WCA_STD_2-193701-20150130090510-F_IAR_47475

Report No : F_IAR_47475 City : HuzhouAudit Date : Jan 22, 2015 Country : ChinaLast Audit : NA Auditors : Primary: Hank WangAssessment Stage : Initial Secondary: None

Overall Facility Score : 85%

Service Provider: IntertekSchedule Type : Announced

DE QING ZI LI SPUN WEAVING CO., LTD.GENERAL INFORMATION

85-100%High Performance71-84%Medium Performance51-70%Low Performance0-50%Very low Performance

Assessmentarea Score results Number of non-compliances by rating

Zero Tolerance Major Moder

ate Minor Notscored

Overall 85% - - 5 8 -

Labor 97% - - - 1 -Wages & Hours 56% - - 4 - -Health & Safety 97% - - - 2 -Management Systems 86% - - - 4 -Environment 67% - - 1 1 -

WORKPLACE PERFORMANCE INDEX AND SUMMARY Participating facilities: 15396

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Workplace Conditions Assessment ReportMeasured Results —Improved Performance

Facility Legal Name: De Qing Zi Li Spun Weaving Co., Ltd.Audit Location: Shilin Development Zone, Xinshi Town, Deqing County, Huzhou City, Zhejiang Province, ChinaCity: HuzhouCountry: ChinaContact Name: Ms. Li YingyingContact Title: Vice General ManagerIndustry: Accessories

Facility Name: De Qing Zi Li Spun Weaving Co., Ltd.A. FACILITY PROFILEA1. FACILITY INFORMATION

Security systems inplace:

Yes The security guards would check and register the identification cards of all strangers access to the facility.

Building Description: The facility consists of one 2-storey building used as office and canteen, one 2-storey building used as production building and warehouse and one flat building used as knitting department. No dormitory is provided to employees by the facility.Special building type: None

NA

Facility Legal Status: Joint ventureYear facility began operations:

1997Located in special economic zone:

NoPerson responsible for overall social compliance issues:

Mr. Li YingyingValid certificatefor social compliance certification program:

NoneVendor Name: CHUNGHSIN INTERNATIONAL TRADING GROUP CO., LTD.


Workplace Conditions Assessment ReportNr. F_IAR_47475De Qing Zi Li Spun Weaving Co., Ltd.

A4. SUBCONTRACTOR INFORMATIONNo subcontractor information given

Languages spoken in the facility:

MandarinManagement and employees speak same language :

Yes

Female Employees: 30 Male Employees: 20 Mgmt Employees: 12 Production (Non-Management) Employees: 38 Local Employees: 50 Foreign/Migrant Employees: 0

A3. EMPLOYEE INFORMATIONRange of total number of employees at the facility:

0-100 employeesUnion name: None Employs juvenileworkers:

None Employee nationalities/provinces:

NA. All employees were local.Hires throughemployment agent:

No All employees were hired directly.

A2. PRODUCTION INFORMATIONChemicals or hazardous materialson-site:

Yes Only some clean agent used in the inspection and packing workshop.

Time recordsystem(s) used:

Punch card system

Current production/Services for client:

No

Products manufactured/Services provided:

ScarfProduction process/Service elements:

Knitting, Sewing, Pressing, Inspection and Packing.Production capacity a week: 25000 piecesTotal number of machines: 50Main machine types: knitting machine, sewing machine, pressing machine and etcShifts andOperating hours:

The general working hour was 5 days per week and the facility could arrange the overtime on weekends. The employees in the knitting department work in 2 shifts and the first shift is from 8:00 to 16:00, the second shift is from 16:00 to 24:00. The other employees work in one shift and the normal working hour is from 8:00 to 17:00 with one hour lunch break from 11:30 to 12:30.



A5. GENERAL INFORMATION1. The total land area occupied by the facility is about 5,000 square meters. 2. The facility management showed positive attitude to this audit during the whole process. The documentation requested for the review was provided timely. Locked areas encountered during the audit were unlocked timely. At the end of the audit, all the findings were accepted by the facility management. 3. Most of interviewees were a little shy but comfortable during interview. All employees stated that they worked overtime on voluntary basis and they were satisfied with the facility and no negative information was raised. The employees do enjoy working in the facility. They are satisfied with the working condition and management system. The facility gives everybody equal opportunity and salary is good in local area.Emergency Preparedness Summary1. The facility had established emergency preparedness procedure such as fire emergency etc, through document review and employee interview, the facility had provided training such as first aid training etc for employees when they joined in the facility. The facility conducted emergency evacuation drill four times per year. 2. The facility provided fire safety equipment throughout the facility such as fire extinguishers, fire hydrant, fire alarms, smoke detectors, fire sprinklers, emergency lights and exit signs, which were adequate for the nature of operations in terms of sufficient quantity, correct type (type A, B, C) and valid, and were inspected regularly by an internal inspector. 3. Evacuation maps were also posted in each floor with position of firefighting equipments, current location, emergency exits, and routes of evacuation. 4. Emergency routes were clearly marked on the floors which could lead employees to emergency exits.



A6. AUDIT PROCESS

Payroll and attendance records sampling

Period From To Peak Season Records ReviewedCurrent Period 2014.11.01 2014.11.30 No 5 Period 1 2014.07.01 2014.07.31 No 3 Period 2 2014.03.01 2014.03.31 No 3 Total 11

Employee interview samplingIndividual 5Group 0Total interviewed 5 interview employees including 2 males and 3 females.

Audit pay period provided for reviewRecords From To12 Months Payroll 1 December 2013 30 November 201412 Months Attendance 1 December 2013 21 January 2015

Special Comments Not applicable

Personnel records Machine maintenance recordsSecurity log book Production recordsNon-Production records Employment contractsLegal Permits Social insurance documentationEmployee leave register Infirmary logsHealth examination records

Other records reviewed



B. KEY PERFORMANCE METRICSB1. COMPARISON BENCHMARKCurrent performance — Global average, China average, Accessories average

Labor Wages & Hours Health & Safety Management Systems Environment

Advancers DeclinerConstant

Section NameCurrent

(22-Jan-2015)

Last(Not Applicable)

First(Not Applicable)

Change(Current-Last)

Change(Current-First)Labor 97 Not Applicable Not Applicable Not Applicable Not ApplicableWages & Hours 56 Not Applicable Not Applicable Not Applicable Not ApplicableHealth & Safety 97 Not Applicable Not Applicable Not Applicable Not ApplicableManagement Systems 86 Not Applicable Not Applicable Not Applicable Not ApplicableEnvironment 67 Not Applicable Not Applicable Not Applicable Not Applicable

Overall Score 85 Not Applicable Not Applicable Not Applicable Not Applicable

B2. PERFORMANCE TREND ANALYSIS

(22-Jan-2015) (Not Applicable) (Not Applicable)


PERFORMANCE RATING

Very Low (0% – 50%) Low (51% – 70%) High (85% – 100%)Medium (71% – 84%)


International Standard: 60 China average: 52 Highest hours this facility: 56

Normal Work Hours Overtime Work Hours B3. WORKING HOURS AND WAGES

56

Average total hours worked weekly

Average wages paid in local currency (RMB)

Special wage circumstances:



Wages and hours summary: 1.13 months and 21 days (from December 1, 2013 to January 21, 2015) attendance records were reviewed. 2. During employee interview, all 5 randomly selected employees stated that they worked overtime on voluntary basis. 3. 12 months’ payroll records (December 2013 to November 2014) were reviewed. 4. In this audit, the auditor noted that the facility used paper card attendance records system to record employee attendance situation and all employees should punch their cards when they came in/out of the facility. Some records such as daily production records, finished products inspection records and material delivered records etc. had been reviewed, those records matched with the attendance records, meanwhile through employee’s interview, no inconsistency was found. The working hours and wages could be verified in current audit. 5. Based on the provided attendance records and payroll records, production employees were only paid 100% of normal rate to piece rate employees for their overtime work on rest days and holidays. 6. Based on provided attendance records, working hours was analyzed as follow: 1) For November 2014 (current month), the average weekly working hours were 56 hours and maximum weekly working hours were 56 hours (all 5 randomly selected employees). 2) For July 2014 (random month), the average weekly working hours were 56 hours and maximum weekly working hours were 56 hours (all 3 randomly selected employees). 3) For March 2014 (random month), the average weekly working hours were 56 hours and maximum weekly working hours were 56 hours (all 3 randomly selected employees). 4) No overtime arranged on normal working days. The monthly overtime hours exceeded the limit as required by law in sample months. Through document review, auditor found that the monthly overtime hours of all 5 randomly selected employees were 80 hours in November 2014 (Most current month); monthly overtime hours of all 3 randomly selected employees were 64 hours in July 2014 (random month); monthly overtime hours of all 3 randomly selected employees were 80 hours in March 2014 (random month).



97%C1. Labor

Sub Section: Employment ContractsStatus Findings % Global freq of

compliance

Minor 98.00 : The facility does not maintain an employee roster which includes information on current residence, contact information, form of employment and length of labor contractAuditor's comment No employee roster was established. Through document review, auditor found that the facility had 50 employees but did not establish employee roster for reference.PRC Employment Contract Law article 7An employer establishes an employment relationship with an employee from the date of start to use the employee. It shall prepare a roster of employees for reference.Regulations on Implementation of the PRC Employment Contract Law article 8The staff roster as mentioned in Article 7 of the PRC Employment Contract Law should contain such employee information including name, sex, identity card number, registered permanent residence and current residence, contact information, form of employment, starting time of employment and length of labor contract.

95%

C. PERFORMANCE DETAILSCurrent (22-Jan-2015)


PERFORMANCE RATING



56%C2. Wages & Hours

Sub Section: Working HoursStatus Findings % Global freq of

compliance

Moderate 120.00 : Total overtime hours exceeds allowable limits under applicable law or agreement.Auditor's comment Overtime hours exceeded the legal requirement. Through document review, auditor found that the monthly overtime hours of all 5 randomly selected employees were 80 hours in November 2014 (Most current month); monthly overtime hours of all 3 randomly selected employees were 64 hours in July 2014 (random month); monthly overtime hours of all 3 randomly selected employees were 80 hours in March 2014 (random month).People’s Republic of China Labor Law Article 41The employing unit may extend working hours due to the requirements of its production or business after consultation with the trade union and laborers, but the extended working hour for a day shall generally not exceed one hour; if such extension is called for due to special reasons, the extended hours shall not exceed three hours a day under the condition that the health of laborers is guaranteed. However, the total extension in month shall not exceed 36 hours.

54%

Moderate 125.00 : Employees are not provided with at least one day off in seven (7) in accordance with local law.Auditor's comment No at least one day off per week was provided for employees. Through document review, auditor found that all 5 randomly selected employees worked for 30 consecutive days without 1 day off in November 2014 (most current month). All 3 randomly selected employees worked for 10 and 19 consecutive days without 1 day off in July 2014 (random month). All 3 randomly selected employees worked for 28 consecutive days without 1 day off in March 2014 (random month).People’s Republic of China Labor Law Article 38The employing unit shall guarantee that its staff and workers have at least one day off in a week.

73%


PERFORMANCE RATING



Sub Section: Working HoursStatus Findings % Global freq of

compliance

Moderate 126.00 : Employees are not provided with at least one day off following six consecutive days worked.Auditor's comment No at least one day off per week was provided for employees. Through document review, auditor found that all 5 randomly selected employees worked for 30 consecutive days without 1 day off in November 2014 (most current month). All 3 randomly selected employees worked for 10 and 19 consecutive days without 1 day off in July 2014 (random month). All 3 randomly selected employees worked for 28 consecutive days without 1 day off in March 2014 (random month).

73%

Sub Section: Wages and BenefitsStatus Findings % Global freq of

compliance

Moderate 145.00 : The overtime wage is not calculated and paid at the premium rate as legally requiredAuditor's comment Insufficient overtime wages for employees. Through document review, auditor found that only 100% of normal rate wages were paid for overtime on weekend and holidays to all production employees, whose wage were calculated based on piece-rate.People’s Republic of China Labor Law Article 44The employing unit shall, according to the following standards, pay labourers remuneration higher than those for normal working hours under any of the following circumstances: 1) to pay no less than 150%of the normal wages if the extension of working hours is arranged; 2) to pay no less than 200% of the normal wages if the extended hours are arranged on days of rest and no deferred rest can be taken; and 3) to pay no less than 300% of the normal wages if the extended hours are arranged on statutory holidays.

75%


PERFORMANCE RATING



97%C3. Health & Safety

Sub Section: General Work FacilityStatus Findings % Global freq of

compliance

Minor 169.00 : Noise level at the facility is not acceptableAuditor's comment Testing result of occupational hazards factors exceeded standard. During facility tour, auditor found that knitting workshop with high-level noise. During document review, testing report indicated that the factors of occupational disease hazards (noise) in knitting workshop exceeded the limit of national standard.

91%

Sub Section: Occupational InjuryStatus Findings % Global freq of

compliance

Minor 211.00 : The facility does not apply for testing of factors of occupational hazards at least once a year and the report kept for reviewAuditor's comment Testing result of occupational hazards factors exceeded standard. During facility tour, auditor found that knitting workshop with high-level noise. During document review, testing report indicated that the factors of occupational disease hazards (noise) in knitting workshop exceeded the limit of national standard.Provisions on the Supervision and Administration of Workplace Occupational Health Article 20An employing entity with occupational hazards shall entrust an occupational health technical service agency with corresponding qualification to conduct evaluation on occupational hazard factors at least once every year. An employing entity with severe occupational hazards shall, in addition to the above requirement, entrusts an occupational health technical service agency with corresponding qualification to conduct assessment on occupational hazard status at least once every three years. The results of the evaluation and assessment shall be kept in archive, reported to local administration department of work safety, and announced to the workers.

73%


PERFORMANCE RATING



86%C4. Management Systems

Sub Section: Management SystemsStatus Findings % Global freq of

compliance

Minor 294.03 : The facility has comprehensive employment practice processes and procedures in a written manual that support adherence to social compliance requirements but they are not all being properly implementedAuditor's comment The facility has written employment practice procedures, but they are not being properly implemented, for example, there was some finding about employee roster.

92% Minor 294.04 : The facility has comprehensive working hour and wages management processes and procedures in a written manual that support adherence to social compliance requirements but they are not all being properly implemented

Auditor's comment The facility has written working hour and wage management procedures, but they are not being properly implemented, for example, there was some finding about working hour and wage.76%

Minor 294.05 : The facility has comprehensive processes and procedures in the area of general facility, dormitory (if any) and/ or canteen (if any) management (e.g. cleanliness, ventilation, noise, lighting, toilets) in written manual that support adherence to social compliance requirement but they are not all being properly implemented.Auditor's comment The facility has written general facility procedures, but they are not being properly implemented, for example, there was some finding about noise level.

83%

Minor 294.07 : The facility has comprehensive employee safety processes and procedures in a written manual that support adherence to social compliance requirements but they are not all being properly implementedAuditor's comment The facility has written manual for processes and procedures includes such procedure but they are not being properly implemented, For example, there was some finding about occupational injury.

78%


PERFORMANCE RATING



67%C5. Environment

Sub Section: EnvironmentStatus Findings % Global freq of

compliance

Minor 320.00 : The facility does not have any environmental management system in place 67%


PERFORMANCE RATING



Sub Section: EnvironmentStatus Findings % Global freq of

compliance

Moderate 322.00 : The facility does not have all required environmental permits, licensees and / or registrationsAuditor's comment 1. In accordance with the PRC Environmental Impact Assessment Law Article 16 and 22 No Environmental Impact Assessment (EIA) and approval for construction project. During facility tour, auditor found that products in the facility are scarf, and the main processes are knitting, cutting, sewing, pressing, inspection and packaging. However, the facility could not provide EIA document and approval for review. 2. In accordance with the Measures for Administration of Environmental Protection Acceptance Check upon Completion of Construction Project article 17 No environmental protection acceptance checks report for completed construction project. During facility tour, auditor found that products in the facility are scarf, and the main processes are knitting, cutting, sewing, pressing, inspection and packaging. However, during document review, the facility could not provide the environmental protection acceptance check approval for their construction project for review.The Measures for Administration of Environmental Protection Acceptance Check upon Completion of Construction Project article 17For construction units accord with the acceptance check conditions prescribed in Article 16, competent departments of environmental protection administration shall approve the application report of environmental protection acceptance check, application form of environmental protection acceptance check or registration card of environmental protection acceptance check. For construction projects with a registration card of environmental protection acceptance check upon completion of project completed, competent departments of environmental protection administration shall, after checking, give the opinions on the registration card of environmental protection acceptance check and make approval decisions. Construction projects without official approval on the application report, application form or registration card of environmental protection acceptance check upon completion of projects shall not be put into production or use.

71%

% Global Frequency of Compliance: Represents the implementation percentage performance of all suppliers participating in the WCA Community globally for each issueIdentification numbers: Represents the finding ID associated with each checklist question

RECOMMENDATION FOR IMPROVEMENT PLAN TIMELINEMinor Take action within 0 ~ 6 months to make necessary improvements. Major : Take action within 0 ~ 1 month to make necessary improvements.Moderate: Take action within 0 ~ 3 months to make necessary improvements. Zero Tolerance: Take immediate action to make necessary improvements.


PERFORMANCE RATING



D. STRENGTHS AND CHALLENGES

Challenges: Facility performance ranks in the bottom percentile of the population Rating Global Freq. of Compliance%The facility does not maintain an employee roster which includes information on current residence, contact information, form of employment and length of labor contract Minor

95%The facility has comprehensive employment practice processes and procedures in a written manual that support adherence to social compliance requirements but they are not all being properly implemented Minor92%Noise level at the facility is not acceptable Minor 91%The facility has comprehensive processes and procedures in the area of general facility, dormitory (if any) and/ or canteen (if any) management (e.g. cleanliness, ventilation, noise, lighting, toilets) in written manual that support adherence to social compliance requirement but they are not all being properly implemented. Minor83%

The facility has comprehensive employee safety processes and procedures in a written manual that support adherence to social compliance requirements but they are not all being properly implemented Minor78%The facility has comprehensive working hour and wages management processes and procedures in a written manual that support adherence to social compliance requirements but they are not all being properly implemented Minor76%

The overtime wage is not calculated and paid at the premium rate as legally required Moderate 75%Employees are not provided with at least one day off following six consecutive days worked. Moderate 73%Employees are not provided with at least one day off in seven (7) in accordance with local law. Moderate 73%The facility does not apply for testing of factors of occupational hazards at least once a year and the report kept for review Minor73%

Facility Strengths: Facility performance ranks in the top percentile of the population and/or has implemented a best practice process

tiRatingng

Global Freq. of Compliance%There are written records (correspondence, report, meeting minutes, etc) of a regular management review of the social compliance system Minor 59%



This report is for the exclusive use of the client of Intertek named in this report (“Client”) and is provided pursuant to an agreement for services between Intertek and Client (“Client agreement”). No other person may rely on the terms of this report. This report provides a summary of the findings and other applicable information found/gathered during the audit conducted at the specified facilities on the specified date only. Therefore, this report does not cover, and Intertek accepts no responsibility for, other locations that may be used in the supply chain of the relevant product or service. Further, as the audit process used by Intertek is a sampling exercise only, Intertek accepts no responsibility for any non-compliant issues that may be revealed relating to the operations of the identified facility at any other date. Intertek's responsibility and liability are also limited in accordance to the terms and conditions of the Client Agreement. Intertek assumes no liability to any party, for any loss, expense or damage occasioned by the use of this information other than to the Client and in accordance with the Client Agreement and these disclaimers. In case there is any conflict between the disclaimers stated herein and the applicable terms and conditions of Intertek incorporated into the Client Agreement, then these disclaimers shall prevail.

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WCA_STD_2-193701-20150130090510-F_IAR_47475

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