human rights

Fair Labor Practices From my Factory in China

Today is International Human Rights Day!  As a businessman working from a Chinese factory, I have an interesting perspective to write from on the subject.  So here it goes:

The title of this post is “Fair Labor Practices From my factory in China”.  It sounds like an oxymoron, but its not.  Workers are treated well in this factory, and that is one of the main reasons I have chosen the factory I am in (aside from the fact that their finished product is the best I’ve ever seen come from overseas).  When interviewing factories, I made it very clear that fair labor practices were of the utmost importance, and I required full access to the factory during the entire production process to monitor conditions.  I also made sure they knew I would have zero tolerance for child labor.  I’ve been here for just over a week now, and I am very pleased with what I have seen.

The factory owner and I had a detailed conversation about workers’ wages over dinner at KFC the other night (KFC is one of China’s most popular restaurants), and I got some detailed info on workers’ wages I will share with you.  He was a little stressed because he has to pay his workers over-time wages in order to get a shipment out to Australia by next Monday, so he vented honestly to me about workers’ pay.  If they have to work overtime, he must pay them 1.5x their hourly rate and 2x hourly wages on Sundays.  Here is what I learned:

"everyone likes a nice guy, but business requires honesty"

Adjacent the factory owner’s desk, this reads “Everyone likes a nice guy, but business requires honesty”

To preface this, I’m a numbers and charts guy.  My undergraduate degree was in economics, not because I wanted to be a banker or work in the financial industry, but because numbers truly fascinate me.  Math seems to be the universal language of science, and money and numbers control the world.  So here it is by the numbers – All of the following numbers came from the factory owner’s honest mouth or the most recent statistics from the World Bank Factbook, the US Census Bureau, or the US Bureau of Economic Analysis.

Workers in this factory work up to 48 hours a week, and earn a base between 3,000-6,000+ Chinese Yuan per month (before overtime), depending on skill level of their position (approximately $500-$1,000 US Dollars), which equals 18,000-36,000¥ per year ($6,000-$12,000 USD). That does not seem like a lot, but the average income for china is $6,091 per year.  Hence, even his lowest paid employees are making about the Chinese national average income.  The factory also provides room and board for free.  The only thing workers have to pay for is their own food, clothing, and entertainment.  Now, let’s also consider Purchasing Power Parity (PPP), which gives us the purchasing power, or value, of their currency compared to the USD when you average the cost of goods in China.  At a PPP rate of 0.61, workers are making a PPP adjusted income equivalent of $9,836 – $19,672 USD per year.

Let’s compare this to the US:  The most recent US Census reported the mean per capita income in the USA at $27,915, and the USBEA reports Americans spend an average of $7,980 per year on housing (remember room and board is free for workers in this factory).  That means that the average american makes $19,935 per year after they pay cost of housing.  Hence, workers in this factory are making a PPP and cost of housing adjusted income of 49%-99% the average income in the USA, before overtime wages.   It’s not great, but its not bad.

The factory owner says he pays higher wages and his employees work fewer hours than other surfboard factories.  And he is the only factory he knows of that closes for the Chinese New Year/Spring Holiday for a week.  However, most of his workers take multiple weeks for this holiday to return home.

I came to China to observe this process for two reasons: 1) to be quality control for iSurf and make sure that my surfboards are built to my exact specifications, and 2) to make sure working conditions are fare in the factory I have chosen.  I am beyond pleased by the results of both my initiatives so far.  I spend every day, Monday-Saturday, in the factory.  I walk the floors and check each board as it moves through the production process.  I doubt you’ll find another surfboard manufacturer who pays so much attention to quality of product and labor conditions for as I have.  Something to consider when purchasing your next produced SUP or wake surfboard 😉