Cheat Sheets for Factory Audits

Jury awards Mattel $100 million in Bratz doll maker lawsuit

While trying to learn what the heck a Bratz doll is, I found this interesting tidbit on Wikipedia.

The allegations in the report describe practices found at many Chinese factories producing name-brand products for export. They include required overtime exceeding the legal maximum of 36 hours a month, forcing workers to stay on the job to meet stringent production quotas and the denial of paid sick leave and other benefits.^[11] The report shows copies of what it says are "cheat sheets" distributed to workers before auditors from Wal-Mart or other customers arrive to make sure the factory passes inspections intended to ensure the supplier meets labor standards.

I definitely believe that the factory uses cheat sheets. This is a common practice to get around the social audit requirements. Another ploy is for an factory that can pass audits to outsource its production to other factories who could not. I always wondered if it was worth the effort to game the system by keeping multiple books, creating cheat sheets for workers, etc.

I also think the auditors who make more money when the factory fails (repeat business!) have a little too much incentive to be anal. You can always find a reason to fail any inspection. We had one our factories fail based on not having enough first aid kits available, even though the factory had a full-time nurse on duty. I wonder if a bribe would have resulted in the auditors finding that they were "mistaken" about the violation.

Walmart does have these kinds of problems finding suppliers. They have to be huge and able to ship massive quantities in a two-week shipping window. That is very difficult from a logistical perspective. They have to pass the audit, which means they have the same costs associated with a Western plant. But they have to be dirt cheap, too.

Personally, I am a little tired of all of the hoops everyone has to jump through. Our importer may be doing business with a large chain store soon, so I just got the 50 pages of requirements in PDF form. Yay! Its quite streamlined now, so the China buying offices start dealing direct with the importer's China office (that's us.) All of the tedious work is thrown on our shoulders, while the importer sends a one liner email:

"Hey buddy, I am assuming we are all okay with these requirements, right?"

Yeah, let me review the 7 different test regimes they require and get back to you. Oh, and the buying office is asking me about payment terms...I guess I should feel good that the customer trusts me about this stuff.

CHINA TRIP: September 3-19

Total Days outside Taiwan in 2008: 73