Nike: Impact Upon Developing Countries Curtis Ardolino Nike is the world’s single largest producer of sporting wear, clothing, shoes and accessories. An Oregon based company founded in 1972 by Phillip H. Knight and William J. Bowerman. Nike’s broad range of products is the key to it’s success, it’s range includes Nike Skateboarding, Nike Golf, Nike Pro, Nike +, Nike Air Jordan and owns other big names such as surf brand Hurley; shoe manufacturer Cole Haan; and two large sports companies – Converse and Umbro.
Having such huge sponsorship contracts with many of the world’s biggest athletes and sports teams, these huge profiles are simply another outlet for Nike to promote their products. Nike currently employs over 31,000 people across more than 30 countries, Nike’s revenue for 2008 was a staggering $184 billion which is more than many small country’s GDP.
However since this huge multi-national corporation has moved nearly all of it’s production to cheaper Asian countries there has been much concern brought forth about the legality and ethics of the company’s operations in these countries, many claiming exploitation of labour and human rights abuses are taking place. Nike’s official website has a detailed set of “responsibilities” that it must adhere to in order to maintain a safe and fair working environment.
Many of the policies are to do with sustainable production and development of their products. However many investigations through current affairs programs have revealed that some of these responsibilities are not being carried out. Nike has been accused of allowing the factories to force their workers to work 7 days a week, long days, employing underage workers. Nike continually defends it’s factories saying that the reports that they receive and inspections that they carry out show no signs of abuses or exploitation.
Can Nike’s factories really be that bad for a developing nation? Nike pays it’s employees almost 10% more than the average wage in the countries that it operates, often food and accommodation is provided for their employees. Of course Nike’s choice to move it’s production overseas can be seen as one that takes advantage of cheap labour and no work cover but if put into perspective they are employing tens of thousands of workers who would otherwise most likely not have jobs.
Nike’s annual revenue has risen to almost $184 billion USD, this is more than the GDP of some of the countries that it manufactures within, the money that Nike brings into these developing countries is extremely beneficial to their economies. Last year Nike reported a turnover in Vietnam of over $11 billion USD, Vietnam’s GDP is currently at approximately $230 billion USD, around 5% of Vietnam’s GDP came from Nike alone, Nike currently employs around 7,000 workers in Vietnam, these employees pour money back into the economy and further help the local community.
Some disadvantages of Nike producing in these countries are that the struggle to police their code of conduct within the factories, it is not so much Nike that is “exploiting “ these workers but the factory owners who are set the rules within the workplace. The biggest argument that the consumer watchdog has against Nike is the huge price inflation that occurs from the factory to the shop. The average cost of materials for a Nike runner is around $8US, the shoe is produced for about $12. 0USD, the shoe moves on to the wholesaler, the average wholesale price is around $25, the price once it reaches American shores is around $60USD, these shoes are purchased by retailers for about $70USD and then sold at RRP of around $160USD. There is a price increase of over 1000%, the argument is that the more of the profits should be spent on making higher quality products and paying their workers more than they currently receive.
The media has also brought forth claims from workers of sexual harassment, physical abuse and psychological damage due to overpowering managers. The term “slave labour” has been used to describe the condition that the workers of the Nike factories are made to work in. Nike disagrees with these claims suggesting that their code of conduct is enforced and worker safety is assured.
Investigations have shown us that some of these policies have been broken and abuses have occurred as a result of this. There are always two sides two a story, Nike’s is really just one large argument. The argument against is that Nike exploits it’s workers and can set the price of their products as high as they want and the argument for Nike is that it brings billions of dollars into these struggling countries, employs thousands of people, gives these people security, accommodation and food.
In our countries Nike’s actions would be illegal but this is the exact reasons that they have shifted manufacturing overseas because of the fact that it is so much cheaper and efficient to produce their goods. This whole story is a double edged sword, Nike is the world’s largest manufacturer of sporting goods, they produce tens of thousands of items each day through cheap labour and sell their goods for huge profits.
Some may argue that they employ slave style workers, paying very little wage and allocating very little freedom to their workers. The countries that Nike produces in are often underdeveloped and underprivileged, Nike pays higher than average wage to it’s workers, it begs the question that if these conditions are so bad why do thousands of people continue to manufacture goods in Nike’s factories, these workers are given accommodation and meals, their wage is often spent within the local economy and supporting family within the countries.
Nike’s acts should not be condoned, but rather encouraged to improve either by paying workers more or allowing more freedom, but as long as people buy Nike’s products Nike will continue to produce and display record profits. Bibliography www. nike. com. au www. nikebiz. com http://xroads. virginia. edu/~CLASS/am483_97/projects/hincker/nikhist. html www. nike. com/jumpman23/historyofflight http://www. afrbiz. com. au/page. asp? 3648=417811&E_Page=416432