Following an internal audit of its Chinese suppliers, Samsung found evidence of excessive overtime as well as fines for being late to work and has vowed to improve the situation.
Speaking to Reuters, Mok Jangkyun, who led the team of over 100 auditors to inspect Samsung’s 105 suppliers in China, said: “There was common use of a system of penalties (at our suppliers in China) for being late or producing faulty products, which is improper practice under global standards but somewhat general practice under local regulations.
“There were indeed some cases of excessive overtime work. When workers have to work weekends, for example, due to a temporary spike in orders, overtime work reached 32 hours a week or 100 hours a month.
“We’ve recommended they hire more workers, introduce automation and improve production processes to fix this. We are also working on guidelines to gradually reduce overtime work hours.”
Samsung produces some 40% of its products in China. Around 90% of this is manufactured in plants that it owns, just 10% is outsourced – a situation that won’t change according to Samsung because it allows the company a degree of flexibility.
“Multinationals are increasingly opting for outsourcing for various reasons. But at Samsung, out of over 200,000 staff worldwide, more than half are manufacturing jobs, which indicates we are very much a manufacturing-driven company and it is where our core strength is,” said Mok.
“Samsung manufactures more than 90 percent of our products internally and only relies on contractors for peripheral products such as components, feature phones and handset cases.”
