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ZNR UUUUU ZZH
R 240745Z FEB 09
FM AMCONSUL GUANGZHOU
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INFO RUEHGZ/CHINA POSTS COLLECTIVE 0112
RUEHBJ/AMEMBASSY BEIJING 0209
RUEHCN/AMCONSUL CHENGDU 0058
RUEHHK/AMCONSUL HONG KONG 0080
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RUEATRS/DEPT OF TREASURY WASHINGTON DC 0056
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC 0063
RUEHC/DEPT OF LABOR WASHINGTON DC 0016
RUEAIIA/CIA WASHDC 0106
RUEKJCS/DIA WASHDC 0106

UNCLAS SECTION 01 OF 03 GUANGZHOU 000131 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/TC, EAP/CM, S/P, INR/EAP 
STATE PASS USTR CHINA OFFICE 
 
 
E.O. 12958: N/A 
TAGS: ELAB ECON ETRD TW CH
SUBJECT: Dongguan Factory Does Damage Control after Labor Abuse 
Report 
 
¶1. (SBU) Summary and Comment:  Executives at Meitai Plastics and 
Electronics, criticized in a recent report by the U.S.-based 
National Labor Committee, acknowledged to Congenoff that some of its 
labor practices were not in compliance with global standards set by 
the industry.  They were at pains to give us a detailed breakdown 
about how they were working on correcting these.  Comment: Congenoff 
observed conditions and practices at Meitai, a maker of keyboards 
for several major U.S. computer brands, which certainly are not in 
accordance to the standards American industry holds them to.  Meitai 
could plead that its workplace environment is not substantially 
worse than ones we've observed at other factories in South China 
that export products to the United States, but the company is in a 
vulnerable position.  You don't produce for the American market 
without extra added scrutiny.  End summary and comment. 
 
Working to Correct Non-Compliance 
--------------------------------- 
 
¶2. (U) The National Labor Committee (NLC), a U.S.-based NGO that 
advocates for worker and human rights, released a report earlier in 
February that accuses Meitai of numerous labor abuses.  The report 
identifies Meitai as a supplier for HP, Microsoft, Dell, and Lenovo. 
 Meitai was founded in Taiwan in 1986 and opened its plant in 
Dongguan in 1999.  The NLC allegations against Meitai include, but 
are not limited to, prohibiting workers from talking, listening to 
music or raising their heads while they work; forcing them to sit on 
hard wooden stool and perform repetitive work for excessively long 
periods of time; underpaying workers and fining them for minor 
violations of company policies; severely limiting bathroom breaks; 
requiring mandatory overtime work; not paying for work injury 
insurance, health insurance or the national social security program; 
and providing over-crowded living quarters and sub-standard food. 
(Note: The NLC's report is posted on U.S. Consulate-General 
Guangzhou's Intelink-U blog, South China SEZ at http: 
//www.intelink.gov/communities/state/southchi nasez/.  End note.) 
 
¶3. (SBU) Meitai is working to counter the public relations problems 
caused by the report.  The company agreed to allow us to visit the 
day after we first contacted it.  Company executives told us that, 
the morning of our visit to the factory, it had just completed a 
week-long audit by several clients.  In addition, Wei Renkai, the 
firm's vice president, said that it had released a report titled 
"Action Plan on NLC Finding" within 24 hours of the NLC report's 
release.  The Action Plan acknowledges 10 areas of noncompliance 
with global industry labor standards set by the Electronic Industry 
Citizenship Coalition (EICC), an organization composed of 
multinational electronics manufacturers.  The Action Plan includes 
corrective measures for the areas of noncompliance.  Some are 
already in place; others are in process.  Wei estimates these will 
cost the firm RMB 500,000 (about US$ 74,000) to implement.  (Note: 
the Action Plan is also available on South China SEZ.  End note.) 
 
¶4. (SBU) Wei complained of inaccuracies in the NLC report.  For 
example, the NLC report describes workers manually snapping keys 
into keyboards.  Wei claimed that this process was automated 4 years 
ago.  In addition, Wei said that contrary to the NLC allegations, 
workers are not forbidden from discussing factory working conditions 
with outsiders.  Instead, they are told only not to divulge product 
specifications.  Wei also pointed out that NLC never approached the 
company or requested an interview with management. 
 
Work Hours and Pay 
------------------ 
 
¶5. (SBU) However, Wei admitted that employees had worked excessive 
amounts of overtime that violated EICC standards as alleged in the 
NLC report.  He said that corrective measures had been taken and 
that workers would have at least one day off every week.  But he 
insisted that regular wages were not deducted from employees who 
refused to work overtime. 
 
¶6. (SBU) Wei also acknowledged that in the past workers had been 
fined for breaking factory rules.  According to Wei, the violations 
that warranted fines included spitting on the floor and wasting food 
in the cafeteria.  However, he emphasized that fines went into an 
 
GUANGZHOU 00000131  002 OF 003 
 
 
"employee welfare fund" and said that fines had been returned to 
workers since the publication of the NLC report. 
 
Insurance and Social Security 
----------------------------- 
 
¶7. (SBU) Only since the publication of the NLC report has Meitai 
taken steps to pay work injury and medical insurance on all its 
employees, according to Wei.  One hundred percent coverage will 
begin in March; previously only half were covered.  Only 12 percent 
of workers are covered by the government pension scheme 
(unemployment insurance and social security).  The Meitai executives 
explained that workers themselves are required to pay a percentage 
of earnings (with the company contributing a larger amount) to the 
pension program, so management would have to discuss with the 
workers whether they would accept an equivalent wage reduction. 
 
Factory Conditions 
------------------ 
 
¶8. (SBU) Physical working conditions at Meitai's factory appeared to 
be not substantially worse than most other factories that we have 
visited in South China.  Almost all molding and painting functions 
are automated and performed by robots, as is a significant portion 
of the assembly, which is the most labor-intensive area and was most 
criticized in the NLC report.  Management identified two alternate 
workers present on the assembly line to fill in for workers 
requiring a bathroom break. 
 
¶9. (SBU) During Congenoff's visit, the cafeteria appeared clean and 
similar to those in other factories or even university campuses in 
South China.  Workers are allotted only 30 minutes to eat as the NLC 
report claims, but cafeteria lines moved quickly and in an orderly 
fashion.  There appeared to be sufficient seating to handle the 
staggered dining shifts.  Wei confirmed the NLC report claim that 
workers receive a complimentary chicken leg or fruit on Fridays but 
said that each meal has two meat dishes and one vegetable dish. 
 
Dormitory Conditions 
-------------------- 
 
¶10. (SBU) The dormitories were similar to those in many other 
factories in the Pearl River Delta.  According to the firm's 
executives, approximately 1,200 workers reside on the factory 
campus, with an additional 700 -- mostly married -- living outside 
in housing they secure independently.  Three nights a week workers 
may come and go at will; on the other nights, they must get a 
supervisor's written approval.  Management claimed this was a mere 
formality, but was unable to give a thorough explanation for why the 
policy was necessary.  Wei confirmed that workers are charged for 
water and electricity they use in the dormitories, but challenged 
the NLC report's claim that air conditioners go unused because 
workers can't afford the charges.  He said that the company allows 
workers to use the air-conditioners for nine hours a day free of 
charge from July to October. 
 
Not the Bottom of the Barrel 
---------------------------- 
 
¶11. (SBU) Comment:  Metai is a comparatively small factory, with 
only about 2,000 workers.  Even allowing for improvements and 
corrections since the report's publication, it does not appear to 
have been substantially worse than most factories in the Pearl River 
Delta.  NLC's apparently dated information on the need for line 
workers to manually press each key into a keyboard, calls into 
question the currency of some of its unnamed sources.  It is likely 
that a key attraction of targeting Meitai is its connection with 
major U.S. multinationals.  This case shows that China's 
export-oriented factories remain sensitive to public opinion and 
eager to show they are complying with CSR standards, despite a 
climate of declining orders, rising unemployment and relaxed 
government enforcement of labor regulations. 
 
¶12. (U) This cable was cleared with Embassy Beijing. 
 
 
GUANGZHOU 00000131  003 OF 003 
 
 
GOLDBERG