Ethical Sourcing Consultants Must Be Aware of Systematic Misrepresentation

The elimination of the global quota system on textiles is expected to drive a growing share of the world's clothing production to Chinese factories. However, something which complicates the ethical sourcing challenge for consultants and buyers alike, is that more than half of the factories that auditors see in China are thought to be forging some of their records so that irregularities including underpayment, inadequate health and safety provisions and excessive hours can be disguised.

In fact, our consultants have learned that particularly in industries where workers are paid piece rates, its not uncommon for the actual wage  in China to be half the legal minimum wage. Get in touch with an ethical sourcing consultant at Executive Interims.

Of Chinese factories Nike's 2004 ethical sourcing report, says: "Falsification of information by factories often related to wages and hours of work is common. This extends to the practice of coaching workers by factory managers trying to deceive compliance auditors".

Inside a footwear company in Guangzhou a sign reminds managers of the different working hours per week required by different customers: "Please educate the workers well to avoid telling the client the truth" says the sign.

Ethical sourcing consultants aware of this situation point to an article in the Financial Times which reported that a garment factory manager in Guangdong said he had tasked a team to create a bogus paper-trail of documents for foreign customers. Some of his team punched bogus time cards, whilst another falsified payroll records indicating that Chinese labour laws (which stipulate a 40 hour working week with a maximum of 36 hours of overtime per month) were being complied with. The laws in China are more stringent than in some countries, and require workers to be paid at least 1.5 times the normal wage for overtime.

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