Campaigning against Fast Retailing for a decade

Labour Education and Service Network, Hong Kong
Written by: L H Au
Editor: May Tam
 

I. Introduction and Fast Retailing at a glance

This report discusses five labour campaigns against the leading global apparel brand, Fast Retailing (FR) and its suppliers. From these cases, lessons are drawn and recommendations are suggested for future labour movements to better labour rights.

FR, originated in Japan, holds its renowned subsidiary Uniqlo and other brands including GU, Compoir des Cotonniers, Princess Tam Tam, PLST and J Brand. Its sales in 2020 amounted to USD18.91 billion, which ranks the third place of the global fast fashion market after Inditex and H&M. 

 

  • Production

Asia is the dominant production center of FR, with more than 90% of its core sewing factories located in 11 Asian countries: Bangladesh, Cambodia, China, India, Indonesia, Japan, Malaysia, Myanmar, Sri Lanka, Thailand and Vietnam. Among them, China is the biggest producer, with 144 core sewing factories out of the total 236. Since 2021, FR has started to involve suppliers from Africa, Europe and South America, with a number of 22.

The ownership of factories also concentrates in Asia, again, with China the major player.  About 120 core sewing factories are owned by parent companies from China. Other companies from Bangladesh, Japan, Taiwan and Vietnam own less than 20 factories.

 

  • Consumption

FR products are mainly consumed in Asia. Over 90% of its retail stores are located in the region, with Japan the biggest market. Its subsidiary Uniqlo has 813 stores in Japan, contributing to 40.2% of FR’s total sales in the Financial Year 2020. Some other 1,439 stores spread across Greater China (Mainland China, Hong Kong and Taiwan), South Korea, Southeast Asia & Oceania, Europe and North America, contributing to 42% of the total sales. FR is expanding into markets in Australia, Europe and North America.

 

  • Two pillars: Japan and China

The above information shows that Japan and China are the two pillars of the FR value chain.  Japan is the major consumer country while China the major producer country. China also plays an important role in consumption. It has more FR retail stores than any other countries outside Japan. Thus, FR heavily relies on China both in production and consumption.

 

  • Why FR cases to examine?

Aiming to enter the Western market, FR emphases simple design and high quality garments, which differentiates itself from other fast fashion generally of low quality in low price. Thus the FR supply chain transfers more pressure to workers than other brands. The fast fashion, which calls for fast changing product designs and tight production schedules, imposes psychological burden and longer work hours on workers. Therefore, there have been labour disputes and campaigns against FR’s supplier factories in recent years. Such campaign experience is worth examining, evaluating and sharing. In fact, labour groups have started researches and monitoring of FR as early as in the early 2010s, and campaigning has begun since 2013 or 2014. Thus the efforts to fight for better labour rights in FR has already stridden across a decade.

This report is based on interviews with activists involving in the campaign cases, investigative reports on FR’s suppliers and the corporate information released by FR.

 

II. Cases against Fast Retailing

 

  • Brief overview of the five cases
  Year Factory location Parent company Issues Actions Results

Case 1

(Investigation 1)

2014 China Hong Kong

- Occupational  safety and health (OSH) issues

- Long work hours

- Research

- Campaign

- Wide media attention drawn

- Rectification plan prepared by FR but without verification by labour groups of its implementation

- Further monitoring by labour groups rejected

- A worker mentioning some changes in factory seen

Case 2

(Investigation 2)

2017 China China

- OSH

- Long hours

- Research

- Campaign

- Rectification plan prepared by the factory but without verification by the labour group of its implementation

Case 3

Artigas

2014 - 2015 China Hong Kong

- Pension

- Housing provident fund

- Factory relocation

- Strike and occupying the factory

- Campaign

- Suppression against workers with arrests and imprisonments

- Compensation of a certian amount of housing provident fund and severance payments, but the pension insurance was not settled

- 2 labour activists faced retaliation (prosecution and imprisonment) for participation in this case

Case 4

Zhong Yin B

2015 - now Cambodia China - Union busting

- Strike

- Campaign

- Negotiation

- Reinstatement of part of the workers

- Further layoffs complicated by decline of the factory and the COVID-19 pandemic, leading to the fight for severance payments

Case 5

Jaba Garmindo

2015 - now Indonesia Indonesia - Factory closure

- Collective actions (i.e. legal appeals)

- Campaign

- Local appeal successfully claimed back wage arrears but not severance payments

- One brand client took up responsibility of severance payments but with minimal help as the brand is only a tiny buyer

- The case was later taken to the UN Women and also the Fair Labour Association (FLA).  Eventually the FLA released an investigative report in July 2021, opining that although FR had not violated the local labour laws, 19 brands previously having employed services from Jaba Garmindo, including FR, are advised to jointly set up a fund to provide financial aid to the affected workers.  Until now, the workers still have not got their severance pay after losing their jobs for six years.

 

 

  • Case 1: Two China factories with poor labour conditions violating the law (2014)

Case 1 and Case 2 involve several factories (FR’s suppliers) in China into which the Hong Kong labour organisations, Students and Scholars Against Corporate Misbehaviour (SACOM), conducted two investigations by sending undercover researchers to collect onsite evidence of labour rights violation. Factories in Case 1 involves the first investigation in 2014 while Case 2 the second investigation in 2017.

SACOM has been engaging in anti-sweatshop movement in Hong Kong and campaigning against Hong Kong brands and transnational corporations operating in Hong Kong. They have started to investigate emerging Asian brands, with FR an obvious target.

Case 1 relates to the first investigation in 2014 and two factories are involved:

Factory 1: Hutai (Panyu) Textile Printing and Dyeing Co., Ltd.
Parent company: Pacific Textiles Holdings Limited

Factory 2: Dongguan Liantai Garment Manufacturing Limited Company
Parent company 2: Luen Thai Holdings Ltd.

Location of factories: Guangdong Province

Location of parent companies: Hong Kong

The first investigation was jointly conducted by SACOM, Human Right Now (HRN) in Japan and Labour Action China (LAC) in Hong Kong, researching into the above two factories. After verification, a report on the evidence showing nasty working environment and practices violating the Chinese labour law was released.  Photos of half-naked, sweating workers working in a workshop without personal protection equipment under high temperature with sewage on the floor were shown, and documents showing workers being illegally fined were also presented in press conferences held in Tokyo in late 2014.

The action drew a lot of media attention, embarrassing FR who emphases cleanliness and quality.

The FR management promptly contacted HRN and SACOM for a meeting, and later issued a detailed ratification plan which was about improving the hygiene of factories, changing illegal practices, and hiring Inno, a Chinese local NGO specialised in providing CSR services, to set up a hotline to receive workers complaints.

However, due to practical difficulties, SACOM was unable to revisit the two factories, and thus whether the ratification plan was really implemented or improvements were made was not verified.

Moreover, after the meeting with FR, SACOM and HRN later had another Skype dialogues with an FR representative. This time FR rejected follow-up actions proposed by SACOM, which included regular follow-up calls with FR and labour rights training in factories.

Anyway SACOM received a thank you message from a worker of Hutai, mentioning some changes in the factory being seen.

 

  • Case 2: A China factory researched in the second investigation (2017)

This is the second investigation done by SACOM as a follow up of the research in 2014 in Case 1.  Again an undercover research was conducted in a factory of Chenfeng Group , a major FR’s supplier. After releasing a report on the nasty working environment of the factory (including high temperature, no provision of personal protection equipment, sewage on the floor and long working hours) and protesting at a Uniqlo store in Hong Kong, FR didn’t respond directly. Instead, SACOM received an email from Chenfeng Group with a detailed ratification plan. Similarly, since the researchers did not revisit the factory, SACOM couldn’t verify if the ratification plan was really implemented or not.

 

  • Case 3: Strikes for pension, housing benefits, and against factory relocation of a China factory (2014-2015)

Factory: Shenzhen Qingsheng Clothing and Accessories Leather Ltd. Co. (or Artigas)

Location of factory: Guangdong Province

Parent company: Lever Style Corporation

Location of parent company: Hong Kong

 

Campaign for pension insurance scheme and housing provident fund

Workers of the FR supplier, Artigas, started organising in mid-2014 to demand the factory to join the legally required pension insurance scheme and the plan of housing provident fund. They collected 200 petitions out of 1,000 workers and invited the management for negotiations. However the management intimidated the workers and thus the 200 workers joining the petition went on strike and occupied the factory in December 2014.

The factory did not respond. The Hong Kong Confederation of Trade Union (HKCTU) and SACOM protested at Hong Kong stores of Uniqlo and G2000, a Hong Kong brand purchasing a lot from Artigas. As G2000 threatened to cut orders, Artigas promised to negotiate with workers but subsequently broke the promise.

Later, the lawyer and assistant representing the workers were denied entry to the factory and were temporarily detained by the police. Riot police arrested 20 workers and dispersed other workers who occupied the factory.

However, Artigas compensated the workers with an amount equivalent to their housing provident fund but the pension insurance was yet to settle. All workers still resumed work and the arrested workers were released.

 

Campaign against factory relocation

In April 2015, workers realised that the factory was about to be relocated, which could cause great inconvenience to workers’ living such as the need to travel a long way from their dwelling place to the workplace. Moreover, workers were afraid that their outstanding pension and severance would not be paid as the current factory was going to be closed down. In June, a worker representative was fired and arrested by the police. All workers consequently joined strikes and occupied the factory. With no responses from the factory, brands and the government for a month, some workers petitioned the Guangdong provincial government, but were violently attacked by the police.

Hong Kong labour organisations put pressure on FR, which was smeared by the local government in Shenzhen as a plot by ‘foreign hostile forces’.

In July, the local labour department claimed no labour rights violation in the factory. The police arrested seven worker representatives and threatened the workers who were told to either accept a compensation equivalent to 25% of their severance payments i.e. 500 CNY (80 USD) per year of service, or to have their worker representatives prosecuted. The workers accepted the compensation offer and ended the strikes. However, one worker representative was still prosecuted and imprisoned afterwards. Oppression went on to 2019. Two labour activists were prosecuted and sentenced. 

 

  • Case 4: Union busting in a factory in Cambodia (2015 - )

Factory: Zhong Yin (Cambodia) B Textile Co., Ltd.

Parent company: Ningxia Zhongyin Cashmere Co., Ltd.  (from China)

Location: Kandal Province, Cambodia

 

Campaign against union busting

The factory level union had already been in intense relation with the factory management before the dispute. In 2015, Japan’s HRN exposed labour exploitation in various Cambodian garment factories including Zhong Yin B. The exploitation included illegal and cruel prolonged work hours, short contracts, union busting and unsafe working environment. Recognising the factory as its supplier, FR conducted its own inspection and denied all accused violations. But ironically, the factory started union busting thereafter, and 50 union members were fired. The fired workers filed a lawsuit to the Cambodia Arbitration Council (AC) and won the case. However, the court order was not enforced and the company did not reinstate the 50 workers. Workers then went on strike in 2016, but 200 strikers got fired.

The Coalition of Cambodian Apparel Workers Democratic Union (C.CAWDU) filed an urgent appeal to the Clean Clothes Campaign (CCC) which then cosigned a letter to FR with the Service Employees International Union (SEIU), urging FR to take action.  FR claimed that it had communicated with the factory and required it to solve the dispute through dialogues with the union.

A larger petition among Japan’s HRN, International NGOs and other labour organisations emerged subsequently. FR claimed to have suspended cooperation with the factory to push it for action, therefore the factory reached an agreement with the union to reinstate all the affected workers.

 

The unfinished struggle after FR’s pullout

Although most of the workers were rehired, 12 union leaders were never reinstated until this day and they have been continuing to fight for their rights. Since FR divested from Zhong Yin B by not placing any order to it and unilaterally declared the resolution of the case in 2016, FR didn’t follow up on the case anymore.

This struggle is now facing a new challenge. As the factory has been declining since FR’s pullout in 2016. A sharp reduction of over 2,000 workers occurred during 2016-2019. Since then the owner tried to close the factory and workers went on strike in 2019 for wage arrears. It also tried to dismiss all workers amid the COVID-19 pandemic, and the workers are thus also fighting for severance payments.  

 

  • Case 5: Protest against factory closure in a factory in Indonesia (2015 -)

Factory: PT Jaba Garmindo

Location of Factory: Banten Province, Indonesia

(Note: As Jaba Garmindo does not belong to a bigger group, so it doesn’t have a parent company)

The workers’ struggle started in 2013 to demand the factory to pay the statutory minimum wage. After the demand was rejected, the workers formed a union but met with the factory management’s union busting tactics including intimidation with violence. Moreover, various violations of rights were discovered, including illegal practice of contracts, not paying pregnant workers’ subsidies, numerous OSH issues and mass dismissal of workers without severance payments.

In 2014, Uniqlo stopped placing orders to the factory with claims of substandard product quality. Later in the year, the factory’s business partners sued the company for outstanding debt. Jaba Garmindo went bankrupt in 2015. At that time, 2,000 workers had already been suffering 4 months of wage arrears. Following the bankruptcy, the workers lost their jobs without severance payments which amounted to USD5.5 million.

The workers appealed against the arrangement of liquidation, and later they managed to get about USD2 million for their 4-months’ unpaid salary, but the severance payments were still not settled. Workers began to demand the major buyers (including Uniqlo) of Jaba Garmindo to take responsibilities, but the brands didn’t think that it was their responsibilities. After continuous campaigning, the brand Jack Wolfskin agreed to pay, which was of minimal help, as it only contributed about 2% of the factory’s orders. Each worker only got USD15.

Labour solidarity actions took place in Denmark, Hong Kong and the Netherlands to demand Uniqlo to compensate.  In 2018, the worker representatives went to Tokyo with CCC campaigners to protest.  Later, FR invited the ILO office in Jakarta to facilitate a meeting between the company and the union but little was achieved. The campaigners took the case to the UN Women and also the Fair Labour Association (FLA). Eventually the FLA released an investigative report in July 2021, opining that although FR had not violated the local labour laws, 19 brands previously having employed services from Jaba Garmindo, including FR, are advised to jointly set up a fund to provide financial aid to the affected workers. Until now, the workers still have not got their severance pay after losing their jobs for six years.

The struggle against the brands for severance payments is particularly difficult because:

  1. In 2015 there was no legal frameworks in Indonesia to make brands accountable for their suppliers’ violations of labour rights.
  2. The bankruptcy of Jaba Garmindo does not seem to relate to Uniqlo.

 

III. Lessons for future campaigns against FR or campaigns in general

 

1. The early success in Case 1 coincides with FR’s expansion to Western market

FR quickly arranged a meeting with the labour group after the release of the investigative reports in Case 1 in 2014, but not in Case 2 in 2017. The year of 2014 coincides with FR’s investment in the European market the early 2010s, and thus negative reports were not wanted.

2. FR quickly learned CSR and whitewashing

The former SACOM campaigners have noticed throughout years that FR has quickly developed its own CSR department and picked up white washing tactics including charity, emphasis on sustainability and collaboration with European designers. Such changes are clearly shown in their annual reports.

3. FR cares more about violation of laws and damage of reputation than rights

This is reflected by the interviewed activists. Therefore a successful campaign targeting FR needs hard evidence on the violation of local laws, such as photos of dangerous working environment as shown in SACOM’s first investigative report, or official documents showing the lack of pension insurance and housing provident fund of the Artigas workers, and the Cambodian Arbitration Council’s ruling to reinstate the workers of Zhong Yin B.  

4. FR’s voluntary monitoring proved its failure

In Case 3 (Zhong Yin B), FR refuted HRN’s accusations of labour rights violation by conducting its own investigation and afterwards denied all accused violations. Ironically, the factory started union busting later. This shows FR’s voluntary monitoring fails to protect workers while external monitoring and mandatory regulations are necessary.

5. Campaigns in Japan with involvement of local civil society organisations (CSOs) is crucial

This is shown in Case 3 (Zhong Yin B) in which Japan’s HRN involved and the reinstatement of workers largely succeeded whereas in Case 2 (Artigas) FR didn’t respond to HKCTU’s call for intervention. Japan CSOs’ involvement is important in two ways: 1. FR as a Japanese company faces more pressure when local CSOs are involved in the campaigns; 2. Foreign campaigners’ appealing meet with difficulties such as language barrier, lack of connection with local media and inadequate knowledge of local campaigning culture.

6. Suppliers’ attitude is different from the brand

In Zhong Yin B case, the factory didn’t care about the labour dispute because of weak law enforcement in Cambodia. Then the pressure lies on the brand which needs a good reputation.

 

IV. Recommendation

1. Develop narrative against the ‘I just follow the law’ attitude

FR’s only concern is whether the suppliers violate the local law and whether there is evidence to prove such violations. This attitude cannot protect workers’ rights as most countries where FR products are produced have outdated labour laws with weak enforcement. It is necessary to develop narratives against the ‘I just follow the law’ attitude.  However, FR actually does respond to certain non-legal demands by disclosing its list of core supplier factories since 2017. Such transparency is becoming a central theme of business and human rights due diligence.

2. Make sure FR has to improve the factory’s working conditions instead of simply pullout

Case 4 (Zhong Yin B) and Case 5 (Jaba Garmindo) are very similar in that FR knew the problems of the factories before collective actions took place, but didn’t make an effort (e.g. requiring the factories to follow the law) to improve the working conditions. Instead, it suspended cooperation with Zhong Yin B to push for action and simply cut orders of Jaba Garmindo to evade troubles.

Brands bear responsibility to protect workers’ rights along its supply chain because it is the brand in the first place to squeeze resources of suppliers in order to reduce cost. Brands should be required to provide sufficient financial and technical resources to facilitate factories to respect basic labour rights.

3. Make FR compensate upon pulling out

If FR terminates cooperation with any supplier, which may lead to the collapse of the supplier like the case of Jaba Garmindo, it is important to advocate for FR’s joining the Severance Guarantee Fund which is a powerful tool to prevent denial of severance payments.

4. Impose pressure through ethical investment mechanisms

A number of garment manufacturers are becoming transnational companies, with some even being listed in stock markets of Hong Kong, Japan, Singapore, Taiwan or the USA. Nowadays many of these stock markets require the listed companies to fulfill Environmental, Social and Governance (ESG) standards. Finding out the coverage, requirements and power of these mechanisms could be beneficial for future campaigns.

5. Develop new strategies in response to increasing hostility against campaigns in China

Situation has been more and more hostile to labour rights advocacy in China since the time when the two investigations in Case 1 and 2 were conducted. Labour activists have faced multiple repressions from the state during 2015-2020, plus the rapid deterioration of democracy in Hong Kong since 2019. It is hard to predict the feasibility of campaigning for labour rights in China and Hong Kong, and thus new strategies are needed.

6. Change social perception of justice in the supply chain and in international solidarity

East Asia countries, not like the European counterparts, generally lack a strong tradition of unionism and do not place emphasis on the important concepts of labour rights such as freedom of association, collective bargaining, job stability, living wage and limited work hours. This is an obstacle to improving working conditions locally. Continuous campaigning to advocate better corporate practices and ethical consumption is needed.

7. Attention to garment brands’ expansion into the logistic sector

The rapid growth of e-commerce not only creates monstrous logistics platform companies, but also attracts garment brands to expand into the logistic sector for optimising its delivery and lowering reliance on other platforms.  

As the two sectors intersects, it is worth attention of keeping track on the development of garment brands in this sector as well as connecting with workers in this growing sector.