Fresh off a billion-dollar loss in a patent fight with rival smartphone maker Apple, embattled Samsung Electronics Co. now finds itself accused by a labour rights group of mistreating workers in China and illegally using child labour.
The New York based-China Labor Watch said its investigation into workplace conditions at eight factories in China showed some employees were working more than 100 hours per month of overtime and that children were knowingly employed.
The group also said its investigation of six Samsung-owned plants and two suppliers showed that safety measures, such as providing workers with protective clothing, were not followed.
It also accused Samsung of barring workers from sitting during their shifts and said it had documented instances of physical and verbal abuse.
High product demand led to overtime, firm says
The South Korean electronics giant responded swiftly to the allegations, acknowledging that poor working conditions might have arisen because of production demands and that a review was to immediately take place.
"We frequently review our manufacturing facilities regarding overtime work. We will re-evaluate working-hour practices," said spokesman James Chung. "When new production lines are completed or new products are launched, high demand has led to overtime work."
But the company denied allegations that it used child labour, saying it has "zero tolerance" for the hiring of underage workers.
According to China Labor Watch's report, overtime for some employees reached or exceeded 100 hours per month, with some employees having only one day off a month.
The report also said that while Samsung suppliers Tianjin Intops Co. and Tianjin Chaarmtech Electronics Co. complied with minimum wage laws — workers were paid the base monthly salary of 1,310 renminbi or $204 — the pay was so low that many workers were compelled to work overtime.
"Dependence on overtime work is characteristic of workers at almost every investigated factory," the report said.
Underage workers forged identity cards
The group also claimed that Samsung or its suppliers knew that Chinese underage youths were using forged identity cards to get jobs. Hiring children under the age of 16 is illegal in China.
The group's report said that "the factory did not take any actions to prevent the hiring of child workers even when they know about them."
Samsung also failed to provide a way for workers to lodge complaints.
"Even when they suffered unfair treatment, workers … lacked any effective channel by which to express grievances to management," the report said.
China Labor Watch said it investigated eight plants in China that produce cellphones, media players, DVD players, TV components, mobile displays, printers, home appliances and cellphone casings for Samsung. They hire more than 24,000 workers combined.
Investigators entered the factories undercover or interviewed workers outside the factories.
250 suppliers being audited
Earlier this week, in response to China Labor Watch's allegation that Samsung supplier HEG Electronics used child labour, Samsung said it will audit working conditions at around 250 Chinese companies in its supply chain by the end of this year.
It vowed to terminate contracts if any labour abuses or violations of its policies are found. But the company denied the presence of child workers under 16 at HEG Electronics.
The allegations faced by Samsung are reminiscent of a labour scandal that recently dogged Apple.
A flurry of worker suicides at Foxconn Technology Group, Apple's largest supplier, drew attention to conditions faced by workers in China who put iPhones and other popular devices together.
The world's two largest smartphone makers are embroiled in patent fights in 10 countries. Last month, a jury slammed Samsung with a $1 billion US judgment after finding the company had wilfully copied parts of Apple's iPhone and iPad.
Samsung is appealing the verdict.