zandi says.

Pay for retail workers rose 43 percent from 1990 to 2001, vs. 50 percent for non-retail workers, according to Bureau of Econo-mic Analy-sis data. No one knows exactly how big a part Wal-Mart played, Zandi says. But its influence is "undeniable" because it created more jobs in the 1990s than any other company, he says. More retail jobs are on the way. Wal- Mart plans to add 800,000 workers in the next five years. U.S. re-tailers are ex-pected to add 3.1 million jobs by 2010, the govern-ment says.

Manufacturers, which pay more, will add fewer than 600,000 jobs in the same period. Labor unions that represent factory workers are alarmed. They say Wal-Mart, in demanding ever-lower prices from suppliers, has helped drive thousands of U.S. manufacturing jobs abroad, where labor costs are lower.

Now they worry about Wal-Mart's push into the unionized supermarket industry. Wal-Mart has no unions. That means its employees earn less than those at competing supermarkets, says the United Food and Commercial Workers.

Wal-Mart's hourly pay averages $7 to $8 an hour, vs. $11 at Kroger, Safeway and other competitors with unions, says UFCW spokesman Greg Denier.

Not true, says Wal-Mart spokesman Tom Williams. While he would not disclose wages, which vary by market, he says Wal-Mart pay is close to or equal to union wages.

# PRODUCTIVITY. Wal-Mart's key role in the 1995-99 economic boom came partly because of its legendary use of technology to analyze costs and speed delivery of goods from its 30,000 suppliers to dozens of sprawling warehouses, say retail and financial analysts.

Wal-Mart says it has the nation's biggest private satellite communications network, one that links stores to Bentonville by voice, data and video. Suppliers tap directly into Wal-Mart's computers to track sales of everything from soup to nuts, which improves inventory controls and cuts costs.

Other retailers, including Kmart, tried matching Wal-Mart's tech prowess but failed. Kmart filed for bankruptcy-court protection last year and is cutting 67,000 jobs and closing nearly 30 percent of its stores.

Wal-Mart also teaches manufacturers to be more cost-effective so product prices can stay down. For example, Wal-Mart might suggest that a supplier cut its labor costs by shipping toasters in their cartons, rather than packing them in bigger boxes and shrink-wrapping them onto shipping pallets, says James Champy, chairman of Perot Systems' consulting unit, which advises Wal-Mart suppliers.

Such close communication between a retailer and supplier is unusual. But it's being adopted by more companies, including Dell Computer, as U.S. businesses seek more productivity to better compete globally.

That future may also include fewer companies. To achieve economies of scale, more consumer products companies are merging. Wal-Mart's demand for low-cost products partly influenced Kellogg's purchase of Keebler in 2001, and the merger of Kraft and Nabisco in 2000, analyst Feeney says.

"We're all working together; that's the secret. And we'll lower the cost of living for everyone, not just in America, but we'll give the world an opportunity to see what it's like to save and have a better lifestyle, a better life for all. We're proud of what we've accomplished; we've just begun."

I am going to pick your arguments apart piece by piece. Of course, facts are not going to change anything for you guys and gals. You are blinded by your brand of so-called "capitalism" where anything goes to met that bottom line. Some of you have openly stated that you would trade with Nazi Germany or buy products made in Nazi Germany made by Jews--even with hindsight--just because they are readily available or because they are inexpensive. So, arguing with you even using facts is a lost cause. If you are really serious about any of this, you would have taken some initiative and go to Google and look for this info yourself. But here we go.

"A - PROVE that Wal-Mart sells more Chinese manufactured stuff than other retailers. You keep stating it but you have provided ZERO facts to support your argument."

I have never argued anywhere on FR or elsewhere that Wal-Mart sells more Communist China products than other retailers, and, according to your idiotic logic, therefore Wal-Mart should be singled out and boycotted.

But I have always argued for the boycott of ALL PRODUCTS made in China. Big difference. I don't give a hoot if Wal-Mart or K-Mart or Toys' R Us loses billions as the result of a successful boycott of made in China products campaign--that's their problem for using slave labor and almost-slave labor in Communist China in the first plafe.

Now who's putting words into someone's mouth?

However, having so said that above, Wal-Mart IS the largest importer of Made in China products in the WORLD. They use several thousands of factories hidden across Communist China. Wal-Mart has consistently refuses to release even the names and addresses of these factories to the American public. Why? Something to be ashamed about? Something to hide?

OK here we go. Wal-Mart is the Largest importer of MIC products in the world (pertinent info bolded just for you!):
http://www.alternet.org/print.html?StoryID=12962

To print this page, select "Print" from the File menu of your browser.

How Wal-Mart is Remaking our World

Jim Hightower, Hightower Lowdown
April 26, 2002

Viewed on March 4, 2003

Bullying people from your town to China

Corporations rule. No other institution comes close to matching the power that the 500 biggest corporations have amassed over us. The clout of all 535 members of Congress is nothing compared to the individual and collective power of these predatory behemoths that now roam the globe, working their will over all competing interests.

The aloof and pampered executives who run today’s autocratic and secretive corporate states have effectively become our sovereigns. From who gets health care to who pays taxes, from what’s on the news to what’s in our food, they have usurped the people’s democratic authority and now make these broad social decisions in private, based solely on the interests of their corporations. Their attitude was forged back in 1882, when the villainous old robber baron William Henry Vanderbilt spat out: "The public be damned! I’m working for my stockholders."

The media and politicians won’t discuss this, for obvious reasons, but we must if we’re actually to be a self-governing people. That’s why the Lowdown is launching this occasional series of corporate profiles. And why not start with the biggest and one of the worst actors?

The beast from Bentonville

Wal-Mart is now the world’s biggest corporation, having passed ExxonMobil for the top slot. It hauls off a stunning $220 billion a year from We the People (more in revenues than the entire GDP of Israel and Ireland combined).

Wal-Mart cultivates an aw-shucks, we’re-just-folks-from-Arkansas image of neighborly small-town shopkeepers trying to sell stuff cheaply to you and yours. Behind its soft homespun ads, however, is what one union leader calls "this devouring beast" of a corporation that ruthlessly stomps on workers, neighborhoods, competitors, and suppliers.

Despite its claim that it slashes profits to the bone in order to deliver "Always Low Prices," Wal-Mart banks about $7 billion a year in profits, ranking it among the most profitable entities on the planet.

Of the 10 richest people in the world, five are Waltons—the ruling family of the Wal-Mart empire. S. Robson Walton is ranked by London’s "Rich List 2001" as the wealthiest human on the planet, having sacked up more than $65 billion (£45.3 billion) in personal wealth and topping Bill Gates as No. 1.

Wal-Mart and the Waltons got to the top the old-fashioned way—by roughing people up. The corporate ethos emanating from the Bentonville headquarters dictates two guiding principles for all managers: extract the very last penny possible from human toil, and squeeze the last dime from every supplier.

With more than one million employees (three times more than General Motors), this far-flung retailer is the country’s largest private employer, and it intends to remake the image of the American workplace in its image—which is not pretty.

Yes, there is the happy-faced "greeter" who welcomes shoppers into every store, and employees (or "associates," as the company grandiosely calls them) gather just before opening each morning for a pep rally, where they are all required to join in the Wal-Mart cheer: "Gimme a ‘W!’" shouts the cheerleader; "W!" the dutiful employees respond. "Gimme an A!’" And so on.

Behind this manufactured cheerfulness, however, is the fact that the average employee makes only $15,000 a year for full-time work. Most are denied even this poverty income, for they’re held to part-time work. While the company brags that 70% of its workers are full-time, at Wal-Mart "full time" is 28 hours a week, meaning they gross less than $11,000 a year.

Health-care benefits? Only if you’ve been there two years; then the plan hits you with such huge premiums that few can afford it—only 38% of Wal-Marters are covered.

Thinking union? Get outta here! "Wal-Mart is opposed to unionization," reads a company guidebook for supervisors. "You, as a manager, are expected to support the company’s position. . . . This may mean walking a tightrope between legitimate campaigning and improper conduct."

Wal-Mart is in fact rabidly anti-union, deploying teams of union-busters from Bentonville to any spot where there’s a whisper of organizing activity. "While unions might be appropriate for other companies, they have no place at Wal-Mart," a spokeswoman told a Texas Observer reporter who was covering an NLRB hearing on the company’s manhandling of 11 meat-cutters who worked at a Wal-Mart Supercenter in Jacksonville, Texas.

These derring-do employees were sick of working harder and longer for the same low pay. "We signed [union] cards, and all hell broke loose," says Sidney Smith, one of the Jacksonville meat-cutters who established the first-ever Wal-Mart union in the U.S., voting in February 2000 to join the United Food and Commercial Workers. Eleven days later, Wal-Mart announced that it was closing the meat-cutting departments in all of its stores and would henceforth buy prepackaged meat elsewhere.

But the repressive company didn’t stop there. As the Observer reports: "Smith was fired for theft—after a manager agreed to let him buy a box of overripe bananas for 50 cents, Smith ate one banana before paying for the box, and was judged to have stolen that banana."

Wal-Mart is an unrepentant and recidivist violator of employee rights, drawing repeated convictions, fines, and the ire of judges from coast to coast. For example, the Equal Employment Opportunity Commission has had to file more suits against the Bentonville billionaires club for cases of disability discrimination than any other corporation. A top EEOC lawyer told Business Week, "I have never seen this kind of blatant disregard for the law."

Likewise, a national class-action suit reveals an astonishing pattern of sexual discrimination at Wal-Mart (where 72% of the salespeople are women), charging that there is "a harsh, anti-woman culture in which complaints go unanswered and the women who make them are targeted for retaliation."

Workers’ compensation laws, child-labor laws (1,400 violations in Maine alone), surveillance of employees—you name it, this corporation is a repeat offender. No wonder, then, that turnover in the stores is above 50% a year, with many stores having to replace 100% of their employees each year, and some reaching as high as a 300% turnover!

Worldwide wage-depressor

Then there’s China. For years, Wal-Mart saturated the airwaves with a "We Buy American" advertising campaign, but it was nothing more than a red-white-and-blue sham. All along, the vast majority of the products it sold were from cheap-labor hell-holes, especially China. In 1998, after several exposes of this sham, the company finally dropped its "patriotism" posture and by 2001 had even moved its worldwide purchasing headquarters to China. Today, it is the largest importer of Chinese-made products in the world, buying $10 billion worth of merchandise from several thousand Chinese factories.

As Charlie Kernaghan of the National Labor Committee reports, "In country after country, factories that produce for Wal-Mart are the worst," adding that the bottom-feeding labor policy of this one corporation "is actually lowering standards in China, slashing wages and benefits, imposing long mandatory-overtime shifts, while tolerating the arbitrary firing of workers who even dare to discuss factory conditions."

Wal-Mart does not want the U.S. buying public to know that its famous low prices are the product of human misery, so while it loudly proclaims that its global suppliers must comply with a corporate "code of conduct" to treat workers decently, it strictly prohibits the disclosure of any factory names and addresses, hoping to keep independent sources from witnessing the "code" in operation.

Kernaghan’s NLC, acclaimed for its fact-packed reports on global working conditions, found several Chinese factories that make the toys Americans buy for their children at Wal-Mart. Seventy-one percent of the toys sold in the U.S. come from China, and Wal-Mart now sells one out of five of the toys we buy.

NLC interviewed workers in China’s Guangdong Province who toil in factories making popular action figures, dolls, and other toys sold at Wal-Mart. In "Toys of Misery," a shocking 58-page report that the establishment media ignored, NLC describes:

13- to 16-hour days molding, assembling, and spray-painting toys—8 a.m. to 9 p.m. or even midnight, seven days a week, with 20-hour shifts in peak season.
Even though China’s minimum wage is 31 cents an hour—which doesn’t begin to cover a person’s basic subsistence-level needs—these production workers are paid 13 cents an hour.
Workers typically live in squatter shacks, seven feet by seven feet, or jammed in company dorms, with more than a dozen sharing a cubicle costing $1.95 a week for rent. They pay about $5.50 a week for lousy food. They also must pay for their own medical treatment and are fired if they are too ill to work.
The work is literally sickening, since there’s no health and safety enforcement. Workers have constant headaches and nausea from paint-dust hanging in the air; the indoor temperature tops 100 degrees; protective clothing is a joke; repetitive stress disorders are rampant; and there’s no training on the health hazards of handling the plastics, glue, paint thinners, and other solvents in which these workers are immersed every day.

As for Wal-Mart’s highly vaunted "code of conduct," NLC could not find a single worker who had ever seen or heard of it.

These factories employ mostly young women and teenage girls. Wal-Mart, renowned for knowing every detail of its global business operations and for calculating every penny of a product’s cost, knows what goes on inside these places. Yet, when confronted with these facts, corporate honchos claim ignorance and wash their hands of the exploitation: "There will always be people who break the law," says CEO Lee Scott. "It is an issue of human greed among a few people."

Those "few people" include him, other top managers, and the Walton billionaires. Each of them not only knows about their company’s exploitation, but willingly prospers from a corporate culture that demands it. "Get costs down" is Wal-Mart’s mantra and modus operandi, and that translates into a crusade to stamp down the folks who produce its goods and services, shamelessly building its low-price strategy and profits on their backs.

The Wal-Mart gospel

Worse, Wal-Mart is on a messianic mission to extend its exploitative ethos to the entire business world. More than 65,000 companies supply the retailer with the stuff on its shelves, and it constantly hammers each supplier about cutting their production costs deeper and deeper in order to get cheaper wholesale prices. Some companies have to open their books so Bentonville executives can red-pencil what CEO Scott terms "unnecessary costs."

Of course, among the unnecessaries to him are the use of union labor and producing goods in America, and Scott is unabashed about pointing in the direction of China or other places for abysmally low production costs. He doesn’t even have to say "Move to China"—his purchasing executives demand such an impossible lowball price from suppliers that they can only meet it if they follow Wal-Mart’s labor example. With its dominance over its own 1.2 million workers and 65,000 suppliers, plus its alliances with ruthless labor abusers abroad, this one company is the world’s most powerful private force for lowering labor standards and stifling the middle-class aspirations of workers everywhere.

Using its sheer size, market clout, access to capital, and massive advertising budget, the company also is squeezing out competitors and forcing its remaining rivals to adopt its price-is-everything approach.

Even the big boys like Toys R Us and Kroger are daunted by the company’s brutish power, saying they’re compelled to slash wages and search the globe for sweatshop suppliers in order to compete in the downward race to match Wal-Mart’s prices.

How high a price are we willing to pay for Wal-Mart’s "low-price" model? This outfit operates with an avarice, arrogance, and ambition that would make Enron blush. It hits a town or city neighborhood like a retailing neutron bomb, sucking out the economic vitality and all of the local character. And Wal-Mart’s stores now have more kill-power than ever, with its Supercenters averaging 200,000 square feet—the size of more than four football fields under one roof! These things land splat on top of any community’s sense of itself and devour local business.

By slashing its retail prices way below cost when it enters a community, Wal-Mart can crush our groceries, pharmacies, hardware stores, and other retailers, then raise its prices once it has monopoly control over the market.

But, say apologists for these Big-Box megastores, at least they’re creating jobs. Wrong. By crushing local businesses, this giant eliminates three decent jobs for every two Wal-Mart jobs that it creates—and a store full of part-time, poorly paid employees hardly builds the family wealth necessary to sustain a community’s middle-class living standard.

Indeed, Wal-Mart operates as a massive wealth extractor. Instead of profits staying in town to be reinvested locally, the money is hauled off to Bentonville, either to be used as capital for conquering yet another town or simply to be stashed in the family vaults (the Waltons, by the way, just bought the biggest bank in Arkansas).

It’s our world

Why should we accept this? Is it our country, our communities, our economic destinies—or theirs? Wal-Mart’s radical remaking of our labor standards and our local economies is occurring mostly without our knowledge or consent. Poof—there goes another local business. Poof—there goes our middle-class wages. Poof—there goes another factory to China. No one voted for this . . . but there it is. While corporate ideologues might huffily assert that customers vote with their dollars, it’s an election without a campaign, conveniently ignoring that the public’s "vote" might change if we knew the real cost of Wal-Mart’s "cheap" goods—and if we actually had a chance to vote.

Much to the corporation’s consternation, more and more communities are learning about this voracious powerhouse, and there’s a rising civic rebellion against it. Tremendous victories have already been won as citizens from Maine to Arizona, from the Puget Sound to the Gulf of Mexico, have organized locally and even statewide to thwart the expansionist march of the Wal-Mart juggernaut.

Wal-Mart is huge, but it can be brought to heel by an aroused and organized citizenry willing to confront it in their communities, the workplace, the marketplace, the classrooms, the pulpits, the legislatures, and the voting booths. Just as the Founders rose up against the mighty British trading companies, so we can reassert our people’s sovereignty and our democratic principles over the autocratic ambitions of mighty Wal-Mart.

More of Jim Hightower's writing can be found in his monthly newletter, The Hightower Lowdown. For more information, see www.jimhightower.com.

"B - PROVE that the Chinese really are slave labor, what standard of living does their wages actually provide, how does that compare to the standard of living of other Chinese and American manufacturing labor. Again you keep calling them slave labor and again ZERO proof."

See above for your reality check. More info on actual Laogai slave labor concentration camps:

China’s Forced Labor System Exposed by The Laogai Research Foundation:

http://laogai.org/en/news-report-immoral.html

Home

Reports

IMMORAL AND ILLEGAL


China’s Forced Labor System Exposed

The United States Senate held the first public hearing on the Laogai - China’s massive forced labor complex - in August 1991. The American public was outraged when the full scope of this system was revealed by 60 Minutes and Newsweek in October 1991. The images captured by Harry Wu pushed the Laogai to the forefront of the world’s growing concern over China’s brutality.

At that time, the Chinese government officially denied that any forced labor products were exported. Evidence proved that to be a lie. Between October 1991 and August 1992, the US Customs Service banned 17 different Chinese forced labor products from entering the US. One American company, the E.W. Bliss Co., pled guilty to violating US law for importing Chinese Laogai goods.

The Bush Administration acted to prevent the continued illegal import of Laogai products by negotiating an agreement with the Chinese Communist government. The resulting agreement, called the Memorandum of Understanding on Prison Labor (MOU), was signed in August 1992. However, the MOU established a method to determine the origin of suspected Laogai products that depended upon Chinese cooperation in providing documentation and access to the suspect labor camps. This fatal flaw doomed the entire process to failure. The Chinese government did not adhere to the agreement and the trade in Laogai products continued.

Clinton Administration Threatens, Then Goes Silent

During his campaign in 1992, Bill Clinton’s rhetoric suggested that the China policy under his administration would be more critical of China’s record on human rights. In May 1993, President Clinton issued an Executive Order that made adherence to the MOU a ‘must-do’ condition in considering the MFN trading status of China in the following year.
In the year following this strong stance on the implementation of the MOU, four more Laogai products found to be entering the US market were banned by the Customs Service. At a House hearing in September 1993, both Commissioner of the Customs George Weise and Assistant Secretary of State Winston Lord testified that, in the words of Secretary Lord, "we have had problems at every stage of the (MOU) process."
Proof of Chinese non-compliance to the MOU put the extension of MFN in 1994 into question. After a series of visits to Beijing by Administration officials, a new oral agreement with the Chinese government was negotiated in principle by then Treasury Secretary Lloyd Bentsen in December 1993 and formally signed in March 1994. Then Secretary of State Warren Christopher pointed to the new Statement of Cooperation on the Implementation of the Memorandum of Understanding (SOC) as evidence that the Chinese had complied with the MOU. President Clinton accepted this maneuver and renewed China’s MFN trading status in May 1994.

Chinese Ignore Agreements, Laogai Products Continue to Enter United States

The Chinese government never intended to honor their bilateral agreements with the US government. The Chinese government has delayed, redefined, or ignored outright the procedures for implementing these agreements. Documentation presented to the Customs officials in China do not provide adequate information to resolve the cases. Official requests for visits of suspect facilities are not answered or are rejected without reason. In the two years since the SOC was signed, the Chinese granted a handful of visit requests while introducing a series of other ‘conditions’ to their cooperation. Numerous investigations opened in 1992 and 1993 remain unresolved. In late 1996, Customs officials wrote that the procedures for implementing the MOU/SOC are "irretrievably broken." The State Department has taken no action.

Laogai products continue to stream into the United States. Between March 1994 and the end of 1996, the Customs Service issued another four Detention Orders banning Laogai products. In 1995, the Laogai Research Foundation presented evidence that industrial graphite from a Laogai was entering the US. In a nationally broadcast television interview (NBC News), the president of an American company, Asbury Graphite, admitted to importing the graphite products from a Chinese forced labor camp. The Customs Service took no action.

The 1930 law banning forced labor products needs to be addressed to determine if it is applicable in the modern economy. The MOU and SOC must be seen for what they are: tools of a failed policy.

Laogai Research Foundation Finds More Forced Labor Products Entering US

The Laogai Research Foundation maintains an ongoing project into monitoring the Chinese forced labor system. As overall trade with China grew, so did the trade in Laogai products. The Laogai is an integral part of the Chinese government’s economic policies. The Laogai is now more than self-sustaining: foreign exchange earned through the trade in Laogai goods has funded the building of larger, more economically viable camps.
The Laogai Research Foundation recently completed a series of investigations that show conclusively that the trade in Laogai products continues. The results of these investigations were publicly revealed for the first time at a full hearing of the Senate Foreign Relations Committee on May 21, 1997. The results were also submitted as testimony before the House Subcommittee on International Operations and Human Rights on May 22, 1997. This Special Report of the Laogai Research Foundation presents the evidence submitted as testimony before the Congress.

Case #1: Guangdong Province Jieyang Prison

Prison Publication Identifies Jieyang Prison Economic Activities

On April 6, 1996, the Guangdong Province Prison Administration Bureau and the officials of the Jieyang Prison held a symposium on the development of prison economics at Jieyang Prison. The Laogai Research Foundation obtained a copy of the publication "Prison Work Newsletter" Third Edition 1996 which presented the proceedings of the symposium.

Jieyang Prison is a newly constructed facility in Jiedong County, Guangdong Province located 50 kilometers north of the Shantou Special Economic Zone. Originally called Dongjing Labor Reform Detachment, this prison was established in 1951. Dongjing Labor Reform Detachment was located in a hilly section of Jiedong County where it primarily grew oranges, tea and rice. Zhou Shiliang, Vice-Director of the Guangdong Province Judiciary Department, said at the symposium, "Jieyang Prison labor involved in manufacturing and processing has grown from 20% in 1989 to the current 80%." Hong Yanjiang, Jieyang Prison Warden, said, "Projects for production are rapidly expanding from solitary farming and tea production to the manufacture and processing of garments, plastic products, rosaries, knitwear, watchbands, stone materials, mineral water and others. Starting in 1994, the prison ceased to be a money-losing unit. In 1995, for the first time, total value of industrial and agricultural production broke the barrier of 10 million RMB, actually reaching RMB15,687,787 [US$1.96 million] and profits of RMB110,000 [US$13,750]."

Based upon the contents of this newsletter, the Laogai Research Foundation conducted an investigation into the economic activities of Jieyang Prison.

Publication Names Garment Production Partners

The "Prison Work Newsletter" included the speeches presented at the symposium by the officials of the prison’s various production units. One officials named a local company that signed a long-term contract with Jieyang Prison for the processing of garments: Shantou Jixiang Knitting Garment Factory.

The Laogai Research Foundation contacted the Shantou Jixiang Knitting Garment Factory and began negotiations to buy products for export to the United States and France. These negotiations were conducted in spring 1997 by an associate of the Foundation and Mr. Li Ding Zun of the Jixiang Factory during a series of meetings in Shantou, China.

In conversations that were videotaped by the Foundation, Mr. Li confirmed that his factory sourced its products at Jieyang Prison in the past. He further stated that he personally supervised the work done at the prison. When asked if he could arrange a visit to Jieyang Prison for us, he answered that he could make those arrangements. Although he did not specifically say that our order would come from Jieyang Prison, he knew exactly the unit costs of garments at Jieyang Prison. He said for a $50 per dozen order, the cost for sourcing at the prison would be $35 per dozen; for a $60 per dozen order, the cost at the prison would be $40. He also said that buyers regularly need to bribe the prison officials $8 to $10 per dozen to assure quality.

The Foundation also learned from Mr. Li that Jixiang Factory has numerous customers in Hong Kong. Mr. Li provided names for four companies: Chaifa Holdings Ltd., Sam Wing Garment Factory Ltd., Roxy Garment Factory and Worldwise Industries Ltd.

Mr. Li said that Roxy Garment Factory Ltd. ordered garments with the ESPRIT brand, such as the one sent to us by Jixiang as a sample. Officials of Roxy Garment Factory confirmed to the Foundation in a phone conversation that they source some of their products at the Jixiang Factory. The Foundation did not determine if any ESPRIT garments from Jixiang are sold in the United States. We call on ESPRIT to cease its business with Roxy Garment Factory Ltd. until its ties to Jixiang Garment Factory and Jieyang Prison can be determined by the US Customs Service.

The business card for Chaifa Holdings Ltd. identifies it as the licensed producer of the Arnold Palmer brand in China and of the Playboy brand and Garfield brand in Hong Kong, Macau, and China. Officials of Chaifa Holdings Ltd. confirmed to the Foundation in a taped phone conversation that they source some of their products at the Jixiang Factory. We call on Arnold Palmer and officials at Playboy to cease their business with Chaifa Holdings Ltd. until its ties to Jixiang Garment Factory and Jieyang Prison can be determined by the US Customs Service.

The "Prison Work Newsletter" stated:

"Hong Kong businesses want to cooperate with Jieyang in the garment project because their representatives saw the advantageous conditions we have in management and labor. Our garment project is our first large-scale production and processing line where we cooperate with foreign businesses; the orders are abundant and our production runs relatively effectively. It is the pillar enterprise which will bring economic development at Jieyang Prison."

The US Customs Service should fully investigate Jieyang Prison
and all its Hong Kong buyers to determine what garments are coming to the United States in violation of American law.



Contracts Signed with Suspect Factory Show Laogai Garments Can Enter US

The Foundation completed negotiations with Jixiang Factory for 500 dozens of woven T-shirts at $50 per dozen. The Jixiang Factory does not have direct export rights from the government of China, so an import and export company must handle the actual shipment of the garments out of China. In this case, we signed the contract with Guangdong Province Shantou Textile Import & Export Corporation to handle the shipment of the products to Hong Kong then to Chicago and Paris. This shows clearly the role of state-owned shipping companies as the middlemen for handling Laogai products.

Jieyang Prison Also Runs Mineral Water Joint Venture

The last page of the "Prison Work Newsletter" is an advertisement for "Kangyuan" brand mineral water. It is the product of a joint venture between Jieyang Prison and Shangchang Apollo Group of Hong Kong.

Chen Guohui, an official of Jieyang Prison Third Detachment, stated:

"Judging by the market, consumption of mineral water is ever rising. Being ever increasingly welcomed by consumers, it has good market conditions. Jieyang Prison has rich sources of underground mineral water. Currently Jieyang Prison is establishing a mineral water plant and will sign an agreement with cooperating Hong Kong merchants. Shanchang Apollo Group believes that our prison’s mineral water had broad market potential and is inclined towards signing an agreement. If we suppose mineral water production develops by an annual production value of RMB10,000,00, an annual production value of RMB50,000,000 will be reached by the year 2000."

Associates of the Foundation purchased Kangyuan water in Shantou city in March 1997.

In addition to the mineral water enterprise, Jieyang Prison also operates a joint venture to manufacture artificial Christmas trees for the international market. These ventures are further example of the Chinese government’s violation of its own laws regarding Laogai participation in joint ventures. A Joint Declaration of the Chinese Ministry of Foreign Economic Relations and Trade and the Ministry of Justice dated October 11, 1991 stated: "The prisons are forbidden to set up joint ventures or cooperative ventures with overseas companies."

Case #2: Shanxi Province Number 3 Prison (also known as Shanxi Linfen Automobile Manufacturing Plant)

American Subsidiary of Chinese National Company Sells Laogai Products

The Laogai Research Foundation has learned of a court case in California between an American company named Excel Industries and an American subsidiary of China National Mineral and Metals Corporation (commonly referred to as Minmetals) called MM Rotors. In the documents of this case, the Foundation found that MM Rotors knowingly imported automobile brake parts made at the Shanxi Province No. 3 Prison and sold them to Excel Industries. Excel Industries has filed for bankruptcy in part because of the low-quality of the Laogai parts bought from MM Rotors.

In a deposition submitted in the case, a former employee of Excel Industries, Mr. Li Xiang, testified that both he and Excel president Peter Arenson were brought to the Shanxi Linfen Automobile Manufacturing Plant by Minmetals officials in December 1993 to inspect the production process of hub rotors and hubless rotors. The following are taken from the deposition given by Mr. Li on April 23, 1996.

Question: "What did you observe at the Linfen Foundry?"
Li: "That it’s actually a prisoner factory."
Question: "Why do you say that? That it’s a prisoner factory?"
Li: "Because I am Chinese and I read the sign by the gate. It says Linfen Prison. And also it was guarded by uniformed guards."

Question: "What else did you see in terms of the dress of the people who were at the entrance to the Linfen Foundry?"
Li: "They have helmets. They got guns. And just like I would assume a typical prison."
Question: "Was there a fence?"
Li: "Fence. And it has got electrical wires on top of the wall."

Question: "What products - did you observe people in Linfen making a product?"
Li: "Yes."
Question: "What were they making?"
Li: "Hub rotors."
Question: "During your trip to China in December of 1993, did you have occasion to meet anyone from Minmetals or MM Rotors?"
Li: "Yes, actually we met with two people from Minmetals."
Question: "Who did you meet?"
Li: "Mr. Bai and Mr. Su."
Question: "Would that be Bai Li and Hailin Su."
Li: "Yes."
NOTE: Bai Li and Hailin Su are officers of MM Rotors.

Question: "And again looking at page 5 which has the Chinese indication of Linfen at the top, are these part numbers that you were advised by Hailin Su and Bai Li were available through Minmetals?"
Li: "Yes, I believe that is what they stand for."
Question: "Was it your understanding in being handed this list by Hailin Su and Bai Li that these parts indicated on page 5 of Exhibit 1 were going to be produced at the Linfen prison facility."
Li: "I can only say it is made in Linfen, yes. They were made at Linfen. That whole page, the parts numbers on that page."

Harry Wu, Executive Director of the Laogai Research Foundation, while a prisoner in China was also at the Shanxi No. 3 Prison. This prison since changed its name to Shanxi Linfen Automobile Manufacturing Plant.

Shanxi Linfen Laogai Makes Auto Parts for Export and Joint Ventures in PRC

The Shanxi Linfen Automobile Manufacturing Plant is located at 80 Gongyuan Street in Linfen, Shanxi Province. The Laogai Research Foundation has located extensive information on the products of this plant through the China Product Information Annual 1990 published in 1991 and the China Product Information Annual 1995 published in 1996. These books are published by the China State Planning Publishers.

The entry for Shanxi Linfen Automobile Manufacturing Plant from the 1990 volume gives production output value of RMB3,450,000 and sales figures of RMB3,310,000. The products that are made at this plant are brake adjusters, brake discs and front and rear brake drums. All the parts are sold under the brand Linhe Sanlun. The entry for brake drums at Shanxi Linfen lists annual production at 12,500 units. It further says "Export: 100%" and "Application: American automobile parts."

The entry for Shanxi Linfen from the 1995 volume gives the production output value of RMB15,000,000. The same four products are also listed. The dramatic growth in output value can be traced to the increase in production of the brake discs. In 1995, brake disc production stood at 300,000 units. The entry again says that the product is 100% for export. It further says that the brake discs are used in the "Beijing Cherokee, [and] Shanghai Santana." Chrysler operates a joint venture in China to make Cherokees called Beijing Jeep Company. Volkswagen operates a joint venture in China to make the Santana model called Shanghai Volkswagen Automobile Company.

Dun & Bradstreet also has researched Shanxi Linfen. In its 1995/96 Directory of Key Manufacturing Companies in P.R. China published in 1995, Dun & Bradstreet gives production output value of RMB12,254,000 and sales of RMB12,084,000.


MM Rotors Annually Imports Tons of Auto Parts

Dun & Bradstreet identifies MM Rotors as a subsidiary of Minmetals Inc. LA. Dun & Bradstreet further shows that the two men who were named in the deposition, Hailin Su and Bai Li, are respectively President and Vice-President of MM Rotors.Hailin Su is also the President of Minmetals Inc. LA. His listed biography notes that he was active with the parent company, namely China Minmetals, in Peking, China between 1967 and 1989. Since 1989, he has served at the Minmetals Inc. LA position.

In publicly available shipping documents, MM Rotors is identified as the import entity for hundreds of tons of auto parts annually. In 1995, MM Rotors imported 561 metric tons of auto parts as well as 1,131 tons of merchandise listed as "metalware, miscellaneous." In 1996, MM Rotors imported 612 metric tons of auto parts, as well as more than 1000 metric tons of merchandise listed as "steel, miscellaneous including ingots" and "metal scrap, ferrous, pig iron." From these documents it is impossible to determine how many brake parts manufactured at Shanxi Linfen were imported to the US by MM Rotors. Li Xiang, an eyewitness to the relations between Shanxi Linfen and Minmetals, stated in his deposition, "We were told Minmetals was the one taking the majority of [Shanxi Linfen’s] capacity."

These same documents show that MM Rotors regularly received thousands of kilograms of merchandise identified as "casting iron" from the Shanxi Province Foreign Trade Import & Export Corporation. MM Rotors last received a shipment of casting iron from Shanxi Province Foreign Trade Import & Export Corporation was in April 1996.

MM Rotors supplies brake parts to a large number of American buyers. A document of Excel Industries, the American wholesaler suing MM Rotors, dated July 1996 names 81 companies that bought its products between 1993 and 1996. This list includes large auto parts retailers such as Autocraft, Midas Muffler Co. and Monroe Motor Parts. We don’t know how many of these companies received the Laogai brake parts from MM Rotors. We call on all companies doing business with MM Rotors to stop selling all parts bought from MM Rotors until the US Customs Service can determine the origins of all products imported by MM Rotors.

The documents for an April 30, 1996 shipment received by MM Rotors from Shanxi Province Foreign Trade Import & Export Corporation identifies a second company named Mountain West of El Monte, California. Mountain West later received two more shipments in September 1996 for a total of 270,000 pounds of "cast ironware" from the Shanxi Province Foreign Trade Import & Export Corporation.

Guilty Chinese Companies Should Be Barred from Doing Business in US

American law clearly bars the import of forced labor products from any country. Since 1991, 27 Chinese Laogai products have been banned from the US. One American company in 1992 pled guilty to knowingly importing machine tools made at a Laogai factory. No Chinese company has ever been brought to trial in the United States for violating the forced labor laws.

The Customs Service should take immediate action to seize all products at the MM Rotors and Minmetals locations until the origin of the products can be determined. The State Department should immediately declare Hailin Su and Bai Li, officers of MM Rotors and Minmetals who peddled the Laogai brake parts, persona non grata and begin deportation proceedings.

It is outrageous that companies owned directly by the Chinese government can be allowed to engage in this illegal trade. Any new legislation directed to stop this trade in forced labor goods should include provisions to bar any foreign corporation found selling these goods from the United States. This should be stated clearly in the forced labor laws.

Chrysler and Volkswagen Should Stop Buying From Shanxi Suppliers

The Foundation calls on both Chrysler and Volkswagen to immediately stop buying brake parts sourced in Shanxi.

Allegations of Chrysler’s Beijing Jeep joint-venture sourcing products from a Laogai have surfaced before. In 1994, the Hong Kong paper Eastern Express reported that Chrysler’s partners in Beijing Jeep, the Beijing Automotive Industry Corporation (BAIC), had a "co-operation agreement for the provision of parts and accessories" with a known Laogai camp. At the time, a Chrysler spokesman said the company would work "to ensure that not only Beijing Jeep Corporation but also suppliers doing business with our share-holding partner are not involved in prison labor."

Both Chrysler and Volkswagen should investigate its joint-ventures to determine if they are buying products from Shanxi Linfen. Chrysler and Volkswagen should make the results of such an investigation public.

Case #3: Nanjing Detention Center Women’s Detachment

American Businessman Investigates Competitor; Discovers Laogai Ties

Mr. Peter Levy, President of Labelon/Noesting Co. of New York, was shocked when he learned in 1996 one of his main competitors was sourcing its binder clips at a Laogai camp in China. The competitor, Officemate International Corporation (OIC) of New Jersey, was grabbing more and more of the market for binder clips because of its lower costs. Mr. Levy decided to look into the manufacturing of OIC to determine the true origins of its products.

OIC operates a sister company called Allied International Manufacturers (Nanjing) Stationary Co. Ltd. (Amico) in Nanjing city, China. Chinese documents show that Peter Chen (also known as Chen Hua), the Executive Vice-President of OIC, is the Chairman of the Board of Amico.

In March 1996, Mr. Levy went to Nanjing. He waited outside the Amico plant until a delivery truck left the plant. He followed the truck. At a stop light, he approached the truck and found that it contained unassembled binder clips. The truck continued on until it reached the Laogai camp outside Nanjing city. Mr. Levy waited until the truck came out again. He then followed it back to the Amico plant. He documented the entire trip by photographing the truck’s route.

Laogai Research Foundation Imitates Methods and Confirms Findings

In March 1997, the Laogai Research Foundation conducted its own independent investigation of Amico to verify Mr. Levy’s findings. An associate of the Foundation went to the Amico plant and began videotaping the plant and its surroundings. We followed the delivery truck after it left the plant. It went directly to the Shifosi Farm. Shifosi Farm is in fact the Nanjing Detention Center Women’s Division. We waited until the truck left the Laogai camp and followed its return to the Amico plant.

Shipping documents show that in April 1997 alone, Amico shipped 79,500 kilograms of binder clips directly to OIC. We don’t know the exact amount of clips assembled at the Laogai camp as ordered by Amico. OIC sells its binder clips to such large office supply retailers as Staples, Boise Cascade Office Products and BT Office Products.

In a letter to the Senate Foreign Relations Committee, OIC stated they were "shocked and dismayed" by the revelations of Peter Levy. The letter also stated, "If the allegations are true, we have been intentionally misled and deceived by the company’s [note: Amico] management." The letter concluded by directing any questions to a Washington law firm.

Case #4: Zhejiang Province No. 2 Prison (also known as Qianjiang Hardware Tools Factory and Hangzhou Shenda Tool Factory)

The Laogai Research Foundation first profiled the Zhejiang No. 2 Prison in a 1994 report titled, "China Fails to Comply with ‘Must Do’ Clinton MFN Condition." We presented evidence that this prison was manufacturing a large range of hand tools for export, including water pump pliers, combination spanners and adjustable wrenches. These products were sold under the "Diamond" brand.

In April 1994, Harry Wu and others traveled to the site of Zhejiang No. 2 Prison. He took extensive pictures of both the exterior and interior of the prison. The pictures included the new civilian name of the camp, Hangzhou Shenda Tool Factory, the prison signboard and entrance, and prisoners in formation inside the compound. Wu met with an official of Shenda who confirmed the "factory" was also known as Qianjiang. The official also disclosed the name of a Hong Kong trading company, Fuchuen Machinery, that had a relationship to the prison camp. The official further identified the Cosmo Trading Company of Houston, Texas as a customer. At that time, the Foundation turned the results of its investigation to the United States Customs Service and requested the Customs Service "initiate an immediate investigation of Cosmo Trading Company’s relationship with this Laogai camp." Since 1994, the Customs Service has never stated publicly the status of the investigation into Cosmo.

The Foundation has gathered existing documentation of the relationship between Cosmo Trading Company and trading companies selling products from the Zhejiang No. 2 Prison. These documents show clearly that Cosmo knowingly imported Laogai products for many years in violation of American law.

One document, dated January 3, 1992, from Cosmo to the Zhejiang Technical Import & Export Corp. (ZTIEC) states, "Because [US] Customs is really paying attention to (Qianjiang factory) wrenches and other handtools, please don’t deduct from the wrench category when ready to ship."

Another document from ZTIEC to Cosmo dated January 29, 1992, states "on February 25, Qianjiang factory wrenches (D/P at sight) [will be shipped]."

A third document from Cosmo to ZTIEC dated June 30, 1992 is more extensive and mentions Qianjiang repeatedly. In item 1 on page 1, it states "Except the goods shipped in June….(one container primarily of Qianjiang wrenches)…." In item 4 on page 1, it states, "The offer from Qianjiang is okay. Please immediately arrange [shipment of] 7,200 pieces flat ply bar. We are totally sold out." Later, in item 7 on page 2, it reads, "You originally gave me 7%, so there is no difference. The 22 pieces and wrenches had many problems that I don’t want to discuss. In 1991 I bought a minimum of 25,000 sets of wrenches (5 piece, 11 piece, 14 piece, SB and polished) from Qianjiang…."
These documents constitute irrefutable evidence that illegal products from the Zhejiang No. 2 Prison were imported to the United States by Cosmo Trading Company. The Laogai Research Foundation calls on the Customs Service to immediately disclose the results of its investigation into the Cosmo case.


Evidence of Further Violations: Testimony Links Christmas Lights with Laogai Labor
In addition to the testimony related to the four cases detailed above, lawmakers at the May 1997 congressional hearings were told that Laogai prisoners have been forced to assemble Christmas lights for export.

Fu Shenqi, a Chinese dissident and Laogai survivor, testified that he and other prisoners at the Shanghai Reeducation-Through-Labor Farm in Jiangsu were routinely beaten as they tried to keep up with production demands.
"The task was hard," said Mr. Fu. "Every inmate had to labor overtime, many laboring until one or two at night. Those who failed to fulfill their quotas were punished."

Two months after the hearings, the Customs Service has yet to formally act on any of the evidence presented in this report.

END-OF-REPORT

Back to Top of Report

More? OK. More.
CRS Issue Brief for Congress on Prison Labor Exports:

http://www.ncseonline.org/NLE/CRSreports/Economics/econ-35.cfm?&CFID=6979732&CFTOKEN=22671638#_1_11

Prison Labor Exports

Some analysts charge that the use of forced labor is widespread and a long-standing practice in China, and that such labor is used to produce exports, a large portion of which may be targeted to the United States. The importation from any country of commodities produced through the use of forced labor is prohibited by U.S. law, although obtaining proof of actual violations for specific imported products is often extremely difficult.

On August 7, 1992, the United States and China signed a Memorandum of Understanding (MOU) to ensure that prison labor products were not exported to the United States. However, U.S. disputes with China over its implementation of the MOU led to the signing of a "statement of cooperation" (SOC) on March 14, 1994, which included provisions which clarify procedures for U.S. officials to gain access to Chinese production facilities suspected of exporting prison labor products. President Clinton's May 1994 report to Congress on renewing China's MFN status stated that China had generally abided by the agreements on prison labor. However, the U.S. Department of State's China Country Report on Human Rights Practices for 1998 states that: "Although the signing of the SOC initially helped foster a more productive relationship between the U.S. Customs and Chinese authorities, cooperation overall has been inadequate." According to the 1999 State Department Human Rights report, during 1999 U.S. Customs unsuccessfully pursued several standing requests to visit eight sites suspected of exporting prison labor products (one of which dated back to 1992, and several dating back to 1994), and renewed requests (several dating back to 1994) for the Chinese Ministry of Justice to investigate seven factories and three penal facilities for evidence of prison labor exports. The Justice Ministry did not respond to any of these requests.

Want more?

Some more facts and figures on your beloved Wal-Mart and the "ALMOST-SLAVE LABOR" that is used extensively by Wal-Mart (now don't go and call me an union-lover, 'cause I don't like unions, but these facts are interesting to say the least)

Wal-Mart Dungeon in China

Qin Shi Handbag Factory
Sanxiang Town
Zhongshan City
Guangdong Province, China

For easy navigation use these links

Summary

Wal-Mart discloses factory location to government in China

Working for Wal-Mart in China... for Nothing

Earning 36 cents a month, 8 cents a week

Wal Mart bags made under slave like conditions

Summary: Wal-Mart/Qin Shi Factory

·         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.

There are 1000 workers at the factory; 90% of them 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 us 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.

Wal-Mart Bags Made Under Slave-like Conditions in China

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.

Kathie Lee Handbags
#62657 70575
Made in China
All Man Made Materials
Dept. 31
KL 6021E
$8.96

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.

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

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

Worker	Hourly Wage	Daily Wage (12-14 hr workday)	No. Days Worked	Net Pay (after deductions for dorm, food, fines)	Number of Pieces Sewn each day	Average piece rate pay per unit	Total Gross Pay (before deductions)
A	9-10 cents	$1.20	37	$44.22	1,010	2/10 of 1 cent	$60.12
B	8-9 cents	$1.09	34	$36.99	413	4/10of 1 cent	$52.89
C	6-7 cents	$0.86	38	$32.77	1,073	1/10 of 1 cent	$48.67
D	6-7 cents	$0.86	37	$31.69	760.22	2/10 of 1 cent	$47.59
E	6-7cents	$0.83	37	$30.60	673.30	2/10 of 1 cent	$46.51
F	6-7 cents	$0.81	37	$30	622	2/10 of 1 cent	$45.90
G	0.8-0.9cents	$0.11	27	$2.89	361	4/10 of 1 cent	$40.00
H	4-5 cents	$0.61	35	$21.20	331	3/10 of 1 cent	$37.11
I	0 cents	$0.00	35	(owed $1.81)	684	2/10 of 1 cent ($0.0014759)	$35.30
J	3-4 cents	$0.44	40	$17.71	393	2/10 of 1 cent	$33.61
K	3-4 cents	$0.43	37	$16.63	434	2/10 of 1 cent	$32.41
L	0 cents	$0.00	35	(owed $7.11)	398.4	2/10 of 1 cent	$27.71
M	0 cents	$0.00	32	(owed $20.72)	401	2/10 of 1 cent	$22.53
N	0 cents	$0.00	23	(owed $18.92)	691.83	1/10 of 1 cent	$18.19
O	0 cents	$0.00	31	(owed $19.16)	474	1/10 of 1 cent	$17.95
P	0 cents	$0.00	19	(owed $23.61	515	1/10 of 1 cent	$13.49
Q	0 cents	$0.00	17	(owed $26.39)	309.5	2/10 of 1 cent	$10.72
R	0 cents	$0.00	9	(owed $33.49	324	1/10 of 1 cent	$ 3.61
S	0 cents	$0.00	10	(owed $34.46)	186	1/10 of 1 cent	$ 2.65
--Five Workers Surveyed from the Gluing Department--
T	7-9 cents	$1.03	37	$38.19	740.11	2/10 of 1 cent	$54.10
U	1 cents	$0.15	32	$4.91	541	2/10 of 1 cent	$42.05
V	5 cents	$0.65	35	$22.77	480.34	2/10 of 1 cent	$38.67
W	0 cents	$0.00	27	(owed $11.20)	340	3/10 of 1 cent	$25.90
X	0 cents	$0.00	24	(owed $20.84)	446	15/100 of 1 cent	$16.27

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.

back to top

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.

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?

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

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.

See: “Mulan’s Sisters/Working for Disney is No Fairy Tale” by Hong Kong Christian Industrial Committee and CAFOD Hong Kong, April 1999

back to top

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.

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

Pay for the top 14% of Wage
Earners at Qin Shi

·        5 cents an hour
·        60 cents a day (for a 13-hour shift)
·        $4.18 per week (for a 91-hour, 7-day workweek)
·        $18,10 per month

$217.16 per year

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.

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.

Want any more, fellows?
http://laogai.org/en/news-report-illegtra.html
http://laogai.org/en/news-report-bloodflo.html
http://laogai.org/en/news-report-meaning.html
http://laogai.org/en/news-report-cruelmn.html

"C - Calling for us to boycott ALL Chinese goods from behind your computer made with Chinese parts is HIGH HYPOCRICY."

My Communist/Wal-Mart lovers, you are the hypocrites. But that's OK. We live in the land of the free where you could buy products made in Nazi Germany made by Jews in concentration camps, if you wanted. Now, you can buy all the slave labor goods from Communist China to all your hearts content.

Goodbye and and good riddance to you all! BTW: Eight to one is not bad (I was outnumbered 1,000 to 1 at the SF rally for US Troops.). If I really wanted I could have call on my FReeper troopers to tear you stupid and ignorant "arguments" to shreads.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

*U.S. economy follows the Wal-Mart way; Americans