Samsung Says 59 China Suppliers Failing Safety Rules

Samsung Electronics Co. (005930) said 59 suppliers failed to provide adequate safety equipment for workers as the world’s largest smartphone maker struggles to improve labor standards at plants in China.

A majority of Samsung’s suppliers do not comply with China’s legally permitted overtime hours while no instances of child labor were found, the Suwon, South Korea-based company said in its annual sustainability report published on its website yesterday. Additional training is being provided to suppliers to prevent injuries to workers and improve standards.

Samsung and Apple Inc. (AAPL), are among companies auditing their supply chain to improve worker conditions, avoid use of so-called conflict minerals and reduce the impact on the environment. The Galaxy smartphone maker came under fire in 2012 for conditions at supplier plants and promised to end hiring discrimination and ensure adequate safety equipment and training by the end of that year.

“Labor costs are rising in China so it’s becoming more difficult for companies operating there,” said Lee Moon Hyung, a Beijing-based director at the Korea Institute for Industrial Economics & Trade. “They also have to meet their social responsibility standards. That’s not optional.”

An inspection checklist to measure Samsung supplier compliance will be fully implemented this year and will expand its monitoring to other areas, including Southeast Asia, the company said in yesterday’s report.

Evacuation Drills

Samsung said 40 suppliers didn’t conduct evacuation drills and 50 showed “inadequate efforts” to establish emergency response programs. Three suppliers exceeded permissible limits on environmental factors such as dust and noise at worksites, according to the report.

In December, Samsung was criticized by worker rights group China Labor Watch, which said a supplier wasn’t paying overtime to some employees while discriminating against pregnant women, older applicants and ethnic minorities.

In February, Apple uncovered labor violations in its supply chain, including the use of underage workers and abuses of migrant laborers lured by recruiters to work in factories making its devices.

Apple conducted 451 reviews of multiple levels in its supply chain covering facilities where nearly 1.5 million people work, according to its eighth annual internal audit. The company said it’s more aggressively trying to remove the use of so-called conflict minerals and has gotten 95 percent of the facilities to keep work to below 60 hours per week.

For at least two decades, Apple and other technology companies such as Hewlett-Packard Co. (HPQ) and Dell Inc. have shifted production from the U.S. to Asia, where labor is less expensive and many electronic parts are manufactured. Cupertino, California-based Apple has faced criticism from labor-rights groups for issues at suppliers ranging from excessive overtime to a spate of employee suicides at Foxconn Technology Group plants.

To contact the reporter on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net Aaron Clark

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