Americans are looking for inexpensive goods and delivering what consumers want has led most retail and brand manufacturing businesses overseas to countries such as China where labor is cheap.
While inexpensive goods are taken for granted by many in the U.S., the basic American sense of fair play has led many to question whether there was an unjustifiable expense being paid by the very same factory workers making the clothing, consumer electronics and other products imported into this country every day.
The call to protect the rights of workers overseas was heard by domestic companies such as Wal-Mart that took direct action to address the treatment of factory workers.
Secrets, Lies, and Sweatshops, the cover story of the Nov. 27 issue of BusinessWeek, reports that in spite of the efforts of Wal-Mart and others, factories in China flout codes of conduct with a variety schemes, such as carrying two sets of books to avoid being caught by inspectors.
An unidentified compliance manager for a major multinational who spoke to the publication said only about 20 percent of Chinese companies were paying workers their legal wage while ninety-five percent flouted regulations regarding employee work hours.
American companies doing business in China are aware that codes of conduct are being ignored.
"We've come to realize that, while monitoring is crucial to measuring the performance of our suppliers, it doesn't per se lead to sustainable improvements," says Hannah Jones, vice-president for corporate responsibility for Nike Inc. "We still have the same core problems."
Zhi Qiao Garments Co. manufactures goods for Nike. The company's general manager, Peter Wang, said it is unfair to lay all the blame on factory bosses. "Any improvement you make costs more money... The price [Nike pays] never increases one penny, but compliance with labor codes definitely raises costs."
Ron Chang, the general manager of another Nike supplier, Shoetown Footwear Co., echoes Mr. Wang. "We can't ask Nike to increase our price," he said. "How can we afford to pay the higher salary?"
To keep Nike's business, Mr. Chang said his company has had to reduce its profit margins from 30 percent to five percent over an 18-year period.
Discussion Questions: There's plenty of blame to go around when discussing conditions faced by workers in overseas markets such as China. What's the answer to the problem?