Samsung to Pass Fewer Orders to China Supplier in Child Labour Response

Samsung Electronics Co Ltd said it will do 30 percent less business with a parts supplier after uncovering employment of child workers at the China-based firm, marking the IT giant's strongest objection to the illegal practice to date.

In July, Samsung suspended business with Dongguan Shinyang Electronics Co Ltd, a wholly owned subsidiary of Kosdaq-listed Shinyang Engineering Co Ltd, after U.S.-based China Labor Watch said it found at least five child workers without contracts at the Guangdong province-based supplier.

Samsung said Chinese authorities found that while Dongguan Shinyang did not directly employ child workers, a subcontractor had hired them through a labour dispatch agency.

"Samsung has decided to still take measures against Dongguan Shinyang to hold the supplier responsible for failing to monitor its subcontractors, in accordance with Samsung's zero tolerance policy on child labour," the maker of the popular Galaxy smartphone said on Tuesday.

The move to penalise the China-based maker of mobile phone covers and parts comes amid growing pressure on Samsung Electronics to ensure that its Chinese suppliers adhere to local labour laws.

In 2012, the same activist group said seven children younger than 16 were working for one of the South Korean firm's China-based suppliers. Chinese law forbids hiring workers under 16.

The use of child labour isn't rare in China. Other multinational tech companies including Apple Inc have been plagued by revelations of exploitation.

Underage workers have previously been discovered at Foxconn, the supplier for some of the world's biggest tech brands. Foxconn is the trading name of Taiwan's Hon Hai Precision Industry.

Strengthening supervision
The earlier suspension in business was prompted by a report released earlier in July by China Labor Watch, which said children were working on the assembly lines at Dongguan Shinyang. In June, an independent audit by Samsung Electronics had found no child labour at the supplier.

"Samsung will continue to further strengthen its monitoring process of its suppliers to prevent such a case from recurring," Samsung Electronics said on Tuesday, declining to elaborate.

A third-party firm supplying workers had brought in child labourers to Dongguan Shinyang around the end of June with forged identification after Samsung completed its audit, said a Shinyang Engineering official, adding that there are no child workers at Dongguan Shinyang now.

"We will ensure that similar incidents do not recur," he said.

The official told Reuters that Dongguan Shinyang will resume supplying parts to Samsung on Tuesday - less than a month after the initial suspension.

He said the firm had not been notified of Samsung's decision to do less business with the China unit, and declined to disclose how big a monetary impact such a cut may have.

© Thomson Reuters 2014