Introduction
Nike, a multinational corporation, has been accused of utilizing sweatshops and worker abuse to manufacture and produce apparel and footwear in East Asia. After increasing prices and the cost of labor in Taiwanese and Korean factories, the company started contracting in other nations in the region. From a financial standpoint, it is sensible for a business to find means to minimize the cost of production to ensure the profits are high. However, it subcontracted without assessing the conditions but according to the lowest bid. It was not until various reports emerged about the insufficient payment of employees and poor working conditions in the Indonesian factories that the sweatshops were scrutinized by the media and human rights activists.
Although more reports have emerged about the mistreatment of workers in these areas, Nike claims that they have less control over sub-contracted factories. Starting in 2002, the company began auditing its factories for occupational safety and health. Backlash, as well as its public relations impact, prompted the organization to alter methods, enhance conditions, and start implementing social responsibility reports in the later years. It has started initiatives that aim to better its factory conditions. The major issue is the question of ethics and how it applies to this situation.
For instance, it is prohibited in the United States to import goods produced by means of forced labor or when the conditions can be described as inhumane. Thus, apart from appearing unethical, it is as well illegal. However, the opponents argue that it is ethical or morally right since those countries with factories have no protective laws against such. They understand that it may appear wrong in the Western world, but it is a common and almost acceptable reality in other places. This paper aims to study the issue of Nike having sweatshops in Asia and how the company has adopted unethical business practices.
Discussion
Proponents
The majority of people believe that it is unethical to benefit from cheap and forced labor. Ethics refers to moral principles that dictate an individual’s conduct. It judges whether or not something someone does is morally right or wrong. In this case, the proponents argue that it is unacceptable that a company manufactures its products through the mistreatment of other people (Eyada 35). An example is when low-paid workers have to endure working for extended period without being paid for overtime. Additionally, receiving threats from the employer that they will be fired if they fail to comply (Cihon and James 34). Some managers are even subjecting employees to risky situations without protective gear. If you consider that the majority of such workers are mostly placing their lives in danger in the manufacturing industries, it is safe to state that a company such as Nike is unethical in its approach to sourcing labor.
Apart from risking the life of a worker, the poor working conditions and low pay are degrading to human life. As suggested earlier, the company promised to start reviewing the working situation of individuals before subcontracting a factory (Koljatic et al. 22). The chairman, Philip Knight, pledged to allow outsiders from labor as well as human rights groups to join independent auditors who scrutinize the factories in Asia, interview workers and evaluate working conditions (Williams, 398). When he stated this, it was universally known that the situation would change and, particularly, there would be no more sweatshops for Nike (Koljatic et al. 23). However, it is clear that he lied to protect the image of the company and protect it from the critics.
In 2020, it was written that the Chinese government had actively forced several women from Uyghur to work in the factories producing Nike shoes. Fifield claims that the majority of the females were young (Fifield and Anna, 8). This is despite the company stating that the factory has stopped utilizing forced labor (Koljatic et al. 23). The South Korean-owned Taekwang factory is among the largest suppliers, manufacturing more than eight million pairs of footwear for the brand (Koljatic et al. 23). It partnered with the China to run forced labor programs that are connected to criminal activities against humanity.
Another program takes the Turkic residents from areas in Xinjiang, northwest China, and forces them to leave behind their kids and other members of their families to work in factories across China. Report shows that the company’s management continued to involve independent third-party auditing that confirms that the facilities lack forced workers, as suggested by Rumainur (13). Auditors specialize in detecting forced labor can do interviews with the local people and non-workers to check whether or not a multitude of transferred Uyghurs still work at the factory (Koljatic et al. 24). However, considering that the brand’s past audits failed to notice its supplier’s participation in forced-labor initiatives, it is hard to trust that the novel audits are strong enough to discover the truth. When asked to provide or be transparent about the overall description of the auditing protocol, the communications department declines.
The brand’s silence on the quality of the audits is concerning. It is established that it is possible for even comprehensive audits to fail to discover the Uyghur forced labor unless particular protocols are in place. This is something many human rights groups think that Nike is hiding from the business world. Social-compliance audits often cost one thousand dollars or more and focus on a factory’s working conditions as well as environmental practices (Koljatic et al. 24). They might comprise interviews with managers and employees, visits to workers’ dormitories, and assessment of time sheets and wage documents. It is essential to remember that Uyghur workers are not allowed to speak freely to auditors without putting their lives in danger.
It is clear at this point that the brand understands the operations in the factories they subcontract not only in China and South Korea but other areas in Asia. However, they choose not to act since they know how they benefit from cheap labor. If someone promises something and then fails to fulfill it, it means that they have acted unethically (Oviedo 126). The outcome can be that they lose respect or trust, possibly resulting in a society filled with discontent. When talking about how unethical Nike is, the majority of people do not understand.
It is true that in the countries in which the contracted factories are, the governments have not set nor implemented laws that prevent forced labor or low minimum wages for workers. It is truthful of the brand to state that it possesses no control over those facilities as they are in other nations. However, it is immoral to lie to the public in general by promising to perform audits that could help to stop the actions (Oviedo 126). If the audits were designed to be effective, it would have been easier for the company to disclose the audit protocols, but they have not.
Opponents
Some individuals believe that Nike has the right to make decisions that positively impact its profit margins and place them in a great place to be competitive in the market. Many businesses aim to conduct operations at a low cost by acquiring raw materials and labor at the lowest expenses (Kim 1512). It has been mentioned earlier that after the cost of labor in Taiwan and Korea rose, the brand started contracting factories in other nations. Since the brand can produce more efficiently and minimize the costs as a result of outsourcing, it is able to compete better in terms of price. This allows the company to price its brand competitively when compared with others that produce and sell similar products (Eyada 38). Reduced competition can aid Nike in cornering the market for its specific items. Subcontracting factories in the Asian region enables the firm to eliminate some financial obligations it might face with the confines of tax laws in the United States.
Additionally, when it is outsourcing to subcontractors, it assumes less risk related to production. Being inclined toward growing and finding means that can facilitate that should not be termed as unethical. It is true that what the governments in those regions are encouraging is unethical and against humanity. However, considering that Nike has less control over those factories means that it should be exempted from any ethical obligations (Koljatic et al. 24). Many people blame the brand due to inadequate information on the idea of subcontracting. In most instances, a firm subcontracts another business to perform tasks that cannot be done internally due to various constraints.
In the case of Nike, it is difficult to maintain similar profit margins if it had the same factories in the United States. The minimum amount that an employee is supposed to receive is $7.25 per hour, according to federal legislation. Multiple states have their minimum wage legislation as well (Kim 1514). In the event that a worker is subject to federal and state minimum wage laws, the worker is entitled to the higher of the two. The federal minimum wage provisions are in the Fair Labor Standards Act (Koljatic et al. 23). The FLSA does not offer wage collection procedures for a worker’s usual in excess of those needed by the FLSA. Nevertheless, some states have legislations under which one can file such claims. When compared to the majority of Asian nations, the United States is more concerned about the welfare of the employees from the view of pay. For instance, in Indonesia, a worker in one of the sweatshops is paid $0.20 per hour (Koljatic et al. 24). This means that the employer spends less on the workforce’s compensation.
For any business, choosing to have the products manufactured in Indonesia makes more sense financially, which is not immoral but strategic. It would have been unethical if Nike handled every part of the operation in the factories, especially human resource management. Additionally, the company has made several efforts to ensure that everyone working for them directly or indirectly is not only paid well but enjoys good working conditions. For example, for a long time, the company has continued to conduct audits for the factories they subcontract. Others have emerged to blame Nike for the continued mistreatment of workers while they themselves have not found any proof to close most of the factories (Koljatic et al. 25). In all the audits, it has not been clear that the products are being produced by individuals being paid lower than the average standards or whether they are forced to work.
While many human rights agencies continue to pressure the brand to discontinue its operations in Asian countries, it is hard to do that without concrete evidence. Additionally, it is even unethical to abandon business activities with individuals or businesses they have an agreement without giving a proper reason. Before collaborating with international firms or subcontracting factories, there are contracts signed between the parties involved (Koljatic et al. 27). All the stakeholders are obligated to honor the contractual terms and conditions. It is a bad business practice to cease operations due to the unproven notion of the other party. Therefore, it is hard to claim that Nike is unethical in its business operations through subcontracting factories in Asian nations.
Conclusion
The paper has examined the issue of Nike having sweatshops in Asia and its adoption of unethical business practices. To summarize, it is clear that despite having less control over the operations of the factories they subcontract in Asia, the brand is unethical. Firstly, the chairman and chief executive lied to the public in general that they would allow outsiders, that is, from labor and human rights groups, to work together with independent auditors who scrutinize the factories in Asia. Later, it was discovered that the company did not adhere to transparency when it could not reveal the audit protocols.
Stating that the company has less control, and that is why it is less responsible, is misleading. It should be noted that Nike, similar to other multinational brands, takes advantage of places that offer low-cost labor. They do this to ensure that they save much and maximize their profits (Kim 1512). Additionally, it is a tactic to remain competitive in the marketplace. As mentioned earlier, after the cost of labor in Taiwan and Korea rose, the company started subcontracting to other nations in the region. This shows that it continues to better its profit margins at the expense of other people (Kim 1513). It can even be said that its choice of nations to have factories in is suspicious.
Nike understands that subcontracting factories in places such as the United States will require them to pay workers more and ensure better working conditions. It is true that in countries such as Indonesia and South Korea, the governments have not set nor implemented laws that prevent forced labor or low minimum wages for workers. For instance, in Indonesia, a worker in one of the sweatshops is paid $0.20 per hour. In the United States, the minimum amount that a worker is supposed to earn is $7.25 per hour, as determined by federal legislation. Several state governments enacted their minimum wage legislation as well.
In the event someone is subject to the federal and state minimum wage laws, they are entitled to the higher of the two. The federal minimum wage provisions are in the Fair Labor Standards Act. As much as the company might try to escape from being accountable for its actions, it is impossible to ignore what is happening. Many people have been documented reporting that they are in forced labor in factories known to be working with Nike, and they are not allowed to return to their homes. It is important that the brand improves its efforts toward better working conditions and compensation.
Works Cited
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