Nike reports troubles at its Chinese factories

Nike Inc. said it found falsified documents, underage workers and unpaid wages at suppliers in China, despite what experts say is one of the top social compliance regimes in the industry.

The Beaverton, Ore.-based company’s difficulties highlight the deep roots of some of the problems businesses face in manufacturing in China, particularly at a time of sharply rising costs and a stiffening legal environment.

In its first country-specific supply chain report, which it said focused on China because of the upcoming Beijing Olympics, Nike detailed the efforts it has been making to get suppliers to comply with its code of conduct and Chinese law, including a program to monitor Olympics-related suppliers.

“As China continues to develop we see progress and best practices emerging,” said the report. “But like our partners in any other country, the factories we contract with in China continue to face challenges as well.”

The report noted problems including falsification of factory documents such as payroll records, lack of effective grievance systems for disgruntled workers and hiring practices that did not ensure minimum age standards were met.

The report said China was Nike’s largest sourcing country, with some 180 manufacturers and about 210,000 employees.

Last year, Nike rolled out a program to check the identity of 150,000 of its workers in China and found 167 cases of people who were below minimum-age standards when they were hired but were now 18 or older. Two people were found to be underage.