Reference ID: 06BEIJING24312    

Created: 2006-12-05 23:06    

Released: 2011-08-30 01:44    

Classification: UNCLASSIFIED//FOR OFFICIAL USE ONLY    

Origin: Embassy Beijing

                  


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UNCLAS SECTION 01 OF 02 BEIJING 024312

 

SIPDIS

 

SIPDIS

SENSITIVE

 

DEPT PASS USTR FOR KARESH, A. ROSENBERG, MCCARTIN

LABOR FOR ILAB

TREAS FOR OASIA/ISA-CUSHMAN

USDOC FOR 4420/ITA/MAC/MCQUEEN

GENEVA FOR CHAMBERLIN

 

E.O. 12958: N/A

TAGS: ELAB EINV PGOV CH

SUBJECT:  CORPORATE SOCIAL RESPONSIBILITY WITH CHINESE

CHARACTERISTICS

 

¶1.  (SBU)  Laboff met with the China National Textile

and Apparel Council (CNTAC), a quasi-government body,

to discuss "CSC-9000T," the code of conduct CNTAC is

trying to establish for China's textile and apparel

industry.  CSC-9000T is intended to cover the entire

supply chain, not just export-oriented factories.  It

is based on Chinese law and will focus on training for

Chinese companies to improve compliance.  CSC-9000T

will not involve accreditation or third-party

monitoring.  Corporate Social Responsibility (CSR)

executives from several American companies told Laboff

that CSC-9000T is in line with the trend in the CSR

community away from monitoring and toward capacity

building.  However, some of these executives doubt

whether CSC-9000T will have sufficient credibility to

be useful to buyers if it does not have accreditation

or third-party monitoring, or deal with

internationally recognized labor standards, including

the freedom of association and collective bargaining

rights.  Others said CSC-9000T's biggest challenge

will simply be to show that its capacity building

program can noticeably improve factory conditions

across China's enormous apparel industry, a big task

for a small and inexperienced organization.  CNTAC

said it would welcome USG assistance. End summary.

 

¶2.  (U)  Laboff visited CNTAC on 16 October 2006 to

discuss CSC-9000T, its code of conduct for garment

manufacturers and their supply chains.  CNTAC Vice-

President Sun Ruizhe said CNTAC's goal is to develop a

robust, voluntary code for the industry, based on

Chinese laws and regulations, which will not involve

accreditation or invasive audits.  CSC-9000T will

apply to the entire supply chain, not just major

exporters.  Chinese companies are already working with

their suppliers to set up the Responsible Supply Chain

Association (RSCA) to work with CSC-9000T.  CNTAC got

help from the ILO, the Fair Labor Association (FLA),

United Nations Industrial Development Organization,

the EU, and several well-known brands in designing and

promoting its code and training programs, and intends

to remain engaged with these partners as it refines

its program. Sun said CNTAC would welcome assistance

from the United States Government as well.

 

¶3.  (U)  CSC-9000T is currently being implemented on a

pilot basis in 10 factories to demonstrate

feasibility.  CNTAC hopes to expand the program to 100

large manufacturers and then 1000 small- and medium-

sized factories over the next three years. Reflecting

Chinese law, the CSC-9000T code focuses predominately

on working conditions, and makes virtually no

reference to freedom of association or collective

bargaining rights.

 

¶4.  (U)  Impetus for the development of CSC-9000T

comes from both the Chinese Government and Chinese

industry.  Implementation of the program is included

in China's 11th five-year plan.  CNTAC itself is a

government-supervised industry association (the

successor to the Ministry of Textiles) and receives

budgetary support from the Central Government.

However, CNTAC intends for CSC-9000T to be self-

funding, through training program fees. Sun said the

Chinese Government recognizes that CSR is a "business

issue".  At the same time CNTAC also wants to reduce

the burden on Chinese suppliers who now must contend

with multiple codes of conduct and auditing

requirements from various buyers.  Sun said Chinese

suppliers are unhappy with existing codes and auditing

programs because they do not provide solutions to the

problems they uncover, and because they do not afford

any real protection to a brand's or supplier's

reputation.

 

 

BEIJING 00024312  002 OF 002

 

 

¶5.  (SBU) Western buyers have varying views of CSC-

9000T.  CSR executives from Disney and Hewlett Packard

(HP) told Laboff that CSC-9000T is probably the first

of several standardized codes of conduct the

Government will attempt to promote for various

industries.  Disney and HP consider the industry-wide

code a positive approach that could help bring order,

better compliance and better cooperation on CSR among

China's many suppliers.  Disney believes that without

accreditation or some from of third-party monitoring,

most buyers will probably not view CSC-9000T as an

acceptable  substitute for their own codes.  Disney

and HP both also said that CSC-9000T does not address

labor-management relations, and that buyers were still

looking for "parallel mechanisms" to prevent and

settle labor disputes in suppliers' factories.  (The

HP executive noted that in the city of Shenzhen, the

local labor bureau told her that dispute settlement

was a company responsibility because government

agencies did not have the resources to do anything.)

A CSR executive from Nike told Laboff that third-party

monitoring is not as important as bringing about

changes in the factory.  An Adidas executive agreed

and noted that CSC-9000T took its lead from the Fair

Labor Association and some of the big buyers who are

moving away from monitoring and toward capacity

building. Adidas said CSC-9000T's biggest challenge

will be to find enough qualified staff to carry out

effective capacity building for its subscribers. CSC-

9000T may just be too small and too shallow to make a

difference, he said.  As for credibility with the

labor rights community, the Adidas executive added

that CSC-9000T?s reliance on Chinese law rather than

internationally recognized labor standards, will

probably be a bigger obstacle than the lack of third-

party monitoring.

 

RANDT