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Refuses to give out names of subcontractors: What is RGI and Orkla hiding in China?

Norwegian manufacturers of clothes and shoes have their products made by cheap Chinese subcontractors. The working conditions in this branch have been strongly criticised recently. Norwegian manufacturers such as Gresvig and Helly Hansen, owned by among others Resource Group International (RGI) and Orkla, and RGI subsidiary Brooks Sports refuses to give NorWatch names of the subcontractors they use. What are they trying to hide?
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
Norwegian manufacturers of clothes and shoes have their products made by cheap Chinese subcontractors. The working conditions in this branch have been strongly criticised recently. Norwegian manufacturers such as Gresvig and Helly Hansen, owned by among others Resource Group International (RGI) and Orkla, and RGI subsidiary Brooks Sports refuses to give NorWatch names of the subcontractors they use. What are they trying to hide?


By Morten Rønning
Norwatch

Norwegian import from China is increasing. Norwegian manufacturers have for several years had their products made cheaply at Chinese factories. Over the latest years we have seen a significant rise in the number of new establishments.

With regard to products such as shoes, clothes and toys, China accounts for a significant part of world production. Within this sector it is still usual to make use of subcontractors instead of establishing own factories.

NorWatch have been in touch with several Norwegian manufacturers of sportswear and shoes. We get rejected when we - on the grounds of reports of low wages, long working hours and child labour - ask for names of subcontractors. That kind of information seems sensitive. The manufacturers refer to competition reasons.

Gresvig
RGI owns 50% of Gresvig, which manufactures a great deal of its trademarks in the East. A Gresvig advertising brochure presents James Oakley as Canadian sportswear. On request from NorWatch, it is revealed that it is the style that is Canadian; 70% of the clothes are manufactured in China, the rest in Southern Europe.

The same goes for GEGE ski clothing, and the summer and bathing clothing trademark Atlantic Technical Sportswear. By reasons of competition, the company does not wish to give out names of subcontractors.

-10 to 15 years of work are behind the contacts we have in China. This is valuable experience that we cannot risk losing to our competitors, says Herman Schonhowd, marketing director in Gresvig.

-Based on the criticism that has been raised against many of the Chinese subcontractors, shouldn't Norwegian customers be allowed transparency into how the merchandise they buy are being manufactured?

-We are present at the factories and can guarantee for the subcontractors we use. The same factories produce goods for several Norwegian companies. In the southern parts of China, the labour costs are higher than in the North. The development has come a lot further in this area, claims Herman Schonhowd.

Managing director of RGI, board member of Helly Hansen and chairman of the board of Gresvig, Bjørn Rune Gjelsten, does not wish to comment on the companies' secrecy with regard to the Chinese subcontractors.

Helly Hansen
Helly Hansen is owned by Orkla and RGI on an even split. The company recently conducted a «restructuring» which resulted in close to one thousand employees being fired, most of them from the company's manufacturing plants in Portugal.

Some production is still kept in Norway, Moss and Alta, while the rest now is to be manufactured with subcontractors in the East. The contracts are arranged from Helly Hansen's Hong Kong office. The production in China is situated in the southern provinces.

Managing director of Helly Hansen, Johnny Austad, has recently come home from a tour of Helly Hansen's subcontractors in Sri Lanka, the Philippines and China. He is very satisfied with his subcontractors.

-I was very impressed with what I saw, it is a tidy business. We have absolutely nothing to hide, but we cannot give out the names of our subcontractors. We fear that our competitors will pick up the production methods that we have spent a lot of money on developing, says Austad.

-We know that in the textile-industry in these countries, there are many subcontractors that profit on low wages, child labour and poor working conditions. Would it not be beneficial for Norwegian manufacturers if we could establish as fact that this is not the case in their production?

-Of course, and it is very unfortunate that we cannot give out the names of our subcontractors. In any case, we are very pleased with the way in which our merchandise is being manufactured, says Austad. He adds that binding contracts have been signed by all subcontractors that child labour will not be used in connection with the manufacturing of their clothes.

Director of Orkla and board member of Helly Hansen, Tom Vidar Rygh, says to NorWatch that the company only deals with serious businesses.

-Our production is so complicated that backyard businesses can not be used, said Rygh.

Brooks Sports
Resource Group International (RGI) - the company of which Kjell Inge Røkke dominates, owning more than 70% - owns the American shoe manufacturer Brooks Sports. Ginny Conricode of the information unit in Washington tells NorWatch that the company has its shoes manufactured in China, South Korea and Vietnam.

All the production is handled by local contractors. Since Brooks is a private company, she does not wish to reveal the company's yearly turnover. When it comes to names of subcontractors, the message is clear.

-We do not give out competition sensitive information.
«It is very unfortunate that we cannot give out the names of our subcontractors. In any case, we are very pleased with the way our merchandise is being manufactured.»
Managing director of Helly Hansen, Johnny Austad.

Why so cheap?
Over the last few years, conditions at Chinese manufacturing plants have been criticised from several different directions. In December of 1995, the English aid organisation Christian Aid published a report on the conditions in the sport shoes industry. The report revealed child labour, minimum wages, piecework rates, long hours, poor living conditions inside the factories and almost slave-like working contracts.

Children and youth sit side by side producing trademark products which are purchased by wealthy customers in the West. The same factories often produces several different labels. Journalists who wish to survey the production are being shut out. China may house as much as 5000 shoe factories.

In November of 1995, Asia Monitor Resource Centre published a report on shoe manufacturing in China. The report concluded: «The worker's rights and interests were far from being taken care of in the shoe industry. Some factories even purposely neglect the security aspects.»

Millions of children
FAFO, Institute for Applied Social Science's report on child labour, Grimsrud/Melchior 1996, finds that it is particularly among the subcontractors in China that child labour exists. In spite of a lower age limit for employment set at 16 years, the report tells of millions of working children.

A report written by Anita Chan with the Contemporary China Centre, Australian National University, Canberra, «Trade unions and collective bargaining in South China», concluded that the unions are far from able to ensure the workers' well-being. Instead, they have to subordinate the authorities in their struggle to attract foreign investments.

The report points out that the industry in the south of the country is worse off than the industry in the northern provinces. Both Helly Hansen and Gresvig products are manufactured in the southern parts of China.

Regarding unions and negotiation rights, Chan points out that the conditions are better in joint venture companies with western capital than it is in pure Chinese companies, or joint venture companies with other Asian capital.

No attention
All NorWatch can do at this point, is to establish as a fact that neither Gresvig, Helly Hansen nor Brooks Sports wish any attention towards their Chinese subcontractors. This makes it impossible to determine whether these Norwegian companies are struck by the heavy criticism that has been raised.

RGI and Orkla in China
Resource Group International owns 50% of Helly Hansen and Gresvig, as well as 100% of Brooks Sports. All companies refuse to give out the names of their subcontractors in China.

Orkla owns 50% of Helly Hansen and a little less than 2% of Gresvig. Both companies refuses to reveal the identity of their Chinese subcontractors.

Norwatch Newsletter 4/96

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