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RR RUEHCN RUEHGH
DE RUEHGZ #0573 2730559
ZNR UUUUU ZZH
R 300559Z SEP 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0965
INFO RUEHGZ/CHINA POSTS COLLECTIVE 0275
RUEHBJ/AMEMBASSY BEIJING 0757
RUEHGH/AMCONSUL SHANGHAI 0213
RUEHHK/AMCONSUL HONG KONG 0284
RUEHCN/AMCONSUL CHENGDU 0214
RUEHSH/AMCONSUL SHENYANG 0223
RUEAIIA/CIA WASHDC 0262
RUEKJCS/DIA WASHDC 0258
RHHMUNA/HQ USPACOM HONOLULU HI
RUEHC/DEPT OF LABOR WASHINGTON DC 0032

UNCLAS GUANGZHOU 000573 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM, DRL 
 
E.O. 12958: N/A 
TAGS: ELAB PHUM EINV ECON CH
SUBJECT: Nike Facing Old Child Labor Allegations Anew in Jiangsu 
 
¶1. (SBU) SUMMARY: A disgruntled former employee of a Nike supplier 
in east China has alleged that his company and others supplied Nike 
with soccer balls made with child labor 2003-2007.  Nike said it 
investigated identical allegations in 2007 but, after failing to 
substantiate the claims, concluded that the balls in question were 
fakes, and thus outside of Nike's supply chain.  Nike is engaging 
with the Fair Labor Association and intellectual property 
specialists to again review the allegations, which Nike says contain 
factual errors.  The supplier is considering legal action against 
China Business Journal, a periodical publishing the allegations. 
END SUMMARY. 
 
Soccer Balls and Child Labor 
---------------------------- 
 
¶2. (SBU) The China Busines Journal reported that an individual fired 
from Nike supplier Shanghai Wanda in July alleged that, between 2003 
and 2007, suppliers providing hand-sewn soccer balls to Nike used 
child labor in their supply chains.  The allegations, which 
originally came to light in 2007 but according to Nike could not be 
substantiated at that time, are, as before, accompanied by 
photographs in a recent article in China Business Journal showing 
young-looking kids in school kerchiefs in a home-work environment 
assembling what appear to be Nike-branded soccer balls. 
 
Balls could be Fakes 
-------------------- 
 
¶3. (SBU) During the initial 2007 investigation, Nike established 
only that one production center in Jiangsu Province had abnormally 
high output.  According to a Nike representative based in Guangzhou, 
high output levels could indicate off-the-books workers or 
additional subcontracting in the supply chain.  Nike was 
subsequently unable to identify any evidence of child labor or other 
illegal labor practices, and production levels at the outlying 
production center returned to normal following the investigation. 
 
¶4. (SBU) The 2007 Nike investigation also concluded that the soccer 
balls in the photographs were probably counterfeit goods produced 
outside Nike's supply chain.  The Nike representative noted that 
identical balls were available in Guangzhou counterfeit goods 
markets at the time. 
 
¶5. (SBU) While Nike said it has no information that these new 
allegations have merit, it nonetheless has involved the Fair Labor 
Association and a third-party intellectual property protection firm 
to work with Nike's brand protection office in this case.  Nike 
claims that certain aspects of the allegations -- such as the number 
of workers producing soccer balls during a specific period of time 
-- are factually incorrect.  The Nike representative noted that some 
of the suppliers from the 2007 allegations no longer exist or no 
longer have a relationship with Nike, though the rep said none of 
these relationships were ended because of suspicions of child labor. 
 Nike also claims that its process for hand-sewn soccer balls in 
China is currently such that there is "no chance" of child labor 
making its way into the supply chain. 
 
An Axe to Grind 
--------------- 
 
¶6. (SBU) According to the Nike representative, the latest child 
labor allegations did not arise until after the former employee was 
fired for poor performance in July.  Since his separation from 
Shanghai Wanda, the individual has repeatedly sought an improved 
severance package while attempting to bring pressure on both his 
company and Nike, according to the Nike representative.  Shanghai 
Wanda, which currently is still a supplier to Nike and other 
international brands, is reportedly contemplating legal action 
against China Business Journal, the periodical that published the 
former employee's allegations online, with a print version expected 
early this week. 
 
¶7. (U) This cable was cleared by ConGen Shanghai and Embassy 
Beijing. 
 
GOLDBECK