Mike, the pseudonym of a person who has allegedly worked as a top executive at a Nike original equipment manufacturer factory in China for six years, is reported in local media as revealing an inside story about sweatshop factories used by Nike OEMs in China.
According to the Daily Economic News report, which consists of a dozen pages, Nike's Chinese OEMs have been using subcontract labor for many years to make high profits. Shanghai Wande Sports Goods Company and Shanghai Bai'en Sports Goods Company, which are the two major OEMs for Nike's handmade football business, are alleged to have subcontracted making footballs to workers in remote areas of China between 2003 and 2007.
According to both the Internet news source ifeng.com and China's Daily Economic News, Mike said that in recent years, Nike's Chinese football OEMs have used cheap labor from the rural areas of Jiangxi, northern Jiangsu, and Anhui to sew the footballs. He revealed that a finished football is sold at USD8, but it is only priced at USD1 when leaving the factory, while the workers only get USD0.73 for each ball they sew. Mike said that he spent five out the last six years helping the factory hide its behavior when Nike came to audit.
Mike stated that it seemed strange that Nike was not aware of the factory's illegal practice, given that with a daily production capacity of four or five footballs per person per day the factory, which has a total of about 100 workers, can produce as many as 120,000 footballs each month. Interestingly the factory was even cited by Nike, in its 2008 corporate social responsibility report, as an excellent OEM.
According to Mike, Nike's CSR department only reviewed such items as the work hours, extra work time and salary amounts on the pay slips provided by the OEM. It is difficult to see purely by looking at the pay slips whether the OEM's actual output matches its real production capacity, or whether it has been involved in sub-contracting. In addition, Nike's quality assurance department is only responsible for evaluating the OEM's product quality and qualified rate. They did know the OEM's actual output, but they do not audit the actual number of employees of the OEM.
Zhu Jinqian, a spokesperson for Nike, stated to local media that Nike has invited a third-party organization to investigate the OEMs after receiving complaints about them.
Meanwhile many other sports brands, such as Adidas and Puma, are also commissioning third-party organizations to probe into the behavior of their OEMs.
