Samsung has suspended trading with a supplier following a watchdog report which has questioned Samsung’s internal audit process

Samsung, the multinational South Korean electronics and the world’s largest smartphone producer, has suspended trading with a Chinese supplier as a consequence of child labour allegations.

The allegations against Samsung’s Chinese supplier, Dongguan Shinyang Electronics, follows an investigation by American labour watchdog China Labor Watch where they published a report on July 10 accusing the Chinese firm for hiring child workers. China Labor Watch argues that Dongguan Shinyang Electronics employed at least five children during a production period of high demand, paying them less than the hours they worked. The Chinese law for hiring workers stipulates that it is against the law for children under the age of 16 to be employed.

During their undercover probe, the U.S.-based watchdog also discovered that the Chinese company was failing to abide to the law on 15 occasions, including child labour, lack of insurance for staff, lack of wages for overtime and inadequate safety exercises.

The conclusions of the investigation led Samsung to declare a temporary suspension of all associated business with the company embroiled in allegations, enforcing their zero-tolerance stance on child labour.

However, the South Korean firm was swift to defend and distance itself from the investigation outcomes, clarifying that Samsung had completed three separate audits since 2013, with the latest on June 25. During those inspections, Samsung claimed that zero cases of child labour were found.

Despite Samsung claiming to have previously completed routine check-ups on their suppliers, including multiple audits for the supplier in question, the independent findings by the American watchdog perhaps questions the rigidity and diligence of Samsung’s internal audits.

However, over the hundreds of suppliers audited by Samsung since the 2012 warning of Chinese tendencies to employ minors, this is the first case where Samsung’s investigations have found evidence of unlawful practice. On the other hand, since evidence and ensuing allegations arose from the external watchdog report, perhaps it is arguable that Samsung’s internal audits of other suppliers may also have failed to uncover illegal operations.

The case has yet to conclude, with the Chinese authorities reportedly intervening to conduct their own inspections. However, in light of the situation, Samsung is to further investigate the matter internally, whilst stating that the company shall address and improve the recruitment process at its production plants and suppliers to ensure that the situation does not occur again.


— Angus McCarter, Editor (Business)

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