Follow up Report on Pleasure Tech, 31 August 2000
By Hong Kong Christian Industrial Committee

The story on Pleasure Tech Holdings and the report of CIC were released on 27 Aug 2000. McDonald’s responded by taking an inspection team to the plants of Pleasure Tech Holdings at Shajing, Shenzhen. The HKCIC is very much concerned with whether the workers of the five plants (City Toys, Jin De, Wei De, Gao De and Tian De) would be fairly treated or penalized. On 31 August 2000, the HKCIC re-visited the plants. The findings are as follows:

  1. Inspection and Firing of large numbers of workers
  • Starting from 28 Aug, the Labor Bureau as well as the client of Pleasure Tech (probably including the auditing firms for McDonald’s although the workers could not identify which is which) have been inspecting the factories. 
  • Workers’ ID were checked. This was to check whether the ID matched the person. 
  1. Firing of workers 
  1. We do not have the actual number of workers fired nor did any of the workers we had talked to know about it. Starting from 28 August, it is estimated that hundreds of workers have been dismissed from the 5 plants. When we visited the 5 plants on 31 August, we were told that the lay-off was still going on. The five plants are estimated to have a total of 2-3000 workers.
  2. We find that there are three categories of dismissals : 
  • Those found to be, or suspected of under-aged ie. under 18 were all fired. Others who used fake identification, or suspected of using falsified ID were also fired, no matter what age. There are cases of workers being victimized. A worker aged 19 from Quei Zhou complained that she was fired because she was small in size and she could not convinced the inspectors of her real age. Others whose ID pictures did not look like the real person were also fired.
  • Workers from Gao De factory, complained that workers under 18 as well as workers above 25 were fired. The workers there could not figure why.
  • When asked whether there was any official explanation from the management about the dismissals, none of the workers knew of any.
  • From talking to dismissed workers, we find instances of un-explained and arbitrary lay-off. This is in breach of article 29, section three of the Chinese Labor Law which states clear under what circumstances workers could not be dismissed.
  1. Lay-off Compensation
  • None of the plant workers we talked to had signed contracts with the employer in the first place.
  • When we asked workers whether they knew of their rights, as well as the regulations on the dismissal of workers as stated in the Chinese Labor, none of them knew any. 
  • According to article 16, section three of the Chinese Labor Law, both the employing and employed side should sign contracts upon employment.
  • Based on article 2, section one of the Chinese Labor Law, as long as a working/labor relationship is forged "in real and practical terms" between the employer and employee, the employee is subjected to the protection of the Chinese Labor Law - with or without an official contract signed. 
  • Whereas article 98 of the Chinese Labor Law states in case of illegal dismissal and failure to sign a working contract on the employer’s side, the employee should get due compensation.
  • Article 28, section three of the Chinese Labor Law states that workers dismissed should receive due compensation.
  • The dismissed workers told us they were given their August salary which varied from five to seven hundred RMB upon dismissal. 
  • Article 5 of Paper 481 named, "Compensation for contravening and terminating labor contract" issued by the Chinese Labor Bureau in 1994, states the calculation of compensation money for dismissed workers. A one-off compensation that equals to a month’s salary should be given for one or less than one year’s employment. Two months’ salary should be given for two year’s employment etc.
  • None of the workers we talked to knew of the delivery of any compensation money for their dismissals, nor did they know that they were entitled to one.
  • We asked the dismissed workers whether their August salary was fully paid by the management upon dismissal. A dismissed worker from Yunnan province working in the assembly section of We De factory recalled that she took only one day off in August; whereas for the rest of the month, she worked from 7am to 10 or 11pm. But she did not have the pay roll as it was taken back by the management when her work wage was delivered. 
  • To add to that, workers told us falsification on the management side regarding the number of working hours was common. In no way could workers get a true and honest record of their working hours as workers were not allowed to punch the clock machine whenever they had to labor till very late at night. We were told by some of the dismissed workers that the management would present only the "nice" clock machine records for outside inspection. 
  • This is in breach of article 3 of Paper No. 481 on "Compensation for contravening and terminating working contracts" issued by the Labor Bureau in 1994. The article states that in case the employer deducts, delays or refuses to pay wages or over time work compensation to the employee, the employee is entitled to a compensation of 25% of his/her monthly salary.
  1. Lay off arrangements
  • Starting from 28 August, workers were dismissed with no prior notification. They were told to pack and leave within three days. Sudden dismissals like this caused huge difficulties to them. We were not sure whether these dismissed workers were given travel money, but many of them told us they had to travel at their own expense back to their home town. Those who wanted to stay had to pay 200 something RMB for a shelter nearby while looking for another job. With the August salary of 5 to 7 hundred RMB, many of them expressed concern over their financial difficulties in the days ahead. 
  • This, together with the fact that most of the workers in the five plants did not have a temporary residence card, make it difficult for dismissed workers to stay in Shenzhen to look for another job. For according to the Chinese law migrant workers who do not have a temporary residence card or employment proof while moving outside their home towns are illegal residents. They could be fined if caught by the police.
  • We also learned about some dismissed workers who had not yet received their August salary and they expressed their worry of delay payment, especially as many of them had to leave their dormitories within three days after the dismissal. 
  1. "Whatever is imposed from the above, there is always a way of going round it." - Dys-functioning of corporate internal monitoring.
This Chinese saying describes best what we find with the inspection and monitoring system regarding Pleasure Tech Holdings.
  • A batch of six dismissed workers from Quei Zhou told us how the management "taught" them what answers they should give to the inspection team and the Labor Bureau. "For these few days the management asked us to tell whoever came for inspection that we did not have over time work in this factory. And we worked eight hours at 24RMB a day. If they asked us whether we should pay for medicine, we should answer negative. If they asked us what facilities and entertainment we had, we should tell them we had a library and there was video show from time to time. Of course there is none! The medicine fee is deducted from our salary and the library is open only to senior staff." 
  • We were told that such "teachings" and warnings would be given prior to any visit or inspection taken by their clients or the Labor Bureau. "Beware of what you say. If you say anything damaging to the factory, you’ll be fired for sure!" A dismissed worker recalled of how the management had warned her before. 
  • A dismissed worker from Gao De factory said for the past few days, she saw under-aged workers being locked up by the management to escape from the inspection.
According to the Corporation, McDonald’s has a set of internal labor code as well as monitoring system. This is done by contracting third-party social auditors which take both announced and un-announced inspection to all of its contracting manufacturers. The latest inspection on City Toys was done last October and according to the Corporation, the inspection found no evidence of under-aged workers or mal-practices. Workers themselves are the best proof of how these "internal codes" and "independent monitoring" are just a sham.
  1. Words from some of the dismissed workers
  • "I don’t have a day off in May but I had to work over time every day. All I got was just five hundred something. Not only May, but the over time work for June and July was under-paid also. When did they ever give us our pay rolls? I have no idea how they calculate my over time working hours and over time compensation. To hell with their calculation!" 
  • "We got 5 hundred, 6 hundred or 7 hundred something each month. But we have to pay everything on our own. See 60RMB for lodgings, and 2 per meal. And what about other expenses on daily necessities? A bit here and a bit there, I got only 200 or at most 300 for my own expenditure. How can I save any money?"
  • "This factory recruit like mad when they need you in high season. They just dump you when you are useless in low season!"
  • "I don’t want to stay in this factory anymore. Anywhere is better than this factory."
  1. Demands from HKCIC
In an earlier statement issued by the HKCIC on 28 August 2000, we expressed our grave concern over the possibility of workers of Pleasure Tech Holdings at Shajing, being penalized after the report on the working conditions at the work place was released on 27 August.

We are sad to find in our latest visit to the plants that our concerns are valid and that workers suffer because of mistakes committed by the manufacturer and McDonald’s Corporation. As workers were not asked to sign any labor contract with the manufacturer, it is regretful that their ignorance of their own rights as enshrined in the Chinese Labor Law is further exploited. They could not get what they deserve during their employment; nor could they when they were dismissed. We express our deep concern that workers any penalty inflicted by the Corporation on the contracting manufacturer would be further transferred to the workers in the days ahead. 

The HKCIC strongly urges McDonald’s Corporation and Pleasure Tech Holdings,

  1. Deliver due compensation, including travel allowance, to all the dismissed workers; for those who had left, such money should be remitted to their families; Over time pay rate should be given back to all the workers;
  2. Commit to non-retaliation to workers in the five plants under whatever circumstances;
  3. Apologize for mistreating workers of Pleasure Tech Holdings, violating their labor rights and hurting their dignity;
  4. Commit to strict implementation of the Chinese Labor Law. All workers manufacturing for McDonald’s should be able to sign contracts with the employing side on a free and equal basis. Dishonesty and falsification in the calculation of working hours and work wages should not be tolerated;
  5. Improve the living and working conditions of the workers;
The HKCIC reiterates its demands on McDonald’s corporation,
  1. Comply to the core International Labor Standards as stated in the International Labor Organization;
  2. Comply to the labor laws of the countries where they have businesses and investments;
  3. Discipline, as well as give positive incentives both financial and logistic, to all of its contracting manufacturers to help them comply to the above stands and laws.
  4. Establish an independent monitoring system which is open to workers’ and labor NGOs’ participation.

3 September 2000 Contact person: Monina WONG or Alice KWAN 

Tel: 852-2366 5860 

Fax: 852-2724 5098


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