Nike’s Supply Chain Report Highlights Problems at China Factories

Nike has said that it has been facing a lot of problems with manufacturing in China with suppliers giving falsified documents, underage workers and unpaid wages topping the list, Reuters stated in its report.

The sneakers and sportswear manufacturer, in what is believed to be its first country-specific supply chain report, has said that the company has been trying to get the Chinese suppliers to follow its code of conduct and Chinese law, in the wake of the upcoming Beijing Olympics. One-third of the company’s shoes are made in China, in addition to a major part of the apparel and equipment it manufactures.

It is reported that the company’s difficulties are a reflection of the depth of some of the problems faced by manufacturing businesses in China, which reportedly is Nike’s largest single sourcing country, with around 180 manufacturers and about 210,000 employees, at a time when prices are rising and the legal environment is stiffening.

The report, which was posted on Nike’s website, said: “As China continues to develop we see progress and best practices emerging. But like our partners in any other country, the factories we contract with in China continue to face challenges as well.”

According to the report, the company faced several labor-related problems, which included falsification of payroll records, hiring practices, entry of age in particular and the absence of a proper grievance system for workers.

In an identity check carried out by the company on 150,000 of its workers in China, Nike reportedly found 167 instances where the employee was below the minimum age standard when hired but was 18 years old now and two cases in which the worker was underage. Wages at some places did not match with the government mandated raises, the report said.

“As multiple factors drive up the cost of business, we find that some contract factories try to avoid making changes to wages in a timely manner,” the report said.