A widely-shared video posted on Chinese social media site Weibo shows a male employee standing in the middle of a circle, getting whipped with a belt. It also showed people drinking yellow liquid from a cup.
Three managers have been detained for five to 10 days each for their role in the employee punishments, it said, as the investigation continues. Other employees can be seen drinking yellow liquid from plastic cups while holding their noses.
According to the report, staff were subjected to a range of freakish punishments, including being forced to eat mustard, eat insects, drink water that had socks in it and having their head shaved.
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Screenshots of alleged internal company communications say: "If the sales goal has not been met by the end of this month, the team leader will have to eat three cockroaches for each failed sale". These contained threats of different kinds of punishment if they failed to meet the firm's sales targets.
According to reports on social media, underperforming staff at the company were also forced to drink toilet water or vinegar, have their heads shaved, or sell condoms on the street.
According to the South China Morning Post, citing Pear Video, staff had not been paid in two months and were reluctant to leave without first receiving their back pay. In August, labour activists that included students were arrested for supporting factory workers from welding machinery company Jasic International who were seeking to form a labour union after they were subjected to inhumane working conditions and later dismissed.