Samsung: Facing Same China Abuse Charges As Apple, Can It Also Emerge Unscathed?

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Samsung Electronics (Seoul: 005930) said shipments of its latest-version Galaxy S3 smartphone exceed 20 million, only six weeks after passing the 10 million mark. The announcement cements the South Korean electronics giant's lead as the No. 1 seller in the Android OS sector.

The news sent Samsung shares up 7,000 won (US $6.17)in Seoul trading Thursday, closing at 1.196 million won. They've gained 65 percent in the past 52 weeks.

Separately, China Labor Watch, a U.S. group that previously charged Apple (Nasdaq: AAPL), the world's most valuable company, with creating abusive labor conditions at Chinese factories owned by contractors, charged Samsung with similar problems both at its own factories as well as those of contractors.

A Samsung representative said the company will investigate them. "We partly agree with the report there are times when workers need to work overtime at some plants, especially when we launch new products," he said.

Based in New York, China Labor Watch said it had probed practices in 12 plants in China it owns or operates, as well as one that's part of its supply chain, where it determined children are employed.

Similar to what the group found in factories operated by Taiwan's Hon Hai Precision Industry (Taipei: 2317) under contract to Apple,  China Labor Watch asserted the abuses included forced overtime, exhausting working conditions, lack of valid labor contracts, unpaid work and "regular crude treatment of workers including verbal and physical abuse.

Unlike Apple, of Cupertino, Calif., Samsung is one of the world's biggest manufacturers of electronics, including semiconductors, PCs, phones, appliances and heavy equipment. It's also one of Apple's top suppliers, a fact that entered into the recent patent-infringement case in which a jury in U.S. District Court in San Jose, Calif., awarded Apple $1.05 billion in damages.

The controversy over made-in-China Apple products forced CEO Tim Cook to visit two Hon Hai factories in China during his March visit during which he pledged alleged abuses would be remedied. Hon Hai said it would begin new monitoring and also raise compensation. The factories account for virtually all of Apple's iPhone 4S, iPad and iPod products, as well as its Macbooks.

Samsung's trumpeting of its Galaxy S3 sales milestone followed Wednesday's debut of three new Android OS phones from Google (Nasdaq: GOOG), the No. 1 search engine, which now owns the Motorola brand as well as rights to Android. 

In the second quarter, market researcher Gartner (NYSE: IT) reported, Samsung was the No. 1 seller of mobile devices, with nearly a 22 percent share, while Motorola's was only 2 percent. The Galaxy S3 was launched in the third quarter.

Shares of Apple rose $3.96 to $674.19 in midday trading. They've gained nearly 78 percent in the past 52 weeks. Google shares set an all-time high of $694.45  before easing to $694.26, up $13.54.

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