CSR and Chinese Factories

If you think that CSR is foreign to Chinese factories, think again. Today, many manufacturers have vendor compliance units that commission routine audits on their Chinese suppliers to ensure that both product quality and working conditions are up to their standards. But while some factories legitimately pass these tests, others fail miserably. Still others seek to trick the system, keeping two sets of books--- one specially designed to convince auditors that their workers are paid fairly and another reflecting reality.

But after years of such abuses, some might say that simple economics are doing justice in a way that vendor compliance never could. An article in yesterday's New York Times ("Defying Global Slump, China Has Labor Shortage"by Keith Bradsher) describes a confluence of factors that has considerably changed circumstances. In sum, a crippled global economy led to millions of layoffs in China, causing migrant workers to leave coastal factories to return to inland areas where government subsidies have made life more prosperous. And with the "one child" policy still firmly in place, China's low birth rate means a diminished pool of future laborers.

According to the New York Times article, factory owners now have no choice but to raise wages and curtail age discrimination. The article portrays a world where job applicants are no long turned away and where factory managers now have to chip in if they want to meet their commitments to buyers.

So, does this mean an end to egregious working conditions? Unfortunately no. Things may now be different in China, but with increased labor costs decreasing Chinese manufacturing's competitiveness with other developing nations, those charged with managing the vendor compliance aspect of CSR will simply be rerouting their flights to areas where cheap labor remains in greater abundance.

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