No Response from Nike on Code Violations in China
June 23, 2014
As you know, on May 16 the WRC reported on longstanding violations of workers’ rights under local laws and university codes of conduct at factories in Dongguan, China operated by Yue Yuen (Holdings) Limited, a supplier of collegiate licensed athletic footwear to both adidas and Nike. As we discussed in our May16 report, underpayment by Yue Yuen of tens of millions of dollars in legally mandated social security contributions for its employees led to an estimated 30,000 of its workers in Dongguan launching a three-week strike in April that drew international media attention.
As our report also described, during the walk-out at Yue Yuen, the WRC contacted adidas and Nike to request that they inform us as to their positions as to whether Yue Yuen’s underpayment of social security benefits had violated Chinese law and university codes of conduct, and, moreover, to indicate what actions they were taking to address the cases of two Chinese labor rights advocates who had been detained by local government authorities in relation to the Yue Yuen workers’ strike.
In our May 16 report to universities, we also noted with concern that, despite having been initially contacted by the WRC more than a month earlier, Nike had not, as of then, provided a substantive response regarding its supplier’s unlawful underpayment of tens of millions in social security contributions. As we also observed, Nike had failed to provide any substantive response regarding the detention of labor advocates in response to peaceful worker protests over the company’s illegal conduct, even though the WRC had notified Nike of this situation more than three weeks prior to the report’s release.
Although the WRC has now sought Nike’s response to these labor rights violations on nearly a half-dozen occasions – on April 9, 14, and 24, and on May 16 and 22 ‒ Nike’s reply to us continues to be that it is “gathering information” and “will get back to you shortly.” Nike’s most recent communication to the WRC on this issue, on May 17, was that it would “respond to you in the coming week.”
Unfortunately, as of today – more than one month later – the situation, with respect to Nike’s response to our report, remains unchanged. Nike still has yet to provide any substantive response to the WRC concerning the violations of university codes of conduct at Yue Yuen. This ongoing lack of responsiveness on Nike’s part has deepened our concerns regarding what was already a troubling situation. The underpayment of social security payments by Yue Yuen reportedly had continued over a period of several years (during which, Nike was consistently among the company’s top buyers); unless remedied, the company’s violation of its legal obligations will cost workers more than $26 million per year in lost future retirement and/or disability benefits. Moreover, one of the two labor rights advocates who was jailed over the strike in April was not released from detention until the end of May.
In such circumstances, the failure of a university licensee that is a major customer of a factory to respond in an adequate and timely manner to its supplier’s violations of university codes of conduct has the unfortunate result of making it more difficult to fully remedy the violations that have already occurred. Yue Yuen secured its employees return to work from the April strike by promising to make social security contributions in the correct amount going forward – but whether the company will actually provide the tens of millions of dollars it owes for its past underpayments remains unclear. Likewise, by the time labor advocate Lin Dong was released from detention on May 30, a clear warning about the consequences of publicly defending workers’ rights had been sent by government authorities to the factory’s workforce.
Despite this deleterious failure to engage on the part of Nike, the WRC will continue to seek the company’s assistance in remedying what is clearly one of the most significant violations of university codes ‒ in terms of both the sheer amount of legally owed compensation withheld from workers, and the scale of worker protest in response ‒ that has come to light in Nike’s collegiate apparel supply chain in recent years. And we will continue to report to the university community on whether Nike’s recent lack of responsiveness on this issue continues or improves.
Worker Rights Consortium
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