HP and Dell suspend use of interns in Chinese factories

Xu Min (name changed), 19, is a second-year accounting student from Huanggang Normal University in the landlocked Hubei province of central China. Although she wanted to use her summer break to complete an internship relevant to her major, her school had different plans for her.

According to an investigation released this week by DanWatch, a Danish human rights research group, Xu Min is among thousands of Chinese students sent by their schools to the assembly lines of some of the world’s biggest electronics manufacturers in China to make servers that will most likely end up at European universities.

The investigation took DanWatch to the assembly lines of Wistron Corporation in Zhongshan, which manufactures servers for HP, Dell and Lenovo, where it found Chinese students working against their will – they won’t graduate otherwise – often between 10 to 12 hours a day for up to five months.

The authors of the report, Servants of Servers, investigated the supply chain of servers bought by European universities, which they say spent £340m on mostly HP, Dell and Lenovo/IBM servers in 2014.

“Many students are forced to complete irrelevant internships, working overtime almost daily, and working night shifts. These conditions violate the Chinese labour contract, as well as the standards on internships set by the Chinese ministry of education. Furthermore the forced internships violate the International Labour Organisation’s (ILO) convention on forced labour,” the report reads.

While the students perform the same tasks as regular factory workers and are paid the same monthly wages – 1,530 yuan (£159) as required by law – they receive no social benefits or insurance, allowing the supplier to save millions of pounds because the factories enter into agreements with the schools and not the interns, the report alleges.

HP, Dell and Lenovo are not only among the biggest players in the global server market, which was worth more than £30bn in 2014, they are also the brands most often used by European universities, according to the report. Less than 10 of the 35 universities contacted by Danwatch divulged details of their procurement policies.

How companies reacted

All three tech giants put in the crosshairs by DanWatch have corporate social responsibility policies and are part of the Electronic Industry Citizenship Coalition (EICC). But these commitments risk being little more than PR unless they are backed by actions. Companies that are serious about their social responsibility must exercise due diligence, a concept that requires them to look closely at their operations, including their supply chains, and identify, prevent and mitigate negative human rights impacts and account for how they address them.

In this case it seems Dell, HP and Lenovo failed to look closely enough. Yes, the electronic’s industry supply chain is particularly complex, but these companies are not new to China and its issues. They have been using local suppliers for a while now. Additionally, NGOs, media and legal researchers have been highlighting labour rights abuses at Chinese factories, including the systematic use of interns as cheap labour, for a good few years.

HP, according to DanWatch, acknowledged concerns raised by third parties about the use of student labour as early as in 2011. And in 2013 it issued a new standard for students and dispatch workers in China, in which it stated that student workers in its supply chain can’t work overtime or night shifts and that all internship programmes in its supply chain must be voluntary and complement students’ education.

As for Wistron, which in its 2013 CSR report stated that “forced labour is prohibited” by its policies, the rights abuses are allegedly taking place right under its nose.

When presented with these allegations by DanWatch, Wistron replied that students at the factory are completing internships as required by their school curriculum and are at the plant voluntarily.

HP and Dell take action

HP and Dell replied to DanWatch and sent unannounced independent auditors to the factory almost immediately. Although denying claims of forced labour, they did acknowledge “concerns” at Wistron’s plant, including students working overtime and night shifts. To the credit of HP and Dell, such reaction seemed almost unthinkable a few years ago, when most NGO allegations were at best stonewalled and in most cases just met with silence.

Both HP and Dell have temporarily suspended the use of interns on their production lines and committed to “investigate the practices at Wistron to be sure” forced labour is not being practiced there.

An HP spokesperson said the company would “continue to aggressively monitor and investigate to ensure all facilities in our supply chain are following HP’s high industry-leading standards. Suppliers that do not meet HP’s standards must immediately correct their practices or risk discontinuation of business with HP”.

A spokesperson for Dell told the Guardian that it had launched its own investigation including third-party audits after being notified of the Danwatch report. “We continue to have regular meetings with each supplier, and we are holding them accountable to correct the issues found in Dell’s investigation. No one company will correct the systemic problems in the ICT supply chain but we are taking action with our peers to make a positive impact.”

In contrast, China-headquartered Lenovo, sent out a generic response, stating that it “is strongly committed to treating its employees with respect and fairness, and protecting their health and safety”. It later said that it would be making unannounced visits to the factory in Zhongshan to check labour laws or the EICC code of conduct were not being violated.

While some companies singled out in this report have responded to the allegations better than others, it is still imperative for all of them to start treating due diligence as the cost of doing business in China, and anywhere else they operate.

That means devoting considerable resources for human rights due diligence, through training, regular unannounced plant inspections, not restricted to the company’s own assembly line and dedicated staff.