A Case Analysis in International Marketing, MGT 155 Department of Agribusiness Management and Entrepreneurship, College of Economics and Management, University of the Philippines Los Banos College, Laguna Design by Kimbo Ras, 2015

1. Concerns about
Factory Safety &
Worker Exploitation
in Developing Countries

2. Sweatshop
A factory or workshop, especially in the clothing industry,
where manual workers are employed at very low wages for
long hours and under poor conditions (Google Definition).
Nike sweatshop

3. 7 Countries With Horrific Sweatshop Situations
http://www.therichest.com/rich-list/most-shocking/7-countries-with-horrific-sweatshop-situations/?view=all

4. Unsafe working conditions at the Menderes
Tekstil factory in Denizli, Turkey resulted in
the deaths of four of its workers. On a daily
basis, workers are faced with harassment
and poor working conditions. They are
exposed to the risks posed by sandblasting
in order to create the effect of distressed
denim, which has led to silicosis among
factory workers.
Turkey

5. Those working in the textile and garment
industry in Indonesia receive exceptionally low
wages, the minimum wage amounting to $2
per day, or Rp 5200. Workers have claimed
that they have been mentally and physically
abused by their supervisors receiving slaps
and being called names during working hours
for making minor mistakes. Nike has
confirmed that these allegations are true and
are continuing to work on improving
conditions for factory workers.
Indonesia

6. Mexico
The enormous pressures facing workers at
one Mexican sweatshop sees employees
expected to meet a quota of 1,000 items
per day. In order to meet this quota,
workers would need to produce more than
one item a minute. GlobalExchange.org
have stated that the ‘quota is so high that
the workers are unable to have a drink or
go to the toilet all day.’

7. China
A shocking 482 million people in China ‘live
on less than $2 a day’, according to a
report carried out by War on Want. For
many of these people, employment in
sweatshop factories is their only option.
They are forced to work under extreme
conditions posing severe health risks. The
recent fashion trend of distressed denim is
created by using sandblasting, a technique
that exposes workers to ‘silica dust particles
which severely damage their respiratory
passages causing silicosis’.

8. Cambodia
They are working in extremely long hours
in excessive heat with few breaks. The
report also found that many sweatshop
factories in Cambodia employ children
under the age of 15 which is a breach of
the law.
A report carried out by the International
Labour Organisation last year found that
‘24 factories kept emergency exits locked
during working hours’ putting workers at
serious risk given fire is the greatest threat
to these factories.

9. Vietnam
Trafficking gangs in Dien Bien, one of
Vietnam’s poorest provinces, recruit
children under the guise of fair
employment only to force them into
sweatshop factories in Ho Chi Minh City
where they work excessively long hours for
little or no pay. If workers do not meet their
daily quota, they are at risk of beatings or
fines. Employees were only allowed to use
the bathroom for ‘eight minutes a day,
including brushing your teeth, washing,
going to the toilet.’

10. Bangladesh
On the 24th of April 2013, the world was
faced with the consequences of cheap
clothing. The eight floor in Rana Plaza
building in Bangladesh’s capital Dhaka
collapsed. Tragically, 1,100 employees died
as a result of the collapse with over 2,000
injured. The Maquila Solidarity Network has
stated that this and other buildings have
collapsed ‘as a result of factory owners
violating building codes and health and
safety regulations.’

11. 10 Major Clothing Brands Caught in Shocking Sweatshop Scandals
10. H&M
9. Nike
8. Walmart
7. The GAP
6. La Senza
5. Victoria’s Secret
4. Disney
3. Sears
2. Joe Fresh
1. Marks & Spencer
http://www.therichest.com/rich-list/most-shocking/10-major-clothing-brands-caught-in-shocking-sweatshop-scandals/?view=all

12. Should toy company executives take
steps in ensuring safety and welfare of
factory workers in developing
countries?
Bangladesh sweatshop fire

13. Yes
It is the company’s responsibility to make
the workers feel secure and comfortable
through safe and healthy working
environment.
_________________________________
“Social responsibility is the
responsibility of an organization
for the impact of decisions and
activities on society and the
environment through transparent
and ethical behavior that is
consistent with sustainable
development and the welfare of
society; takes into account the
stakeholders.“_________________________________
ISO 2600 Working Group (2007)
Content moderation sweatshop in the Philippines

14. How was the number of manufacturing
jobs in triad countries affected by low
wages paid in developing country
manufacturing operations?

15. Dramatic decrease in
manufacturing jobs in high
wage triad countries.

16. Woods (2015) cited the report provided by the Information Technology and
Innovation Foundation (ITIF) which shows that since year 2007, in the US, the
manufacturing sector is down 3.2% — 15,000 fewer production facilities and 2
million jobs have already lost.

17. If higher wages in toy factories led
to higher prices in the United
States for toys, how would the toy
industry be affected?

18. Generally, if the toy industry will make the customers
shoulder the increased labor cost in manufacturing
toys, the quantity demanded will decrease.
In the US, purchasing power is high
enough that a change in price
cannot significantly affect the toy
industry. An increased-price toy
made from a developing country is
still cheaper than those made in the
triad countries.

19. Should the subject of working conditions be
included in international trade agreements?

20. There is little compelling
empirical evidence suggesting
that mandating higher labor
standards will improve wages
and working conditions in
developing countries. Some
evidences show that it may
make poorer workers worse off.
• As costs increase, the degree of leverage to pursue producing
in that country decreases since lower labor costs is what got
multinational companies there in the first place.
• There was a significant degree to which workers were
displaced when minimum wages were raised in different
amounts.
• Protective labor legislation can backfire when measures are
too costly for the employer.
Latin America. Reduced hiring rate in some countries due to
high levels of severance pay (Heckman and Pages, 2000).
Senegal. Attempts to create more secure employment in the
Labor code resulted in increase in short-term three-month
contracts (Terrel and Syenjar, 1989).

21. There is little compelling
empirical evidence suggesting
that mandating higher labor
standards will improve wages
and working conditions in
developing countries. Some
evidences show that it may
make poorer workers worse off.
• If the employer increases the wages of the workers, it goes
with the event that workers are to produce more.
• Just increasing the minimum wage does not translate to a
possible better standard of living as inflation will only keep
up with the increase in wage since no change in actual
value of productivity occurred.
• History also states that imposing “outside” institutions or
policies on countries that are not ready for them, is a
recipe for failure.

22.  Prohibition of forced labor
 Freedom of association and protection of the rights to organize
and to collective bargaining
 Equal remuneration for men and women for work of equal value
 Nondiscrimination in employment and occupation
 Minimum age of employment of children and abolition of worst
forms of child labor
International Trade Standards
A good set of standards for international trade should include these.
These standards are from the
International Labor Organization
which are not implemented in all parts
of the world due to the presence of
constraint earlier discussed.
How expensive, branded shoes are made in India

23. Are companies doing responsibly enough in ensuring
that human rights standards are upheld for workers
both inside and outside their home countries?

24. No
Sweatshop, Human
Trafficking, and Child
Labor STILL EXIST
“America has stronger labor
laws than most undeveloped
countries, but it is not free of
sweatshop conditions. Many
labor violations slip under the
radar of the US Department of
Labor.”
DoSomething.org
“The governments of many
developing nations are
reluctant to enforce strong
worker-protection laws. They
view cheap labor as one of
the major assets they can
offer to attract investment by
multinational companies,
which creates jobs and
provides capital for
development.”
Encylcopedia.com

25. Inside Apple's Chinese 'sweatshop'
factory where workers are paid just
£1.12 per hour to produce iPhones
and iPads for the West
•Factories covered in suicide nets to stop workers
leaping to their deaths
•18 people have killed themselves at the facility
iPhone, iPad and MacBook assembled in factory in
Shenzhen
•Microsoft, Dell and Hewlett Packard products also
built on site
Apple 'failing to protect
Chinese factory workers'
Poor treatment of workers in Chinese factories
which make Apple products has been
discovered by an undercover BBC Panorama
investigation, 2014.