“The auditors were saying everything was in perfect order,” he said. “It shows how ineffective these monitoring organizations can be.”
Effie Marinos, sustainability manager at SGS, defended her company’s findings. SGS had followed the inspection protocol developed by the Business Social Compliance Initiative, a factory certification group for European businesses, she said.
Marinos said the protocol for Rosita did not require interviewing workers outside the factory, a practice that she cautioned could undermine a relationship between a Western company and its suppliers.
“You don’t want to start the whole approach with a lack of trust, that they are trying to fool you, that they are behaving unethically,” she said. “It can sour an entire relationship.”
BYPASSING INSPECTION RULES
In mid-2011, the Quaker Pet Group, whose biggest customer was Walmart, began looking for cheaper factories where its trendy dog clothes could be made, according to a former Quaker employee who requested anonymity for fear of reprisal from Quaker. The company has also sold its goods to Petco, PetSmart and smaller retailers.
Quaker settled on a plant called Jiutai Bag and Gift Factory in Dongguan, Guangdong. After visiting the site, Quaker Pet Group president Neil Werde sent a note to a Jiutai representative in June 2011. “I was pleased with your factory,” Werde wrote, according to an e-mail shared by the former employee. “Good luck on the Walmart inspection.”
That inspection did not occur. Quaker officials became concerned that Jiutai would not be able to pass an inspection, the former employee said.
However, there was a workaround. While Jiutai would make the garments, Quaker would fill out order forms to say that the items had been made by Ease Clever Plastic Manufactory, then an approved Walmart supplier. Ease Clever is an established manufacturer that ships products to Target and other large companies, according to the global trade database Panjiva. Jiutai, by contrast, had only one recent listing in the database, for a small shipment to Puerto Rico in 2011.
The stickiest issue was how to get the clothing made by Jiutai past Walmart inspectors. An inspection at Ease Clever was scheduled for September 2011, when the Walmart representatives would check that the dog outfits were being manufactured there, the former employee said.
Jiutai simply took the clothes to Ease Clever, according to the former employee. Those moves were outlined in a later e-mail from a Jiutai representative to Werde.
“The Wal-Mart inspectors showed up and said, ‘Oh, they are being made here.’ It’s not as challenging as you would think,” the former employee said. “You have your finished-goods area and just show them the cartons being packed out.”
In an e-mail to Werde, the Jiutai representative, identified as Mr Hu, detailed how the setup had worked as he pushed Quaker for payment.
In July, a company based in Hong Kong called KYCE, apparently acting as a liaison, helped arrange an order for the Christmas dog clothes, Hu wrote.
“JiuTai only make the clothes,” Hu wrote.
In September, “we hang the clothes” in display cases and “send to Ease Clever warehouse for Wal-mart during inspection,” Hu added, including photographs of the costumes. After the inspection, the clothes went back to Jiutai, and Jiutai, after making final adjustments, packed and delivered the clothes to the shipping terminal, Hu wrote.