Samsung says to fix outsourcing issues, but keep most production inhouse

Fri Nov 30, 2012 2:21am EST
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By Miyoung Kim

SEOUL (Reuters) - Samsung Electronics Co plans to keep the bulk of its manufacturing inhouse but reiterated a pledge to improve working conditions at its suppliers after admitting excessive overtime and fines for employees in China, a senior executive said on Friday.

New York-based China Labor Watch (CLW) said employees at one of Samsung's suppliers sometimes worked up to 16 hours a day, with only one day's rest a month.

That prompted an investigation in September by Samsung of its suppliers in China.

"There was common use of a system of penalties (at our suppliers in China) for being late or producing faulty products, which is improper practice under global standards but somewhat general practice under local regulations," said Mok Jangkyun, who led the team of over 100 auditors to inspect Samsung's 105 suppliers in China.

"We're working with them to change these practices and introduce a better work environment," Mok, vice president of human resources, told Reuters in an interview.

"There were indeed some cases of excessive overtime work. When workers have to work weekends, for example, due to a temporary spike in orders, overtime work reached 32 hours a week or 100 hours a month," he said.

"We've recommended they hire more workers, introduce automation and improve production processes to fix this. We are also working on guidelines to gradually reduce overtime work hours."

Samsung produces more than 40 percent of its goods in China including its popular Galaxy S smartphones, home appliances and chips. But most of that is in its own plants, with outsourcing accounting for less than 10 percent of total production.   Continued...

An employee of Samsung Electronics walks past the company main office in Seoul April 6, 2010. REUTERS/Lee Jae-Won