Nike in South Asia

Aybey Boran

Nike In Southeast Asia

Nike, which had been a victim of media offensive for quiet some time faced some serious criticism from media and human rights watchdog groups. Nike which had been subcontracting most of its manufacturing through its suppliers had to deal with issues ranging from workers’ physical and sexual abuse, underpayment of workers, unsafe and unhealthy work environment etc. But major issues among all of the ones mentioned above were substantially low wages paid to workers and physical punishments given to workers as a result of poor or slow performance. All these issues questioned the moral and ethical responsibilities that Nike must bear as one of the biggest and most profitable sports business in the U.S. and abroad. Essentially, Nike had no responsibility of any kind of workers who worked for its subcontractors. But since all these operations were maintained and operated solely for Nike, it bore responsibility for providing or pressurizing its suppliers to provide their employees and workers compliance with local government’s safety, health and wages regulations. The severity of criticism ranges from workers being made to work at minimum wages, in one instance, as low as $2 a day to physical abuse of workers up to a point where they passed out. In Vietnam Nike’s supplier made workers work for them without any pay increase for years and years until it was brought to government’s notice. All sort of physical and emotional abuse were reported including the extreme humiliation of workers. An example of that was beating of a 15 Vietnamese women by their forewoman on their faces by a shoe sole. Some critics even compared these practices to early 1900 sweatshop-era in United States. Also a leak memo from Nike’s internal audit revealed workers having respiratory problems due to poor ventilation system and level of harmful chemicals exceeding the standard set by government in Vietnam.

After all said and done, Nike tried hard both at international and local levels to regain its lost reputation. Although it is an overstatement to say that Nike lost its reputation, but this issue was big enough for Nike to implement some vital changes in its business practices and ethical standards in its manufacturing factories abroad. Even at its corporate level, Knight admitted that Nike was not prepared very well to deal with media offensive.

Nike’s image was tarnished in some circles or its brand loyalists, who had an impeccable image of it in their minds. It is quiet possible that Nike’s sales might have been affected due to its exposed business practices but overall Nike being such a big name and the largest producer of footwear in the world maintained a considerably good level of sales. It can also be considered another chance given to Nike by its consumer to improve the well-being of its overseas workers.

At national level, Nike established measures to improve its image in the eyes of its consumers, activist groups and government. Being harshly and bluntly criticized, it offered congress members to visit its factories. It also hired an accounting firm named Ernst and Young to do the audits of factories regarding safety and wage issues. Nike discontinued business with four of its factories that were allegedly paying less to their workers. It had its contractors signed a memorandum that abides them to comply with all the local and federal government rules and regulations. Not only that, but it also reconsidered increasing its public relations office staff. After so much scrutiny, Nike gave some serious thought to make some essential changes in its public policy and overseas manufacturing operations. Hiring Andrew Young, may have been a wise decision on Nike’s part but it didn’t appeal people generally. Although Nike sent him to his factories in Indonesia and Vietnam, it didn’t have much of an effect on its image. Andrew, hired due to his unique background, reported not much different from what Nike expected him to be. His reports which described Nike’s subcontractors’ business to be fair and ethical and according to health and safety standards, were published in almost all major newspaper to show the conformity with international safety laws. But this was just one effort to promote its image. Basically, it can be considered a countermeasure to nullify the effect of media offensive. At the moment and for the records it was a good effort but not that effective.

Phil Knight, a man who might have been under extreme pressure at the time, must have made this statement “ Nike can lead countries out of poverty” to blow off some steam. So far, we haven’t seen any good solid example where Nike or a company of equal size brought any country out of poverty. This is an overstatement. Nike probably won’t have changed its practices if it wasn’t brought into light. Still, its contribution made to those countries and surveys conducted by private groups differ a great deal. So it might not be what it seems like. If Nike really wants the welfare of its workers and laborers, it must start with wages that if not equal to U.S standards should be well above those countries’ local level. There is no denial in the fact that profitability is Nike’s ultimate motive. So it’s upto Nike to decide if it can afford to lose some of its profits.

As far as wages are concerned, Nike should let the international organizations,just any ones which are unbiased and fair, decide the fair minimum wage instead of relying on its own internal audits. Obviously, the wages need to be increased periodically to keep workers satisfied and happy with their work. Also, it shouldn’t just be about wages. It should also take measures to provide workers with improved job benefits such as affordable health insurance etc.. It is claiming to have increased wages but it should keep raising it every year to a considerable minimum level for its workers to survive the inflation and rising costs of living in those countries.

Nike learnt its lesson from its known or unknown mistakes. Nike has already made a great effort to reduce any future discrepancy. Still its unavoidable for it to avoid media and watchdog groups which make up for the large part of any scandal or scrutiny. Since we haven’t heard much since its last scandal, which means the issues were addressed, if not completely, at least to some extent which is a healthy sign both for its growth and prosperity. The best way will be to keep its workforce happy and especially strict laws and penalties should be imposed, should any subcontractor or factory owner mistreats or abuses his or her workers. It sets a good example for any other upcoming or large multinational corporations that workers’ safety, prosperity and well being are the top most priorities in its own prosperity and well-being.