China’s Tech Factories Turn to Student Labor

CHONGQING, China: On the outskirts of this southwestern Chinese hub lie the student factories.

Schools send thousands of teenagers here to put together electronic devices for some of the world's largest brands. Many students say they are given no choice.

"I was suddenly told I had to spend the summer making computers or I couldn't graduate," said a 16-year-old girl surnamed Xiao who is in a college-preparatory program at a local vocational school. "I feel like I've been tricked."

Ms. Xiao and her classmates have worked on the assembly line of a Hewlett-Packard Co. supplier called Quanta Computer Inc. for 12 hours a day, six days a week—conditions that violate Chinese regulations for workers under 18. "Sometimes we are so tired on the night shifts we almost fall asleep," she said.

Chinese law limits student interns to eight work hours a day with no night shifts, and states that schools should place students in internships related to their majors. These rules are widely disregarded by factories.

Student interns have become increasingly entrenched in China's labor force, especially among major electronics makers. At some factories, interns say they outnumber regular workers.

Some major brands like H-P and Apple Inc. say they are working with their suppliers to make sure intern use is reasonable and complies with labor laws, but acknowledge that violations occur.

The practice has the official stamp of approval of China's Ministry of Education, which in 2010 said vocational schools must supply students to fill labor shortages.

China's vocational schools largely cater to students who don't plan to go on to a university education. Some provide high-quality training, while others dump students for long internships at factories, researchers say.

The internships can run from three months to a year, depending on the school. The ministry said there are at least eight million such student interns each year. It didn't respond to requests for comment.

China has traditionally relied on migrant workers to man factories in China's coastal areas, but in recent years the government has started directing industries inland. Chongqing has seen an explosion in worker demand as electronics makers moved here en masse.

But with Chongqing's minimum wage only about two-thirds of coastal Shanghai's, migrant workers are less eager to go west.

"Most regular workers want to go somewhere with better wages," said Qin Lei, 18, who recently completed a yearlong mandatory internship on a Pegatron Corp. laptop assembly line.

On a recent evening, uniformed workers streamed out of Chongqing's major electronics factories to buy noodles or sizzling sausages. Of the roughly two dozen workers stopped at random, nearly all said they were vocational students, with majors ranging from computer science to tourism to education.

Some interns said they were paid around the same as regular workers, or around 1,300 renminbi ($212) a month before overtime, though several students, including a 16-year-old girl surnamed Yang who makes laptops at Compal, said they had to pay most of their base wages to their school.

Students at three of the Taiwanese-owned electronics companies that make personal computers for many major global brands—Pegatron, Compal Electronics Co. and Wistron Corp. said interns were in the majority at their Chongqing factories. Workers at the Quanta plant said a large proportion of workers were students.

Wistron, one of H-P's suppliers, disputed the workers' claim, saying the intern ratio had fallen to 48%-49%. H-P said its checks showed only 12% of workers at its assembly plants in western China were students in July. An H-P spokeswoman didn't elaborate on the discrepancy in numbers, but said Wistron was close to meeting H-P's guidelines.

Acer Inc., which sources laptops from Chongqing, said overuse of students was one of the most common violations in its 2012 audit of suppliers, resulting in the company's decision to launch a student worker management program last year.

"The percentage of interns at…factories in western China seems to be quite high," Acer said. It added that the percentage of interns at its Chongqing manufacturers has halved since last year and that students aren't forced to work.

Both Wistron and Pegatron acknowledged that interns sometimes work longer hours than their ages dictate, but said company officials are working to decrease such practices. Pegatron, which makes laptops for Toshiba Corp. and Asustek Computer Inc. in Chongqing, said 30% of its workforce are interns. Quanta and Compal, the world's two largest laptop assemblers, declined to comment.

Asked about intern work conditions at its Chongqing suppliers, Asustek, which sells laptops and tablets under the brand Asus, said it would "conduct a thorough investigation."

A spokesman at Toshiba said the company wasn't aware of local working conditions at its suppliers in Chongqing but expected the factories to respect local laws and social norms. "If we find violations on this, we ask for them to correct it in a speedy manner," the spokesman said.

Some schools say they are putting pressure on factories. At the Nanxi Vocational and Technical School, the director of employees, Wang Guiqing, said the school has asked Pegatron to limit students' work hours to eight hours a day and overtime to two hours a day.

But students at Pegatron and other factories said night shifts and long overtime hours continue to be standard.

The Fair Labor Association, which promotes adherence to labor laws world-wide, last month published an assessment of Quanta factories making Apple products, which showed a number of labor violations including interns working too much overtime.

Apple said Quanta had 86% compliance with Apple's 60-hour workweek this year through July. "Excessive overtime is not in anyone's best interest, and we will continue to work closely with Quanta and our other suppliers to prevent it," Apple said.

But a widespread shift away from intern usage is unlikely at Chongqing's current wage levels: Executives squeezed by already-low margins say they have no alternative but to rely on students.

At Foxconn, Apple's largest supplier, intern levels have declined sharply with public scrutiny, but some of its smaller factories are still known internally as "intern factories" due to their concentration of students, according to a person familiar with the matter.

The company said in a statement that interns made up 1.23% of its more than one million employees in China in the year to date, and while student levels varied across factories, there were no campuses where interns were the majority of the workforce.

Factories typically pay 500 yuan to 1,000 yuan, or $82 to $163, to labor brokers for each student they arrange for an internship, and still save money as they spend less on insurance and other costs than for regular workers, said the person familiar with the matter. "It's not a system that helps students," he said. The plant director for Pegatron's Chongqing factory, E.K. Liao, defended the internship programs as educational and said the local government had asked factories to train students as the city builds an IT industry. "The city needs more workers with this knowledge," he said.He denied that factories paid commissions to school administrators to encourage them to send more interns.

Factory campuses house nearly all workers. Festooned with slogans such as "Labor produces a happy life," they have ping-pong tables and basketball courts, and students seemed happy with living conditions there.

Some students said their parents liked that they are "getting a taste of society" at the factories, even though they are away from their families and not studying. But other parents have been angry. One complained in June that the Chengkou County Vocational High School didn't allow students to arrange internships related to their majors, instead forcing them to work at Pegatron's laptop factory.

"I think there's reason to believe the school is making improper profits from sending students to the factory as cheap labor," the parent wrote on the Chongqing government's website.

The government responded on the site that internships "must be aligned with the labor usage plans of Chongqing's six contract manufacturers." Neither the Chengkou school nor Chongqing's Economic and Information Commission responded to requests for comment.

Scott Rozelle, director of Stanford University's Rural Education Action Program, which is evaluating vocational schools in Henan province in collaboration with Apple, said his research showed that students at certain vocational schools actually performed worse at math and other subjects at the end of their school studies than at the start.

China, which aims to shift its economy to more skilled sectors, last year announced an overhaul of vocational schools, which encompass 29.34 million students nationwide.

Few of the students interviewed see the internships as educational. "I just put the same piece in the computers over and over, every day," said Ms. Xiao. "I'm not learning anything."