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Qantas, Emirates, Kmart Implicated in China Prison Labor Scandal

Posted by Abe Sauer on June 27, 2013 11:38 AM

Suggestions of connections to worker suicide may be becoming the "good" China supply chain news for brands. Or at least that may be how some brands come to look at their China supply chains as more reports of Chinese prison labor has come to smear Qantas, Emirates and British ­Airways as well as electronics maker Electrolux.

The new report follows similar allegations just two weeks ago after a letter pleading for help was found hidden inside a toy sold at Kmart. The very thought that brands now need to worry about certifying themselves "Chinese prison labor-free" is disheartening.

"This product produced by Unit 8, Department 2 Masanjia Labour Camp, Shenyang, Liaoning China" reads the letter stashed, ironically, inside a styrofoam gravestone Halloween decoration purchased by a mother in Oregon in 2011. “Sir: If you occasionally buy this product, please kindly resend this letter to the World Human Right Organization, thousands of people here who are under the persecution of the Chinese Community party Government with thank and remember you forever[sic]" reads the letter. Just this month, the letter's author came forward to speak to The New York Times, saying that prisoners—paid as little as $1.40 a month—were forced to make a wide range of products including some labeled "Made in Italy." Those products, the man reported, included those for export.

It was one thing—nearly one of those quirky "Oh, China!" stories—when it was revealed a couple years ago that Chinese prisoners were being forced to "play" online games like World of Warcraft to build up in-game credits that guards could then sell for real profit. It was almost a light compliment to the forced organ donation stories the West was used to hearing out of Chinese prisons. 

Now, just two weeks after the smuggled letter story, a New Zealand man who was convicted of manslaughter and spent several years in a prison in south China has come forward with specific brands supplied by one prison labor detail. In an interview with The Australian Financial Review, Danny Cancian says he made electric components for brands such as Emerson and Electrolux. He and fellow inmates were also forced to assemble headsets for numerous airlines including British Airways, Emirates Air and Qantas. Another prisoner identified the latter as "the one with the ­Kangaroo as its logo." Chinese tech giant Huawei is also implicated.

In early 2013, China hinted that it would begin to disband its network of prison labor, a system that sees inmates often "sold" to other labor camps in need of ramping up production capabilities. But suggestions about dismantling the system disappeared from China's state press almost as hastily as it had appeared. While the labor camps are used for manufacturing production, their primary goal has fundamentally been social re-education.

Qantas told the Review that it was "concerned by these allegations" and suspended dealings with the supplier, a Vietnamese middle man.

Supply chains in China rarely consist of a single link. What might be happening with the end manufacturer could be removed from the final buyer by a number of middle parties. As long as the first link is telling the next one that all manufacturing is on the up and up, no one's the wiser. In this very instance, Qantas insists this was the case, telling the Review that its supplier—Airphonics—had provided "written assurances there was no forced labor in any part of the supply chain." Mostly unrelated, Qantas has of late been courting Chinese airlines that fancy a stake in the carrier.

Qantas quandary is unenviable. The company claims it audited its China suppliers only months ago and yet here it is. For companies like Qantas that are actively engaged in advanced, brand-building corporate social responsibility campaigns, even a hint of a scandal as dire as using forced China prison labor for supply threaten to unwind such significant brand investments. Case in point:

In an announcement that could not possibly be better timed, Qantas stated a day after the Review's report that the airline would institute a total ban on shark fin products as cargo after activists heavily lobbied airlines to help preserve shark populations currently being decimated by China's demand for the cartilage. Qantas' total ban goes a step further than peer airlines such as Cathay Pacific which have stated they will allow shark fin cargo from "sustainable" sources.

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