VZCZCXRO1525
OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2343/01 2251038
ZNR UUUUU ZZH
O 131038Z AUG 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5643
RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 02 BEIJING 002343 
 
EEB/EPPD FOR NANCY SMITH-NISSLEY 
DEPT FOR EAP/CM AND EAP/EP DHANNEMANN 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AMGT BEXP ECON ELAB ETRAD KSEP SENV CH
SUBJECT: CHINA: DUE DILIGENCE ON NOMINEE FOR THE 
SECRETARY OF STATE'S 2009 AWARD FOR CORPORATE 
EXCELLENCE 
 
Ref: State 78538 
 
¶1. (SBU) The following are answers to the due 
diligence questions posed in reftel.  (Note: In the 
answers below "Cummins" and "the company" refer to 
the parent company headquartered in the United 
States; "Cummins China" refers to Cummins' wholly- 
owned holding company in China as well as its joint 
venture operations in China. End Note.) 
 
A) Post research has not uncovered significant 
possible negatives or risks associated with 
selecting Cummins China.  However, Cummins China has 
had a joint venture with Dongfeng Motor Corporation 
since 1996 producing several varieties of engines 
used in Chinese-produced heavy trucks, including 
those used by the People's Liberation Army and the 
People's Armed Police.  Post is also aware of 
reports that Cummins China engines were included in 
some truck shipments from China to Burma and Sudan 
around 2005 (see links below).  The company 
responded in June 2006 by banning sales of Cummins 
products in Sudan and Burma. 
 
http://www.amnesty.org/en/library/asset/ASA17 /030/20 
06/en/dom-ASA170302006en.html 
 
http://www.sudanreeves.org/Article115.html 
 
http://www.rawstory.com/news/2006/Report_Chin a_selli 
ng_arms_to_rights_0608.html 
 
B) Cummins does not compile data on job creation in 
the United States from its operations in China. 
However, according to information provided by 
Cummins China, in the five years prior to the start 
of the recession in late 2008, Cummins added 
approximately 3,000 jobs in the United States -- in 
part on the strength of the company's international 
growth that led to record sales and profits for 
Cummins from 2004-2008.  For the past several years, 
Cummins' international sales have accounted for more 
than half of the company's total revenues; in 2008, 
international sales accounted for nearly 60 percent 
of Cummins' consolidated sales.  With consolidated 
sales of USD 1.1 billion in 2008, China is one of 
Cummins' largest international markets.  Factoring 
in sales from the company's unconsolidated joint 
ventures, Cummins sales in China reached USD 2.3 
billion in 2008. 
 
C) According to Cummins China, Cummins is a 
significant exporter from the United States, with 
approximately USD 11 billion worth of goods and 
services exported worldwide in the last three years. 
Cummins does not track exports by receiving country 
and Post does not have an independent assessment. 
 
D) Post is not aware of any problems related to 
labor conditions at Cummins China facilities. 
According to Cummins China, unions have been 
established in all of the their joint ventures in 
China, and Cummins China's wholly-owned holding 
company recently established a union that is quite 
large and vibrant.  According to Cummins China 
representatives, they view unions as a key part of 
their approach to actively integrating local Chinese 
partners and encouraging local employee development. 
 
According to the Trade Union Law of China, workers 
can form a union in any company, foreign or domestic. 
The Communist Party-controlled All China Federation 
of Trade Unions (ACFTU), however, is the only legal 
union and does not effectively represent workers or 
bargain on their behalf.  Cummins has received 
criticism that the company's business and employment 
practices in China and Nigeria do not measure up to 
international labor and human rights standards. 
 
The following two paragraphs are in their entirety 
an excerpt from a 2009 stockholder resolution 
available on the internet 
(http://www.onlineethicalinvestor.org/eidb/wc .dll?ei 
dbproc~reso~8570): 
 
Begin Excerpt: 
 
 
BEIJING 00002343  002 OF 002 
 
 
In January 2008, Cummins took an important step 
towards recognizing workers' fundamental rights by 
amending its Code of Business Conduct (the "Code): 
"We respect employees' freedom of association, right 
to bargain collectively and all other workplace 
rights." However, the Code does not contain any 
monitoring, enforcement, or reporting provisions to 
protect these rights.  In addition, our company's 
non-discrimination policy fails to include "union 
affiliation," as called for by International Labor 
Organization (ILO) Conventions 98 and 135. 
 
The Code states that "Our commitment to fair 
treatment ... extends to our joint ventures, 
suppliers and other partners" through the Supplier 
Code of Conduct.  This code, however, merely 
requires adherence to local law regarding workers' 
freedom of association and does not address 
collective bargaining. Cummins' global operations 
include countries such as China and Nigeria, whose 
laws fail to sufficiently protect workers' 
fundamental rights to form and join unions of their 
choice, and to bargain collectively. End Excerpt. 
 
E) Post is not aware of any litigation involving 
Cummins China pending in local courts. 
 
F) The CDA and others involved in the nominating 
process do not hold shares of stock or have other 
financial interests in Cummins. 
 
GOLDBERG