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Q&A ACCIDENT WING STAR SHOES CO. LTD. CAMBODIA

1. STATEMENT

Q1. What is the situation on the Wing Star factory accident in Cambodia?

On 6th July 2013, senior representatives of ASICS met with the families of the two workers who lost their lives following the accident at the Wing Star factory in May. The purpose of the meeting, which followed detailed and prolonged consultations with the ILO, local labour unions, NGOs, the sporting goods industry and garment manufacturing representatives, was to facilitate the compensation discussion with the families and to address any queries or concerns from them.

All of the stakeholders consulted by ASICS came to an agreement on the compensation details following frank discussions in June on how best to deal with issues around worker safety in Cambodia and determine the appropriate support for the victims’ families.

The families have accepted the compensation as well as ASICS’ and Wing Star factory’s expressions of deep sympathies for their losses.

Ken Loo, Secretary-General of the Garment Manufacturers Association in Cambodia said: “We are pleased that ASICS has facilitated with all key stakeholders the settlement with the victims of the accident at the Wing Star factory. As an organisation that seeks fair, safe and ethical working conditions for Cambodians, we support compensation that is equitable and reflective of the needs of workers and their families. We provided information and advice to ASICS to arrive at the appropriate compensation and hope with them that the families of the victims will be able to use the funds to move on and rebuild their lives after these painful losses.”

Ron Pietersen, Senior Executive Officer, Senior General Manager of ASICS’ Global Legal & Compliance Division said: “Safety and ethical working conditions are of paramount importance to ASICS. We were therefore shocked and saddened to hear of the accident on 16th May 2013. While the factory is not operated by ASICS, we wanted to ensure that adequate support and assistance are provided to those affected, and that further safety measures to prevent such an incident happening again are put in place.”

Actions that ASICS has taken following the accident include the following:

• Extended storehouses have been demolished and banned at Wing Star factory since the accident

• The factory has implemented stricter rules on building extensions and enlargements

• We have enforced inspections by the factory managers and by the Cambodian Security Office

• Evacuation and fire drills for staff are conducted at the factory and will continue on a periodic basis

• The factory has also agreed to set up a new Health and Safety Committee which convenes with Unions representatives to ensure the implementation of safety measures are constantly reviewed by the factory management and labour union representatives. The factory has reached out to a third party recommended by GMAC and ILO BFC for a building inspection

• We have instructed our Cambodian supplier factories to join the ILO Better Factories Cambodia programme

• We have also instructed all of our global supplier factories to review their fire and building safety provisions.

Contact e-mail regarding this matter: pr@asics.c.jp

2. BASIC FACTS REGARDING THE ACCIDENT

Q2. What was the cause of the accident?

The accident was caused by construction of a mezzanine extension between buildings without the proper authorisation and for allowing heavy equipment to be put there.

Q3. How many people have been killed or injured in the accident?

Two people were killed in the accident and twelve people were injured. All victims are Cambodian workers of Wing Star Shoe Co. Ltd.

Q4. When did Wing Star Shoe Co. Ltd. resume production in the factory?

Our priority was to investigate the cause of the accident and ensure those affected received appropriate support and adequate care. Therefore, following detailed consultation with the Labour Office, and only after validating that the facilities were safe to operate in, the factory reopened on Tuesday 21st May 2013 afternoon. The ongoing safety and welfare of our workers is paramount to us and we have put in place a long term plan after consulting with the relevant authorities, factory, labour unions and workers to ensure this does not happen again.

3. ASICS PRODUCTION AT WING STAR FACTORY

Q5. How long has Wing Star Shoe Co. Ltd. been working with ASICS? What percentage of the shoes produced at the factory are ASICS shoes?

Wing Star Shoe Co. Ltd. is a newly established factory and became operational early 2012. It has been manufacturing products for ASICS since its opening. As of May 2013, 100% of shoes produced at the factory were ASICS shoes.

4. ASICS WORKPLACE STANDARDS / SAFETY MEASURES & ACTION PLAN

Q6. What kind of standards does ASICS apply to its suppliers?

ASICS and all its suppliers are to operate on the basis of internationally recognized standards that are derived from guidelines of the World Federation of the Sporting Goods Industry (WFSGI), the ILO and the Fair Labor Association (FLA).

Q7. What systems does ASICS have in place to monitor safe and ethical working conditions at the supplier factories?

ASICS regularly assesses factories that produce for our brands. Such audits are performed in three different forms:

• Assessment by ASICS: our production, sourcing or corporate responsibility teams regularly visit suppliers to perform assessments and provide training/guidance.

• Third party audits: independent third party monitors perform audits on labour standards, health & safety and environmental management at facilities where our products are manufactured. We only work with auditors that are either accredited by the FLA or that are otherwise certified.

• FLA audits: as a member of the Fair Labour Association, the FLA annually audits part of our suppliers by their accredited monitoring partners.

Q8. What areas do the audits cover?

Our audits cover the following 17 areas:

• How well is ASICS policy understood among the workers

• How well the guidelines set by the company are understood by the workers

• Forced labour

• Child labour

• Harassment

• Discrimination

• Protection of female rights

• Freedom to assemble

• Wages

• Working hours

• Extra pay

• Fire safety

• Safety of electronic machinery

• Safety equipment

• Work environment

• Chemical safety

• Environment

Q9. Has ASICS ever audited the Wing Star factory? Were there unsafe conditions at the facility that were ignored?

After its construction in early 2012, ASICS has audited the factory twice (August and December 2012).

The area that collapsed was not completed during these inspections. At the time we concluded that the factory’s progress on improvements on labour conditions and safety as stated in ILO guidelines (including certification of fire safety) were compliant to international, national and ASICS’ standards.

Q10. How will you respond to factories which do not meet your safety and ethical standards?

Compliance with international safety and ethical working standards is of utmost importance for ASICS. We are fully committed to working closely with each of our suppliers, local labour organisations and other key relevant stakeholders to ensure such safety and ethical standards are adhered to at all times in all factories manufacturing ASICS products. We will take strong action if such standards are not respected.

Q11. What actions is ASICS implementing to improve workers’ safety at Wing Star and other supplier factories in Cambodia?

On the basis of a comprehensive consultation with all stakeholders, we have implemented the following changes:

• Extended storehouses have been demolished and banned at Wing Star factory since the accident

• The factory has implemented stricter rules on building extensions and enlargements

• We have enforced inspections by the factory managers and by the Cambodian Security Office

• Evacuation and fire drills for staff are conducted at the factory and will continue on a periodic basis

• The factory has also agreed to set up a new Health and Safety Committee which convenes with Unions representatives to ensure the implementation of safety measures are constantly reviewed by the factory management and labour union representatives. The factory has reached out to a third party recommended by GMAC and ILO BFC for a building inspection

• We have instructed our Cambodian supplier factories to join the ILO Better Factories Cambodia programme

• We have also instructed all of our global supplier factories to review their fire and building safety provisions.

5. SUPPORT TO THOSE AFFECTED BY THE WING STAR FACTORY ACCIDENT

Q12. How did you determine the adequate support to provide to those who were affected by the accident?

In reaching a decision on how best to support the victims and their families, ASICS facilitated compensation discussions with key stakeholders and used ILO Convention 121 as a basis for the calculation of appropriate compensation. We held detailed and prolonged consultations with the ILO, local labour unions, NGOs, the sporting goods industry and garment manufacturing representatives and incorporated a number of variables to reach an appropriate compensation level. Stakeholders agreed with the outcome, and the families of the two workers who lost their lives in the accident were satisfied with the settlement.

As for the injured workers, the factory has paid their full medical costs, provided transportation service or fee for hospital visits, provided leave of absence until they came back to work with full wage and benefit payment.

All of the injured were discharged from the hospital by 27 May, 2013.