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Organization Name

Fung Group

Case Story Title

Ensuring Responsibility within the Global Supply Chain

Case Story Date

2003/02/28

Issues Addressed

  • Principle 4 - The elimination of all forms of forced and compulsory labour
  • Principle 6 - Eliminate discrimination in respect of employment and occupation
  • Supply Chain Sustainability

Case Story Category

Partnership Project

Countries of Impact

China

Case Description

Li & Fung (Trading) Ltd. is today one of the premier global consumer products export trading companies managing the supply chain for high-volume, time-sensitive consumer goods ? garments/apparel and hardgoods. These goods are sourced through a network of offices in over 40 countries for customers worldwide.

As a buying agent, we understand that our clients today face an increasingly discerning group of consumers who are not only looking for quality and value, but are also concerned about how their goods are made. Social compliance is a key element along all the steps of our supply chain. Through systematic inspection, audit and supplier education we help our clients enforce their high standards throughout their factory base. And, to keep up-to-date on the latest in matters of corporate social responsibility, Li & Fung is an active member of Business for Social Responsibility (BSR)

Principle 4 ? Involuntary Labor

On September 2001, we conducted a social compliance audit in a factory in Dubai/UAE, which employs many of its workers as foreign labor imported mostly from Sri Lanka, Bangladesh and India. During a routine worker interview, two Sri Lankan girls from the same production line in separate interviews seemed to have something to say but were hesitating. When they were certain that these interviews were confidential and our team guaranteed that nothing would happen to them as a result of their statements, they started talking. They stated that their Indian supervisor, was giving them, and other Sri Lankan workers a hard time by forcing them to work extra overtime, shouting at them, always giving them disciplinary penalties and never being satisfied with their work. This was in contrast to other Indian workers who were treated well. The workers also stated that they were afraid to inform the management as the supervisor had informed them that she was well connected with the owner of the factory and they could loose their jobs if they complained. We increased the number of workers to be interviewed from the same line in order to verify these allegations, which were confirmed.During the audit-closing meeting with the top management, we focused on our finding as a critical violation to our customer?s code of conduct and all ethical and recognized international standards. We also advised the management to take strict actions towards the behavior of the supervisor, as this is considered a form of forced labor as well as a discrimination violation. The management agreed they would correct the situation accordingly. During our follow-up visit, we confirmed the management had moved the supervisor to another position requiring less subordinate oversight. Furthermore, management also decided to group workers from the same nationality into the same production lines in order to maintain workplace peace and harmony.

On December 2002, during the annual audit of this factory, all workers interviewed confirmed that conditions were now much better than before. They also stated that originally they thought their statements during the first interview would bring them nothing but troubles, but now they realized they made the right decision in talking to us. Through our employee interviews, they confirmed to be fully satisfied.

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