Uniqlo Maker Vows to Improve Work Conditions in China

By Monami Yui

Photographer: Yuriko Nakao/Bloomberg

Tadashi Yanai, chairman of Fast Retailing Co., is betting on sales outside Japan to... Read More

Fast Retailing Co. (9983), Asia’s biggest clothing seller, said it would improve working conditions at two factories operated by suppliers in China after an advocacy group published a report highlighting abuses.
Dongguan Tomwell Garment Co. and Pacific Textiles Ltd., should take steps including eliminating fines against workers, increasing holidays, requiring protective clothing and monitoring air quality, Yamaguchi, Japan-based Fast Retailing said today in a statement. The maker of Uniqlo casual wear also said it will work with outside groups to monitor work conditions at the factories.
The effort to eliminate labor abuses emerged from the company’s investigation following the Jan. 11 report from SACOM, a Hong Kong-based non-governmental organization. Japanese Billionaire Tadashi Yanai built Fast Retailing into the region’s biggest apparel company partly
by relying on lower-cost Chinese factories to produce clothes for export using simple designs and innovative materials.
“There’s room for Uniqlo to improve working conditions at the factories in China, but it’s hard to control them well,” said Dairo Murata, an analyst at JPMorgan Securities Japan Co. “Labor abuse isn’t an issue just for Uniqlo, but also for the entire industry.”

China Strikes

Operations at Yue Yuen Industrial Holdings Ltd., a major supplier to Nike Inc. and Adidas AG, were idled temporarily by labor protests in China last year. International Business Machines Corp., PepsiCo Inc. and Wal-Mart Stores Inc. were also affected by labor strife in the country.
Yue Yuen workers demanded higher pay and better compliance with rules requiring employers to contribute to pensions. Nike and Adidas were among the companies saying they support workers’ rights, while declining to cut off some suppliers accused of violating them.
“Fast Retailing has urged swift action against the factories on the issues identified in the SACOM report, and we will cooperate fully with them to ensure that improvements are made,” Yukihiro Nitta, Fast Retailing group executive officer, said in the statement. “Together with third parties, including auditors and NGOs, we will check progress within one month.”
Yanai is betting on sales outside Japan to fuel growth as domestic demand is damped by stagnant economic growth and a declining population.
The brand’s international sales leaped 47 percent in the quarter ended in November, with greater-than-expected gains from stores in South Korea, China, Hong Kong and Taiwan. Overall sales rose 23 percent to 479.5 billion yen ($4 billion) in the period.
Dongguan Tomwell makes clothes in Guangdong Province as a member of the Fast Retailing Group, while Pacific Textiles supplies textiles to garment factories, according to the statement.