Underage, Underpaid Workers, Sexually Predatory Security Guards at Troubled Chinese Microsoft Supplier

Chinese factory

Underage, underpaid workers working 15-hour shifts, sexually predatory security guards, hourly pay of just 52 cents per hour after deductions for the canteen food. No talking during work hours, no listening to music, no bathroom breaks. These are just some of the conditions that workers at China's KYE Systems Corp. plant in Dongguan City have to endure. The factory produces hardware for U.S. companies, including Microsoft, and its work practices have been documented in a report by the National Labor Committee. What would the directors of the Bill and Melinda Gates Foundation say to all this?

The report is the product of a three-year-covert investigation by the NLC, a collective of 22,000 individuals and organizations dedicated to helping "defend the human rights of workers in the global economy." Its director, Charles Kernaghan, is the man who famously exposed the fact in 1996 that Kathie Lee's clothing line for Walmart was made in Honduran sweat shops (he's also taken on Kmart, Gap, Target, Nike, and many more for similar workers' and human rights issues).

In his latest report, there are some truly spine-chilling first-person accounts of factory life. And it is a life. Workers are billeted, 14 to a dorm, in the compound. If they don't supply their own mattresses and bedclothes, they sleep on plywood boards. They are permitted three days off each month. The air-conditioning is only turned on when foreigners visit the factory, and when the workers meet their targets, the management immediately raises them.

"Without a doubt, one of the most disappointing things was that one of the workers who had been in a factory for a while just said that the young people in this factory, they have no chance to grow or develop—not emotionally, not intellectually," Kernaghan tells FastCompany.com. "They're being destroyed."

Chinese factory

One of the workers agreed to be interviewed for the report. Some of his quotes are below.

  • "The manager shouted: Everybody pay attention, while at work, everyone should be full of vigor. Everyone must strictly follow the 6S system! [Sorting, Straightening, Sweeping, Standardizing, Sustaining discipline, Safety] You are not allowed to talk at work. You cannot drop products on the floor. Can you hear me?" We respond, "We hear you! but some of my colleagues didn't answer with much enthusiasm."
  • "The foreman then calls out commands for workers to: Stand at attention! Turn right!" and sums up the day's work. One worker who accidentally dropped a product on the ground is called out and scolded by name. Finally the foreman says we can leave. At that time, we only have half an hour before the overtime shift begins."
  • "This factory has a stupid regulation that doesn't allow anybody to enter or reenter the factory compound after 9 p.m. When workers finish overtime, it is already 10 p.m., and if they leave the factory, they cannot come back in. Most workers live in the company dorm, so they don't dare risk getting stuck outside. This regulation was crafted to force workers to rest in the dorms and it guarantees workers' performance the next day."

Cynics would say that the NLC report is nothing surprising—and that this is the third time that a factory in mainland China with links to Microsoft has been investigated. Last year, Swedish NGO the Fair Trade Center found similar conditions in a quartet of plants that supply tech firms including the software giant, and the NLC has already sniffed out dodgy working practices at a keyboard factory where Lenovo, Microsoft, and HP do business. Let's not forget the Foxconn plant, either, where Apple's iPads are made.

It is a given that consumers want cheap tech. But at this price? As well as Microsoft, Hewlett Packard, Samsung, Foxconn, Acer, Logitech, and Asus use KYE Systems Corp. for production. Basic wages for the workers are around $112 per month—without overtime—and it only thanks to cheap labor and overheads that allow $300 netbooks to make their way into U.S. stores. It is not that there are no labor laws in China, it is that large factories such as KYE flout the regulations: Its workers' average of 28 hours of overtime each week exceeds the limit by 237%.

Chinese factory

Microsoft has already responded to the report, and has promised an investigation into the treatment of its workers. "We take these claims seriously, and we will take appropriate remedial measures in regard to any findings of vendor misconduct. Actions for non-compliance with our requirements may include corrective action plans, remedial training, certification requirements, cessation of further business awards until corrective actions are instituted, and termination of the business relationship."

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  • Robert kellert

    One more thing.
    The pictures show workers given a 5 minute break, usually every hour and they take this opportunity to close their eyes. It is so easy to give a picture a nefarious look, but try to do this on an assembly line in the US... Good luck.
    For those wondering, the US does not have a maximum working hours regulation or law, contrary to China.

  • Robert kellert

    What an epic joke.
    First, attract the reader with an apparent horrible title involving Sex: Sexually Predatory Security Guards at Troubled Chinese Microsoft Supplier...
    Then develop an article that does not present a single shred of evidence that such activity exist.
    This is classic NGO's trying to attract funding by paying workers in China, to make derogatory comments against their employer.
    China working environment is obviously not ideal but it is getting better. Legitimate scrutiny as well as economics are taking care of natural improvements in under-developed countries.
    Americans are addicted to cheap goods from China. That's a fact and when given an option to buy similar goods, made in the US at double or triple the price, if no one is watching, Americans buy the cheap version.
    In 20 years, China has managed to evolve at a rate that took the US 100 years to achieve.
    Keep buying the cheap toys, sneakers and computers, and soon, fortunes will reverse. I bet in my lifetime.

  • Diana M

    This story breaks my heart but I am thankful that there are organizations like Nomi Network bridging the gap between companies and manufacturers to ensure fair labor practices and good jobs for survivors of human trafficking.

  • Diana M

    This is heartbreaking but there are organizations like Nomi Network making a difference and bridging the gap between companies and manufacturers to ensure that products are made fairly while providing good jobs to survivors of human trafficking. www.nominetwork.org

  • Diana M

    This is heartbreaking but there are organizations like Nomi Network making a difference and bridging the gap between companies and manufacturers to ensure that products are made fairly while providing good jobs to survivors of human trafficking. www.nominetwork.org

  • Camila Aguilar

    The tragedy of our globalized market which renders slavery produced cheap goods to consumers in more developed nations is, in a nutshell, a crisis of imagination. After multi-thousands of years, mankind continues to envision primarily slave-driven economies and wages wars to keep such systems in place. We can invent vastly more humanistic economic structures. Starting with end users voting with their purchasing power - demanding products that are produced ethically and refusing to get swept up in consumer hype - "iHype" has got to go. Inventiveness must supplant greed. Participation in compassionate economies must supplant mass produced crap that we don't really need. Unconscious consumerism always equals slavery. How many of us are willing to wake up, get educated on where our goods come from and either buy locally or buy Fair Trade? For starters. We have a long way to go to meet the evolutionary demands of our world that's currently in upheaval due to the unsustainable and unimaginative drive of our present consumer model.
    I'm happy to live a much simpler and mindfully compassionate life where I take the time to consider what impact is made by the dollars I spend. Wakey wakey everybody! It feels really good!

  • William Williamson

    The pics are easily explained. Workers sleep at their stations in Asian countries. I work in Japan and after eating lunch, we turn off the office lights and half the people catch a half-hour nap on their desk.

    Billeting is also common. 14 to a dorm is pretty reasonable. I know the dorms where my co-workers live have 20 units.

  • James Coughlin

    Cheryl Jenkins, your efforts to help these unfortunate Chinese workers by killing all Chinese people might be a little misdirected. And it's amazing the people rising to the defense, at the very least it's a total violation of Chinese law. And Bruce Wolfson, blaming Unions, which were forced into existence by this exact kind of mistreatment of workers, for shame. Who raised taxes on the rich? Bush gave them a huge tax cut and Obama extended it. Actual tax revenues in the US are lower than any advanced nation, save for Japan. When taxes were at their highest on the wealthy the US completely dominated trade in the world and paid union wages. If the Tea Partiers and the Sarah Palins of this world win, this story will be about US workers again. We've got to realize that absolute unrestricted Capitalism creates lives not worth living.

  • Cheryl Jenkins

    I'm in favor of WWIII to wipe these Chinese bastards off the planet never to promote this kind of slavery on the planet again. They are pure evil.

  • Gregory Varady

    I have to agree with the 23 year factory expert. I myself have been in hundreds of the same factories. Many ran by Japanese and Korean management who also take advantage of not only the work being performed at a cheap rate, but the female workers as well. What people don't understand is that these girls are just lucky to be alive. Many female babies are aborted due to China's strict population control policies. If companies like Wal-Mart and Best Buy stood up to these abuses they could have an impact. China has been this way for hundreds of years. Just look at history and you will see for yourself.

  • tim W

    It is these global companies sucking the blood of these poor labours.

    The most greedy parts are these US companies. e.g microsoft, apple. They keep on cutting the price of these OEM comapnies, give them very low profit margin, for example, for each iphone sold, apple gets $100 and these OEM companies get onyl $1 in profit.

    Why do't these global companies just give a little bit more to these OEM companies so they can pay their wrokers a little bit higher?

    You see, in the article, microsoft propose a few solutions but none of them is to pay little more money!

  • tim W

    The most greedy parts are these US companies . e.g microsoft, apple. They keep on cutting the price of these OEM comapnies, give them very low profit margin, for example, for each iphone sold, apple gets $100 and these OEM companies get onyl $1 in profit.

    Why do't these global companies just give a little bit more to these OEM companies so they can pay their wrokers a little bit higher?

    You see, in the article, microsoft propose a few solutions but none of them is to pay little more money!

  • Rajeev Rawat

    This is horrible, you think? How naive? Of the six billion humans, less than 25% can boast of even these conditions. These employees have jobs, they have shelter, food, income, running water, and electricity. In fact they are better off than some in the Blue Ridge mountains of North Carolina or the Appalachia, or the urban locales of Detroit (MI), Columbus (OH), Buffalo (NY), or Sacramento (CA). Be careful while condemning the free choices of gradually capitalistic China. Even these terrible conditions in a jail like life might be better than the lives of our own fellow Americans.

    What can we do to help? Ensure that each of us is at the cutting edge of innovation and creativity to be the best on the planet, in whatever we way we earn a living, or contribute to our communities.

    I am as capitalistic free-choice proponent as any. Most people in that factory are grateful that they have a job for which thousands will line up, if there were a vacancy.

  • Bruce Wolfson

    Well, there are several things involved here (1) American companies got overrun by unions, which caused them to be uniwilling to pay American workers the wages demanded to produce the items that consumers were demanding cheaper and cheaper (2) The American Government, Federal and most states, incompetent at managing the BILLIONS of dollars they take in annually in taxes, squandered those billions, and then, instead of cutting spending or being accountable, punished companies and "rich people" by raising taxes on them, which, of course caused those "evil" companies and "rich people" to leave states, then, the country, for cheaper labor and more business friendly tax structures. And as times got worse, those governments continued to budget as though times were still good, e.g. absulutely refusing to cut spending or even have oversight to at least ensure that the massive amounts of taxes collected at least were applied where they were supposed to be applied--raised taxes even more. And then, blamed "wall st" and the "banks" as they stood by like innocent bystanders after just about destroying the US economy (they caused the "housing bubble" too). This is both parties by the way--this isn't a partisan rant, its a criticizing politicians in general rant. and (3) There ARE no human rights in China. China does not care about whatever heart tugging articles published here about those poor workers---if the workers give them too much trouble, they are replaced. I bet you that, whoever it is spoke to the reporter for this article, they found out who that person was, and he/she was either sent for "re education" or, their family was billed $1.15 for the bullet. Terrible as this is, our own politicans caused it. That's just the truth.

  • Christine Maingard

    There are no simple answers to these global realities. This post only highlights one small sample of what is happening around the world. In the end it's about consumers wanting everything cheaper, it's about competition, and, ultimately, about greed.

    What can we do as individuals? Asking questions whether or not someone wants to give up an iPhone is not going to help. Render ourselves helpless and just keep watching what's going on around us only turns us into passive participants. But we can examine our relationship with ourselves and each other, with material possessions, money and our environment. And then we can decide how we can contribute to making the world a better place.

    Dr Christine Maingard
    Author of "Think Less, Be More" http://www.thinklessbemore.com

  • chris brown

    Yes, those workers could be sleeping from exhaustion, or just taking their noon time nap like everyone else in China, including me. I could post a similar shot of my workplace.

    I'm not saying there aren't many problems with the country, but you should at least put things into perspective. 52c is about 3.5 yuan which goes a long way. I live in a big city and breakfast costs me 2 yuan. lunch is 4 yuan. Things in the country are way cheaper. There was a story in the news about a farmer who topped himself because he couldn't pay off the debt he had accumulated, about 100yuan, or about 15 bucks. I'm not saying it's right, but despite the harsh conditions in factories, many people put up with it because of the money they can make compared to working the land. Those sleeping quarters are pretty typical for any accommodation offered at the workplace if you are low down the food chain. And if you think that's bad, you should see where the transient workers live.

    And as for that "Everybody pay attention, while at work, everyone should be full of vigor. Everyone must strictly follow the 6S system etc etc" pretty much every work place spouts out that crap, not just the factories.

    Todd Singleton goes straight to the point. You express outrage, so what you going to do about it? give up your iPhone?

    You highlight important issues, you don't need

  • Frank Argondizzo

    China has the best of both worlds for greedy companies: A pro-business policy with the population control techniques of communism. No complaints, no tears, just work or go to gulag. However, we feed into the machine by purchasing all these cheap chinese products. Why? Because it's too expensive to produce in America. In addition, with the entire populace being taxed to high heaven for all the poorly constructed social welfare spending, we can only afford chinese products. To make matters worse, China is one of the largest buyers of US debt in existence today. We have no choice but to buy chinese or else they pull the plug on buying US treasuries and we're literally doomed. What a crazy cycle!

  • Mike Smith

    This is absolutely true. I have worked as an Industrial Engineer for 25 years in factories since I was 23 so I'm an expert when it comes to factories, managers and staff. I spent some time in China touring Chinese factories out of curiosity. I had to pose as a very rich buyer to get in. I even worked for a short time as an exporter for one of the largest export companies in China just to get a feel for what was going on there. As I am a factory expert it was easy to talk the walk and walk the talk. I can walk through a factory from the front door to back. By the time I get to the back door I generally know what's going on. I know they falsify quality and production reports and treat workers as slaves. How do I know that because the owners and the employees tell me themselves. The owners and managers are so confident they have no fear . I have seen them do it with my own eyes. It's not just at that factory but all factories throughout China everywhere I went was the same. Once when I was negotiating a mutli- million dollar contract as a middle man in China in a Chinese Factory. I couldn't figure out how such a small factory could meet such huge production quotas yet they assured me they had the workers . As I suspiciously toured the area alone behind the factory among the workers knowing they had a way to buy the production outside. I noticed huge red brick buildings lining the streets behind the factory and I walked through the streets to confirm my suspicions. I began to walk into the buildings and look around climbing up and down the narrow steps peering in the open doorways where a door should be. I saw building after building with nothing more than concrete floors and production equipment and 25 to 50 workers sitting on the floors of each of the buildings making the same products as the factory. In other words. Slavery in the factories in China is a joke. It's a way they can find out what the objection is remedy it until the Americans/inspectors leave the factory then it's business as usual the real slavery is behind the factory.
    All the while the real slaves, millions and millions more, are working in multi storied red brick buildings behind the factories. The goods produced are quietly snuck into the factories during the night through the back door and left in a special secured inventory area for inclusion in the factory production paperwork and delivered to rich American/European middle men buyers who probably know what's up but don' t ask any questions and can look the other way. In the country factory recruiters comb the country side looking for workers to sell into a lifelong of slavery working 12 hour days 24/6 in the factories. The workers get Sunday off to get paid and send their money home.The family agrees to send their teenaged children to work in a particular factory for their useful life time. The factories work them until they can't keep up, fire them, then they have no choice but to join the cottage industry behind the factory making the very same products mostly for food and a place on the floor to sleep. When you enter the buildings you see only older people mangled from working in the factories or burned up from being abused. I couldn't believe my own eyes. I as an experienced factory engineer have seen the slavery and poverty of the exploited worker but what I have seen in China defies the imagination. There is a group of bosses that run a particular area. In chatting with them it was painfully obvious to me they were nothing more than criminal thugs. So ,that's how it works the Chinese can deliver the goods in any quantity and with any level of desired quality because they the back door is always open. Mike

  • James Fears

    David Roberts, the article mentions the NLC, who are associated with some organizations that are supporting human rights in the workplaces. You can probably start there.