Bike tech giant Shimano has allegedly sold gear produced by a supplier that has been accused of “modern slavery,” according to a report in the British newspaper The Telegraph.
The report, which was published online early Thursday morning, revealed that the Japanese company, which outfits bikes for commuters, WorldTour racers, and just about everyone in between, has used a Malaysian supplier that has allegedly engaged in dubious and abusive labor practices, some of which, according to some labor experts, equate to “modern slavery.”
Per the report, workers at the Kwang Li Industry company in Malaysia say they have been “subject to physical abuse and threats, unlawful salary deductions and recruitment fees, and unpaid suspension.”
Such salary deductions have reportedly pushed many of Kwang Li Industry’s workers below the threshold of Malaysia’s monthly minimum wage, “leaving them unable to pay off expensive recruitment costs—equivalent to seven months of salary—tied to their employment,” according to the report.
The Telegraph’s reporting draws from interviews with current and former Kwang Li Industry employees, analysis and examination of paper trails such as pay slips, employee contracts, and, as many of the workers are migrants from Nepal, correspondence between the company and Nepal’s embassy in Malaysia.
According to The Telegraph, these workers are often sourced using third-party agents, who charge the migrant workers expensive recruitment fees, which are often financed via high-interest loans.
However, per the report, many of the migrants are allegedly stripped of their passports upon arrival in Malaysia, rendering them unable to leave and therefore trapped within the country. This is a process known as “debt-bondage,” in which the workers are then reportedly forced to work off their debts while being subjected to life in squalor and abysmal pay that might never get them out of their debt.
Additionally, The Telegraph reports that managers are armed with the constant threat of deportation for the migrant workers if they don’t meet certain productivity targets.
According to the report, in the fall of 2022, with the cycling industry still trying to catch up from the pandemic-induced bicycling boom, Kwang Li Industry outsourced a Nepal-based recruitment agency to find 251 male workers for its Malaysian factory.
There, they would be tasked with building and assembling a variety of Shimano groupsets. The men were reportedly promised a salary of 1,500 Malaysian Ringgit per month (roughly $515 as of this writing) over a contract that would last two years. The Telegraph reports that another 207 Nepalese migrants were recruited by these third-party agents in January and February 2023of this year.
In a document reviewed by The Telegraph, Kwang Li agreed in writing to cover the charges incurred by hiring the recruiting agency. However, those costs—which included medical screening, travel costs, and services charges—are reported to have trickled down to the migrant workers. The deductions that Kwang Li reportedly took off the top of worker salaries amounted to as much as much as one-a third of some employees’ monthly income.
Per the Telegraph report, “Kwang Li Industry said it ‘had no knowledge that the workers were asked to pay any recruitment fee [at] any point during the process.’”
The report claims that one worker was paid what amounted to around $201 for a month’s worth of work.
And at least one employee, a Bangladeshi worker, was reportedly “struck across the face by his supervisor for making a ‘very small mistake.’” according to The Telegraph. According to two other employees reportedly said, that man was subjected to further verbal abuse and eventually suspended for one month without pay. Per the report, long suspensions resulting from mistakes or unmet production goals were common.
As the cycling boom cooled off and production caught up with demand, Kwang Li was forced to cut employee hours, which, in turn, would delay the repayment of their debt, according to The Telegraph. Additionally, Kwang Li is reported to have forced the resignations of 82 workers earlier this summer, nearly 18 months before the end of their contracts.
Per the report, Kwang Li has “strongly denied” these allegations, with a company spokesperson telling The Telegraph saying, “We vehemently deny all the false allegations made against us. This includes but not limited to the allegations of physical abuse and threats, illegal salary deductions and recruitment fees, and unpaid suspensions. We wish to state that our company has adhere[d] to all the requirement and regulation of the labor law in Malaysia, which governs various aspects of employment, including working hours, minimum wage, and other related matters.”
In response to the report, Shimano has launched an investigation into Kwang Li. “This is a serious accusation and it stands against what we believe in at Shimano,” a Shimano spokesperson said in a statement to Bicycling. “We are currently investigating the matter with the relevant parties and will use appropriate action to ensure the situation is resolved.”
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