Global companies face global problems. With supply chains that stretch across continents, it can often be a challenge to enforce compliance standards on suppliers and partners in far-flung areas. One company that has learned this lesson the hard way is Samsung Electronics.
The South Korean electronics giant has been met with allegations that one of its Chinese suppliers uses child labor. A nonprofit group known as the China Labor Watch called out Samsung, alleging that the Shinyang Electronics Company, makers or cellphone covers and other parts, was using children who had used fake IDs to get jobs in the factory.
Samsung had stood firm, denying these allegations in the past, but on July 14, the company announced that it would suspend business relations with Shinyang pending an investigation into this matter.
The impetus for suspending relations with Shinyang seems to be Samsung’s own internal investigation into the matter, which was no doubt spurred by the watchdog allegations. Samsung reportedly found evidence of suspicious hiring practices and decided to look into the matter further.
This illustrates the type of problems that companies with large international supply chains face. With literally hundreds of suppliers and partners in countries like China, where enforcement of regulatory standards can be lax, it falls upon the corporations themselves to set the right tone and to ensure compliance. In June, Samsung did an internal audit of some of its Chinese suppliers and found that 59 percent of those polled did not use the proper safety equipment.