H&M Clothes Made in Collapsed Cambodian Factory

By KATE O'KEEFFE and SUN NARIN

The Wall Street Journal

PHNOM PENH—Swedish fast-fashion retailer Hennes & Mauritz HM-B.SK -0.13% said on Tuesday that some of its clothing was produced in a Cambodia factory where 23 people were injured in an accident on its premises Monday.

European Pressphoto Agency

A rescue team searches for workers after a shelter at a garment factory collapsed in Phnom Penh, Cambodia, on Monday.

The Stockholm-based retailer also said its orders had been placed at the factory without its knowledge, highlighting the lack of control some of the world's biggest brands may have over their supply chains.

Garment factories in Cambodia and other countries sometimes subcontract orders from retail brands to other factories to help meet demand or save costs, even though major brands often officially forbid the practice. Workers' rights activists condemn such subcontracting because they say it makes it harder to track the origin of garments, obscuring responsibility for working conditions at the factories. Subcontracted factories may also be subjected to less rigorous auditing than factories approved by the brands.

Andrea Roos, a press officer at H&M, said the placement of its orders to the factory, which hadn't been approved by the company, had been done without its knowledge by another approved supplier, which it didn't name.

"This is not acceptable, since we have a clear policy that all production has to take place in units approved by H&M," she said.

Ms. Roos said that H&M has requested that all its Cambodia suppliers meet Wednesday to participate in a workshop regarding the implications of using factories not approved by the company.

On Monday, 23 workers were injured when a rest area outside the subcontracted factory operated by Hong Kong's Top World Garment (Cambodia) Ltd., and located near the Cambodian capital of Phnom Penh, collapsed and fell into a pond.

The incident came just a few days after portions of another Cambodian garment factory collapsed, killing three people and injuring several others.

The accidents in Cambodia add to heightened scrutiny of worker safety in Asian factories following several more-deadly accidents in Bangladesh, where more than 1,000 people died in a garment building collapse last month and many others have died in garment-factory fires over the past year.

Koch Ousphea, chief administrator at the Top World factory, said Tuesday that 16 of the workers had been able to leave the hospital and return home. He said the factory gave each of the victims $50 and paid for their medical treatment.

He said he didn't yet know the cause of the accident or the name of the supplier with whom Top World was working.

Top World made two "smaller orders" of H&M garments, said Ms. Roos, without providing further details about the size of the orders.

H&M said it was "very sorry to hear about the accident" and said that staff from its Phnom Penh office met with the management of its supplier who had placed the orders. H&M demanded that the supplier take full responsibility for the affected textile workers, which it agreed to do, Ms. Roos said.

David Welsh, Cambodia country director for Solidarity Center, a nongovernmental organization affiliated with the AFL-CIO, questioned whether H&M should have known where its orders were going.

"In a small, homogeneous market like Cambodia, it's inconceivable that they can't keep track of where their products are going," he said.

A small Southeast Asian nation of 15 million people, Cambodia has over 400 garment factories registered to export goods. Although its garment sector has grown dramatically in recent years as wages have climbed in China, it still makes up a much smaller component of some companies' supply chains than other big apparel producers such as Bangladesh, which has a population of more than 160 million.

H&M auditors will visit Top World and remain in "constant contact" with Better Factories Cambodia, a United Nations factory monitoring program, regarding the factory, said Ms. Roos.

Another H&M press officer, Anna Eriksson, said, "This is the first undeclared unit case for our approved supplier, and as long as there is a willingness to improve, we prefer to remain a buyer and support our supplier according to an action plan to make the necessary amendments." She said H&M doesn't plan to contract business with Top World in the future.

Activist groups have linked earlier cases of subcontracting to other garment-factory accidents. Last year, for instance, Wal-Mart Stores Inc.'s WMT -0.01% clothes were found in the debris of Tazreen Fashions Ltd., a Bangladeshi factory that burned down in a fire in November, killing over 100 people.

Wal-Mart said the factory wasn't permitted to make its clothes. It blamed a third-party supplier for failing to ensure the garments were made in another facility that Wal-Mart had audited. After the fire, Wal-Mart said it was no longer using the supplier or the audited factory.

Sears Holdings Corp. SHLD +3.12% also said it didn't know its clothes were being made at Tazreen and later fired the U.S.-based supplier it said was responsible.

—Tom Wright contributed to this article.