Samsung halting business with supplier over child labor concerns

Samsung Electronics Co said it halted business with a supplier in China over suspected use of child workers, the first time it has taken such a step, after criticism that its monitoring of labor practices at suppliers was inadequate.

The decision, announced on Monday, comes less than a week after US-based China Labor Watch said it found "at least five child workers" without contracts at the supplier and called Samsung's monitoring process to halt such practices "ineffective."

Samsung, one of the world's biggest smartphone makers, said it conducted three audits since 2013 of the supplier, a wholly owned subsidiary of South Korea's Shinyang Engineering Co, the latest of which ended on June 25.

But another investigation prompted by the watchdog's report led to evidence of what Samsung called suspected child labor, pointing to holes in the tech giant's ability to enforce its labor guidelines for Chinese suppliers.

"The Chinese authorities are also looking into the case," Samsung said in its statement on Monday.

It said it would permanently cut all ties with the supplier if the allegations were true, in line with its zero-tolerance policy on child workers.

Dongguan Shinyang Electronics and Shinyang Engineering could not be reached for comment despite multiple attempts to contact them by Reuters on Monday.

Labor practices at Samsung suppliers have come under scrutiny since 2012, when China Labor Watch said seven children younger than 16 were working for one of the electronics giant's China-based suppliers.

Chinese labor law forbids hiring workers under 16.

The South Korean firm later said it found no evidence of child labor following those accusations, although acknowledging other problems including overtime hours in excess of regulations.

In November 2012, Samsung established a code of conduct for suppliers in line with standards set by the US-based Electronic Industry Citizenship Coalition.

It also asked suppliers to sign a compliance agreement to prevent child labor.

Samsung also demands that suppliers adopt a strict hiring process that includes face-to-face interviews and the use of scanners to detect fake IDs to ensure no child laborers are employed.

In its annual sustainability report, published on June 30, the firm said a third-party audit of 100 Chinese suppliers found no instances of child labor.

The report cited other problems, however, with minors of legal working age but 18 or younger found working with chemical handling processes at 48 suppliers and a majority of suppliers not complying with China's laws on overtime.

Samsung said it demanded immediate action to correct such behavior. But China Labor Watch Executive Director Li Qiang said that Samsung's social responsibility reports were an "advertisement" and that its efforts so far had failed to bring improvements for workers.

Samsung declined to comment on details of its investigation and whether confirmation of use of child labor would affect its existing relationship with Dongguan Shinyang's parent Shinyang Engineering, which is also a Samsung supplier.