OSAKA, Japan (BRAIN) — Shimano says it is investigating after a news report that a supplier to its factory in Malaysia has operated under conditions that are “akin to modern slavery.”
The U.K.’s The Telegraph reported Thursday that the factory, Kwang Li Industry, has deducted fees from foreign worker paychecks that reduce pay by as much as a third, putting the pay below Malaysia’s minimum wage.
Additionally, the article said workers from Nepal and Bangladesh have to take out high-interest loans to pay recruitment fees to a third-party agency the factory uses. According to The Telegraph, the recruitment payments by workers are in breach of a 2018 memorandum between Malaysia and Nepal that requires employers to pay recruitment fees.
“This is a serious accusation, and it stands against what we believe in at Shimano. We are currently investigating the matter with the relevant parties and will use appropriate action to ensure the situation is resolved," Shimano said.
The Telegraph also cited reports of worker abuse in the Kwang Li factory. Andy Hall, a British labor rights specialist, told The Telegraph that conditions at the factory were "akin to modern slavery."
Kwang Li denied to The Telegraph knowledge of the recruitment fees and strongly denied the reports of worker abuse.
BRAIN has reached out to Kwang Li but has not received a response yet.
Shimano supplied a statement to BRAIN on the situation: “This is a serious accusation, and it stands against what we believe in at Shimano. We are currently investigating the matter with the relevant parties and will use appropriate action to ensure the situation is resolved," the company said.
BRAIN has also sent questions to Shimano through its U.S. office. A representative told BRAIN the questions will be sent to Shimano’s offices in Japan for response. BRAIN has also reached out to several major bike brands and other manufacturers.
The Telegraph said its investigation included “first-hand interviews with current and former workers at Kwang Li Industry and analysis of salary slips, contracts, and correspondence exchanged between the company and Nepal’s embassy in Malaysia.”
Shimano makes hubs, derailleurs, wheels, pedals, freewheels, and brakes at its Malaysia facilities, which it first established in 1990. Initially the factory provided lower-priced products but Shimano later added production of higher-end components including Dura-ace wheels.
In June 2021, Shimano was forced to close its Malaysia factory for several weeks due to COVID-19 conditions, after operating at 60% capacity for some time. The factory re-opened in July.
According to its website, Kwang Li was established in 1992 as an assembler of bike parts. It now provides assembly, printing, laser engraving, and packaging services for several industries. Kwang Li Industry and Shimano's Malaysian headquarters are both in Pekan Nanas, a town in the state of Johor, Malaysia.
