LABOUR RIGHTS IN CHINA (LARIC)

The "Code of Conduct" Campaign and Transnational Corporations

Incident One
During the 1970s and 80s, many powdered milk-manufacturing companies - Nestlé for example - were accused of dumping milk powder at very low prices on Third World countries. Transnational companies (TNCs) targetted hospitals, doctors and nurses to promote the product through effective and often unscrupulous advertising campaigns that claimed powdered milk was better than mother's milk. Consequently, TNCs producing powdered milk were subject to boycott campaigns organised by consumer groups.

Incident Two
In 1984, chemical pesticide spilled out of a factory in the Indian City of Bhopal. The US-based TNC Union Carbide was a part owner of the factory. The accident led to the deaths of over 4,000 citizens of Bhopal. The lethal chemicals seriously and permanently injured a further 200,000. The massacre is the most serious case of widespread death and disease directly resulting from a TNC investing in a developing country.

Incident Three
In 1993, factory fires in Thailand and China killed almost 300 workers and seriously injured many more. The Kader Toy Factory in Bangkok and the Zhili Toys Factory in Shenzhen (Chicco, an Italian famous toy company, was one of Zhili's contractors) were both Hong Kong invested toy-producing factories. Among the many reasons lying behind the tragedies were long-term neglect of health and safety, combined with a total disregard for the lives of employees who, confined to the factory premises, worked and slept in conditions more akin to slavery than to modern production.

Since 1970s, many TNCs producing goods for the international market have been exposed in the world's press for using subcontractors who employ child labour, prison labour as well as implementing rules that restrict workers' freedom of movement. Following a string of accidents resulting in many injuries and deaths, public opinion in Europe and the USA began to react. An increasing number of consumers, especially those from developed countries in Europe and North America, began asking awkward questions about the sourcing, marketing and production of the goods they were being asked to buy. Many started to boycott certain goods in disgust. Coca-Cola, for example, ran into opposition from the international trade union movement after attacking trade unions in the company's factories in Guatemala. McDonald's was targetted by environmental groups in many countries who objected to the ruinous effects the TNCs' production practices were having on the environment. As problems arising from cross-border production, investment and marketing operations got worse, a number of large, "well-known" clothing, toy and sports shoe manufacturers fell under the scrutiny of organisations such as trade unions, consumer rights groups and environmentalists. Their investigations and support led to further consumer boycotts.

During the 1980s, various social movements in the West lashed out at the TNCs who were moving labour-intensive, environmentally hazardous and very dangerous production lines to comparatively poor countries. The reasons behind the shift to Latin American, African and Asian countries were low labour wages, few, if any, labour rights for employees and a lack of government laws and regulations regarding industrial and public health and environmental protection.

In the 1990s, more TNCs sought to avoid increasingly effective boycotts and salvage an already damaged reputation by adopting Codes of Conduct. Many people greeted this development as a step forward. The thrust of the argument ran that as many Third World governments were unwilling - or even unable - to confront the enormous political power of TNCs and adopt legal measures to curb the illegal or immoral practices, TNCs adopting voluntary codes of conduct could ameliorate the problem. Moreover, consumers were relatively willing to accept the concept of "Codes of Conduct" as they tend to pander to the "feel good" factor. People feel better about purchasing goods manufactured by companies who claimed working and environmental conditions were in keeping with a workplace code. Moreover consumer groups, human rights groups and even environmental protection groups were willing to promote "Codes of Conduct" as they represented a positive step forward after many years of struggle and hard work to improve working conditions. This sentiment was undoubtedly helped by the fact that big corporations began asking some social groups to act as advisers to drawing up and even implementing company codes. This newfound respect from TNCs led some NGOs to alter their perspective towards the big companies who they now regarded as acting in good faith.

Against this background, the Code of Conduct movement has developed rapidly, and over the last two or three years has become a global bandwagon, on which TNCs have been more than willing to trumpet their codes. Corporations such as Nike and Reebok have spent enormous amounts of money on publicity to promote the existence of their codes. Moreover, the codes have received active promotion from governments (e.g. in the UK and US) and the support of various NGOs - especially organisations exclusively advocating human rights - some of whom have been participating in monitoring programmes.

The trade union movement on the other hand has adopted a far more cautious approach to the Code of Conduct explosion and has raised serious doubts about the entire concept. These doubts spring from the fact that, despite the TNCs apparently sincere pledges to respect and ensure minimum labour standards - including the right to organise and the right to collective bargaining - wherever their products are made, they maintain a hostile and often severely repressive attitude to trade unions and trade union activists. Further evidence of this antagonistic approach is revealed by the fact that many TNCs have shifted production to countries where basic labour rights - especially the right to organise and the right to collective bargaining - are non-existent. It is hardly surprising then that the trade union position has hardened to the point where many trade unions view Codes of Conduct as little more than posturing or expensive public relations campaigns. Labour groups and trade unions have argued that effective monitoring of labour standards at the workplace can only be achieved through representative trade unions.

For a number of years labour groups in Hong Kong have been able to take advantage of a number of factors, including geographical position, language and access to information, to monitor the behaviour of TNCs that have invested in China and Asia in general. We have continually exposed TNCs for violating worker and human rights as well as criticizing the corporations for not implementing their own Codes of Conduct. Of course, while doing this, we were well aware of the dual nature of the codes. On the one hand, they give TNCs an excellent public relations opportunity. At the same time they give us a leverage through which we can pressure companies to improve their workers' rights situation and hopefully create conditions that facilitate the right to organise and the right to collective bargaining. Therefore, we need to pay close attention to this powerful new development as well as discuss tactics for its future direction. For example:

1. Independent Judgement

a. Over the years, we have carried out a number of independent investigations and reports on the working conditions in factories producing for TNCs. These reports have been passed on to the media leading to considerable public pressure on TNCs to improve working conditions. Our work has also provided support and assistance to northern consumer groups. In fact, investigations followed by media exposure of exploitative working conditions have been our most effective weapon to date.

b. Responding to TNCs Code of Conduct Propaganda.
Through various channels such as corporate bodies and associations etc., some TNCs have already opened up a dialogue with NGOs. Various individuals or NGOs have been appointed to carry out either "monitoring" or training of TNC personnel in labour rights. In a one-off public relations stunt, the well-known human rights activist Andrew Young was appointed by Nike to carry out inspections of their shoe factory sub-contractors in various Asian countries. An academic college was also appointed by Nike to carry out research on the same topic. Although we made a forceful response to the stunt, we estimate that in the future, this kind of activity to improve the image of TNCs will become more frequent and sophisticated; we must make sure we are prepared with an appropriate response mechanism.

2. Improve Communications between NGOs and other Social Organisations

A number of social movement groups have already been drawn into public relations exercises by the TNCs but the vast majority of Asian NGOs and trade unions are still very much in the dark about exactly what Codes of Conduct are and what they represent. It is therefore very important for us to supply up-to-date information and analysis so that more people have a deeper understanding of the issues at stake. NGOs in the region also need to clearly define their roles as well as coordinate action and debate. We need to carry out research on investment capital from Hong Kong, Taiwan, Korea and Japan that social movement organisations in our region can use to improve the labour situation in general.

3. Promote the Consumer Movement

Virtually all TNC production takes place in the developing world, while product research, marketing and design work are part of a chain-like network that connects various regions all over the world. At the moment, TNC marketing and sales promotion appears to be walking on two legs: one leg is used to boost sales by providing low-cost goods, as with MacDonald's recent sales technique in Hong Kong where a snoopy doll was given away with every hamburger purchased. The other leg promotes highhanded consumption of expensive but fashionable brand names in order to increase the overall value of sales - some models of Nike sport shoes can cost up to US$100. The tactic of promoting highly priced "exclusive" brand name goods has proved very successful in attracting customers. In this scenario, the image of a company has a direct correlation to its sales. At the same time, in countries where people have access to information and a developed sense of social awareness, interest in the social cost of consumption should start to increase. Against this background, internationally recognised universal standards for environmental protection, labour rights and human rights should have more chance of being respected. We must continue to push the consumer social awareness movement and encourage consumers to demand that commercial producers respect socially accepted moral standards.

4. Rise in Independent Trade Union Consciousness and Awareness of Workers' Rights

The majority of Codes of Conduct are operational in regions where there is no active trade union movement and where awareness or workers' rights and interests is minimal. In our view, the most effective monitors of codes are the producers themselves and therefore we must aim at providing training at shop-floor level so that the codes can be of some genuine use to workers. Effective labour rights education is a practical channel through which rights awareness can be raised and helps to guarantee the implementation of a code of conduct. It is in this light that we believe that by far the most important measures a Code of Conduct should include is the right of association and the right of collective bargaining. These rights will lead to workers forming their own trade unions and using them to monitor and improve their working conditions. This aspect should be the focus of the whole Code of Conduct campaign.

Today, the TNCs' use of the Code of Conduct campaign has led to great deal of moral posturing and superficial public relations stunts. The TNCs have put their emphasis on encouraging consumers to accept their brand image. But they have certainly not improved working conditions on the production line any more than they have made any significant contribution to the overall environmental or social improvement to the areas where their goods are being made. NGOs and social groups like ourselves must concentrate on exposing the hype and make sure that Codes of Conduct are used to improve both the quality of life and the labour rights of those who work in the factories.

After many twist and toms for more than a quarter of this century, the concern taken by the international community on the operation and social impact of TNCs have landed on the bandwagon of voluntary codes of conduct. It remains to be seen whether this is a good or bad development. One thing is certain: this trend directly challenges government legislation and regulation and trade union power around the world.

To be blunt, if the TNCs are serious about respecting labour rights and the environment in general, why do they always set up their production in areas of the world where trade unions and environmental protection is weak or non-existent? On the other hand, the TNCs' brazen propaganda regarding implementation of Codes of Conduct should spur on NGOs and the grassroots social movement to prioritise our work so as to make sure that consumers and workers are not fooled by the hype.

14 May, 1999
Labour Rights in China (LARIC)

Introduction
We are a Hong Kong-based coalition of labour organizations. Our coalition shares a common concern about labour rights in China. Labour Rights in China (LARIC) aims to promote trade union rights and organized labour to improve workers' basic rights, working conditions and livelihood in China. We believe that workers have the right to take action to protect and improve their working conditions. LARIC's constituent organizations independently engage in trade union organizing, trade union education, legal advice on labour laws, research, publishing, policy advice, and perform advocacy work for independent trade unions and labour rights in Hong Kong, China, and the surrounding region.

We formed LARIC in January, 1999 to coordinate our efforts in the monitoring of the activities of multinational companies which affect labour rights and working conditions in China. In particular the expanding initiatives of multinational corporations' Codes of Conduct demand our active and concerted actions.

Goals

1. To Promote the right of workers to organize autonomous and democratic trade unions in China.
2. To promote the right of workers in China to take up effective collective bargaining with their employers.
3. To monitor and report on multinational companies' activities and various codes of conduct campaigns, which affect labour rights and conditions in China.

Programme
In order to achieve our goals, we pursue the following programmes:

1. Conduct research and analysis for publication.
2. Conduct monitoring and investigation.
3. Provide consultation.
4. Provide policy advice.
5. Provide trade union education and training to raise awareness among workers.

Membership
Asia Monitor Resource Center
Flat 8B, 444-446 Nathan Road,
Yaumatei, Kowloon, Hong Kong
Tel: 852-2332 1346 Fax: 852-2385 5319
E-mail: amrc@hk.super.net

China Labour Bulletin
Flat 801, 28 Ferry Street,
Yaumatei, Kowloon, Hong Kong.
Tel: 852-2780 2187 Fax: 852-2359 4324
E-mail: clb@hkstar.com

Hong Kong Christian Industrial Committee
Flat 704-5, 7/F., 57 Peking Road,
Tsimshatsui, Kowloon, Hong Kong.
Tel: 2366 5860 Fax: 852-2724 5098
E-mail: hkcic@hknet.com

Hong Kong Confederation of Trade Unions
19 floor, 557-559 Nathan Road,
Yaumatei, Kowloon, Hong Kong.
Tel: 852-2770 8668 Fax: 852-2770 7388
E-mail: hkctu@hk.super.net