VAUDE CSR-Report – Production in Myanmar

Production in Myanmar – a loyal partnership

VAUDE has two Taiwanese production partners in Myanmar who manufacture VAUDE products in three factories.

Maintaining Due Diligence – Despite the Crisis

In Myanmar since 2003. This is in a production facility owned by a Taiwanese partner that we have been working closely with for many years. In addition, since 2019 we have been working with another Taiwanese partner who manufactures our products in two of its production facilities in Myanmar.

We are aware of the risks associated with Myanmar as a production country and make significant efforts to ensure that our production facilities meet our high standards of due diligence. Since the military coup in February 2021, we have maintained our long-standing partnerships because we believe that the best way to support the people in the country is by helping to secure jobs and, consequently, the livelihoods of the workers. We maintain close communication with our partners, have transparency over the production facilities, and are familiar with the working conditions. We receive regular updates on the situation on the ground and continuously assess the situation.

Fair Wear's Position on Production in Myanmar

VAUDE has been a member of Fair Wear (FW) since 2010, an independent multi-stakeholder organization with the strictest standards for social responsibility in the textile industry. All production facilities in Myanmar were regularly audited by FW until the military coup. Based on external investigations and a dialogue with various stakeholders, FW presented a reassessment of the human rights situation in February 2023. FW member brands are advised to either responsibly exit the country or demonstrate how due diligence obligations can be reliably met if they choose to remain in Myanmar.

HRDD Plan to Fulfill Our Human Rights Due Diligence Obligations

In collaboration with other Fair Wear (FW) member companies, we have developed a comprehensive Human Rights Due Diligence (HRDD) plan to ensure compliance with our due diligence obligations as outlined in the Fair Wear Guidance. We submit a progress report on the HRDD plan and compliance with due diligence requirements to Fair Wear three times a year, as mandated.

A key element of our HRDD plan is the provision of complaint hotlines that allow workers to report any irregularities directly to Fair Wear. These hotlines remain active and are managed by the Burmese Fair Wear team in collaboration with member companies. Additionally, workers have access to the MADE project's complaint hotlines. Historically, these mechanisms have proven effective, with each complaint being taken seriously and addressed promptly.

Audits, another crucial element of our HRDD plan, continue to be conducted on-site in the factories.

Furthermore, our employees regularly visit the production sites and work closely with the facilities to adhere to the HRDD plan.

Exemplary Internal Complaint System

Our CSR team has supported our long-standing partner in Myanmar in establishing a functional internal complaint system.

Local Stakeholders

Since the military coup, Fair Wear is no longer active on the ground in Myanmar. Instead, we closely collaborate with SMART, the MADE Project, and EuroCham, the European Chamber of Commerce. Our partnership with SMART in Myanmar dates back to 2015. SMART is an EU-funded project aimed at improving labor and environmental standards in the textile industry in Myanmar. In December 2022, the EU launched the MADE Project (The Multi-Stakeholder Alliance for Decent Employment) with a funding of 3 million euros, a long-term on-the-ground program involving 200 factories and aiming to preserve at least 50,000 jobs in Myanmar. The MADE Project covers all aspects of compliance with social standards, including workplace audits, training, and complaint handling. SMART personnel visit factories on-site. All three factories producing for us in Myanmar participate in the MADE program.

Wage Level at Our Producers in Myanmar

Another crucial aspect of our HRDD plan involves measures to address factory-level risks, such as low wages. Brands continuing operations in Myanmar must demonstrate compliance beyond minimum requirements.

Since 2018, the minimum wage in Myanmar has been 4,800 Kyats per day. Except for a minimal increase of 1,000 Kyats/day in October 2023, there have been no other adjustments. The new minimum wage stands at 5,800 Kyats per day.

The national union CTUM advocates for a living wage of 10,000 Kyats per day. Together with our long-standing partner, Tah Hsin, we have implemented a living wage with the production of the Winter 2024 collection. Learn more here

Responsible Withdrawal

Due to one of our partners (with two production facilities in Myanmar) not meeting our stringent due diligence requirements, we will cease production there by the end of 2024 and undertake a responsible withdrawal. We will relocate a portion of production to our remaining producer in Myanmar.

A crucial part of our HRDD plan is enabling workers to report any issues through complaint hotlines managed by Fair Wear or MADE. This channel has proven effective in addressing concerns. We take every complaint seriously and handle each case with care. Over time, we've encountered recurring complaints in both factories, which we've consistently addressed. Despite our best efforts, some proposed improvements unfortunately weren't fully implemented. Despite repeated appeals to factory management, we've noted a reluctance to enforce these measures fully. This doesn't align with our strict standards for compliance with due diligence obligations at our producers. Additionally, we've seen an uptick in quality issues in processing our products.

Hence, at the end of 2023, we made the tough decision to end our partnership with this producer and execute a responsible exit from production. We've crafted a detailed exit plan and taken steps to gradually scale down production while ensuring full compliance with all due diligence obligations. Collaborating with other Fair Wear members, we'll also ensure that outstanding wage payments are settled correctly. The partnership will conclude by the end of 2024.

We understand that our withdrawal from production could result in job losses. As part of the exit plan, we're exploring various options for workers in case of layoffs or factory closures, including training programs or potential job placements with other production partners.

How long as VAUDE produced in Myanmar?

In 2003, VAUDE decided to relocate a part of its production to Myanmar. The reason for this was that our partner urgently needed customers to maintain the production facility there. We continue to work with this partner, who has a production facility in Myanmar.

Our partner began producing in Myanmar as early as 1999, primarily for the American market. However, when the USA imposed a trade embargo on Myanmar in 2003, many customers for our partner disappeared. Consequently, the producer approached us, asking if we would consider relocating some production to Myanmar. Facing financial difficulties due to the embargo, the operation in Myanmar urgently needed new customers. In order to sustain jobs there, VAUDE made the decision in 2003 to place orders in Myanmar. Since then, we have been manufacturing a portion of our products at this facility in Myanmar.

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