Hana Cambodia

In early 2005, the WRC initiated a compliance assessment at Hana Cambodia, an apparel factory located in Kandal, Cambodia. The facility is owned by a Korean multinational company known as Hana Global. At the time of the WRC’s assessment, Hana Cambodia was producing collegiate licensed apparel for university licensee Top of the World, and non-collegiate goods for Reebok.

Through the course of our investigative work at the facility, the WRC identified serious violations in the areas of overtime and overtime compensation, freedom of association, harassment and abuse, and occupational health and safety. Among the most serious violations, factory management had unlawfully terminated three union officers in what the available evidence indicated was a brazen act of retaliation for the workers’ efforts to advocate for improved working conditions. The firing of the union officials, in combination with other acts of anti-union intimidation, had effectively rid the facility of the union.

Unfortunately, while the WRC was still in the process of completing its compliance assessment and initial remediation efforts, the facility’s primary direct buyer, PNG – an agent through which all orders from Top of the World and Reebok were placed – decided, with the consent of Top of the World and Reebok, to move all of its orders from Hana Cambodia to a new facility in China. The WRC pressed PNG, Reebok, and Top of the World to reconsider this decision, as the presence of these buyers at the facility represented the only substantial leverage available to press for positive change, but we were unsuccessful in persuading any of the companies to maintain business ties with Hana Cambodia.

The decision to withdraw production, according to Top of the World and Reebok, was based on economic considerations, not code compliance concerns; however, the fact that production was withdrawn in the midst of an investigation and remediation effort is, in the WRC’s view, inconsistent with Top of the World’s university code of conduct obligations (and inconsistent with the obligations inherent in Reebok’s own code of conduct), even if the decision was made in the routine course of business. Given this development, we are not optimistic that remediation of the worker rights violations identified by the WRC’s investigation is achievable at the facility in the near term – absent a decision by the licensees to return orders to the factory and engage actively in efforts to compel corrective action. Moreover, Hana recently suspended production, in part due to the loss of orders from Top of the World and Reebok. It is not clear whether the factory will reopen.

The decision of these brands to leave Hana is of particular concern given the commitment the Cambodian government has made, in the context of a trade agreement with the United States, to improve enforcement of domestic labor law. It was hoped that brands would maintain orders in Cambodia in order to support this process.

Read more:

• WRC Factory Assessment Update – February 15, 2006