Hu and KYCE representatives did not respond to multiple e-mails seeking comment.
Throughout September, according to Walmart purchase orders, Quaker shipped US$2.1 million worth of pet outfits from Yantian, China, to various US ports. The purchase orders list Mrs Claus dresses, Santa suits and reindeer suits — the exact outfits Hu of Jiutai said he had made at his factory and then photographed. However, the purchase orders list Ease Clever as the supplier, not Jiutai.
Contacted by telephone last month about the inspection and shipment, Jay Xie, a sales manager for Ease Clever, said the company had allowed the use of its Walmart certification.
“His factory had not yet been audited — he used my factory because it was already audited,” Xie said of the Jiutai factory manager. Xie said this had happened only once, as a friendly act to help a fellow manufacturer.
The shipment, though, was late, according to the former employee. And soon after Walmart started selling these items, Quaker began receiving complaints, according to the former employee. When Walmart conducted a quality test on the Mrs Claus dress, it found holes, and the outfit failed the test.
Walmart executives then summoned Quaker employees to its sourcing office in Shanghai for an explanation, but Quaker did not disclose the subcontracting to Walmart at that time, the former employee said.
In March 2013, Walmart received a tip, via its global ethics hot line, about the unauthorized subcontracting and looked into it.
Kevin Gardner, a spokesman for the company, confirmed that subcontracting in this case occurred in 2011, and that Walmart officials “met with the supplier after the investigation to go through the findings and reinforce what our expectations are pursuant to subcontracting.”
Even though Walmart was alerted to the case nearly two years after the products were made and only after a hot line tip, the retailer pointed to the episode as an example of how its investigation and compliance system was working, not faltering.
“We investigated. We talked with the supplier. We think this does show the processes were in place,” Gardner said.
In January 2013, Walmart established a “zero tolerance” policy, saying it would drop suppliers who used subcontractors without the company’s approval. Walmart adopted the policy after garments headed to the company were found in the fire debris at Tazreen, an unauthorized factory.
Quaker and Werde declined to comment. The pet specialty company remains a Walmart supplier, Gardner said.
The question-and-answer sheet that the factory’s managers distributed to all their employees was explicit: If an inspector ever asked, “Are there injury records?” they were to answer, “Have not heard of any work-related injuries.”
And if an inspector asked, “Any corporal punishment in the factory?” the employees were to reply, “No.” If monitors inquired about underage workers at the plant, employees were coached to respond, “Employment for those less than 16 years old is prohibited.”
This sheet, prepared by managers at a Chinese factory and obtained by the Times, had one purpose: to trick inspectors.