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With the advent of globalisation and corporate that have selling and manufacturing activities in different countries, the concept of corporate social responsibility (CSR) has assumed a new dimension and urgency. Simply put, when the multinational giants shift their manufacturing base to the developing countries, they need to look at CSR as a hard edged business decision and the potential savings of low cost labour should not be a signal for exploitation of child labour. The paper examines the concept of CSR with reference to three companies, Nike in Southeast Asia, Leo Mattel in China and how the increase in tea prices that consumers pay has really not helped the tea workers even by a small percentage. When we speak of globalisation, we refer to companies that source components and materials from one part of the earth and then market it in different parts of the world.
The Price of Coffee
Coote (1998) speaks of the tea and coffee industry that have been plagued by price upheavals. This industry is truly gloabalized as the raw material is grown in one apart of the world, bought and consumed by people from other parts of the world. Consequently, the ramifications of any CSR that are practiced will relate to operations on a global scale and not just isolated pockets. The authors narrates the events of 1989 when the prices of Coffee fell by a very wide margin but sadly, the consumers still paid the same price as before. The author argues that the main reason is the processing, manufacturing, distribution and marketing channels involved that make the price go up. The stakeholders in the tea business are the consumers, producers, workers, brokers, packers, distributors and each party has its own woes and troubles. According to the author, the consumption of tea has been falling steadily since the past few decades and with the advent of teas bag, the sale of loose leave tea has further dropped. Tea is grown in south East Asia, parts of Africa. The tealeaves once they are picked need to be processes immediately and there is no value addition in terms of increasing the taste or appearance. The author suggests that on the spot processing is required after picking the tea leaves and this is done in factories attached to the estates and this is where funds and financial strengths come not play. The tea workers lot is the worst as their day begins at 4 am and goes till late evening and they are paid about 0.5$ per day for this work. The workers are marginalized, exploited and regarded as slaves and third grade citizens. Thy depend on the company for food, medicine, education and are not able to leave the estate and seek work elsewhere. The Company officials cite poor margins, irregular sales, low prices and express a general unwillingness to improve the condition of the workers. Moreover independent farmers have very small land holdings and are not able to be profitable. The author also speaks of tea processing which is a complicated and costly enterprise. Coote has also spoken of the auction centres where tea is sold in lots through brokers who charge up to 2.25 percent brokerage commission. The sale price is dependant on a number of unregulated factors such as supply, demand, harvests, stock and others and the prices vary very much. The author suggests that the tea is purchased in bulk by the blender who are large companies and take up the task of packaging the product and they mark up the price by 50% and make the lucrative profits. The items are marketed by retailers and distributors who in turn add another 22 percent to the price.
The author has attempted to show how the tea industry is exploitive and while the big companies make profits, the actual workers continue to wok under slavery conditions and how the farmers who grow the product do not receive appropriate returns. This is the CSR that needs urgent attention as the big companies are morally obliged to improve the lives of the starving workers. The tea industry is globalised and operates across many continents and countries and involves many players that range from the poor tea worker to the rich and famous who consume tea. Any CSR activities that are taken up by the tea seller should first start with the poorest and weakest of the society and all actions must be taken to improve their lot A price difference of a few cents for a cup of tea will not make any difference for the consumers but a few cents more for an overworked tea worker who slaves in a tea plantation in Sri Lanka will provide the means to buy life saving medicines for her starving baby. This should be practiced globally even though the profits may be hit by a few cents and mainly because it is morally the correct thing to do.
Nike in Southeast Asia
Mayer (2007) has reported about the disturbing first amendment to the US constitution that would allow Nike to hold back information about employing child labour in Southeast Asia. Nike sources much of the work to small sweat shops in these countries and the author states “These factories allegedly employ children under the age of sixteen, impose twelve-hour workdays, pay illegal poverty wages and expose workers to life-threatening environmental toxins.” The author has also reported many incidents about Nike who exploit the workers and speaks strongly of the attempts by the corporation to deceive the public into buying products created on the backs of human misery. Kenyon (2000) has provided transcript of a covert video recording that was done in one of the shops were the products are sold and the shop keeper relates how the items are manufactured in poor nations by employing child labour. Haan (1999) has provided details on how Nike operates, the conditions that sub contractors have to work in and the minimum wage, healthy work conditions, collective bargaining and other issues that must be met. But sadly these are never followed.
Based on the above discussions of Nike we have to question the CSR of Nike. Obviously in their haste to make huge profits, the company has abandoned all ethical practices that modern and civilized organizations stand for. For them, lower costs means more sales and more profits. But then the question arises as to whether Nike should be held responsible for omissions and irregular practices that their vendors practice. It is not feasible for the company to police these small shops on a daily and hourly basis. Companies like Nike are globalized and operate in many countries. They need to have a CSR that is not exploitive like Shylock and the CSR needs to be drafted and implemented keeping in mind certain moral obligations and mainly in just doing it the right way. Being totally profit oriented and hiding the facts that the products are created by poor workers living in starving conditions is wrong. Many customers who buy Nike products would not share the same thoughts and while everyone wants discounts and bargains, it must be understood that these customers would loathe products made by exploited workers and find the items morally repugnant and they would in fact refuse to utilize them. Nike has to realize that by being a globalized company, these misdeeds cannot be swept under the carpet. For Nike to retain its brand image, the CSR has to be globally implemented for the benefit of the poor workers.
Mattel in China
Mattel has been forced to recall 20 million toys that were made in China because the products had unacceptably hazardous levels of toxins, lead, formaldehyde and other substances in the paint and the raw material utilized. Merle (2007) has written about the confusing versions that Mattel and the Chinese governments have offered. While Mattel has apologised, the Chinese agencies differ in the manner of the apology. But the main problem of harmful goods being sold in US markets is still not solved. Mattel source 65% of the toys from China and does not wish to offend the country. In the meanwhile the great cover up game has started. Xinhua (2007) has suggested that the toys are safe by Chinese and European standards but the US standards are very stringent. Barnett (2007) has reported that the Chinese blame design flaws in the toys to make them dangerous. But the toys actually have toxin content that cannot be regarded as safe by any country in the world. The fall guys have been the Chinese in this fiasco with Mattel trying to appear as blameless.
In this discussion the CSR of Mattel and Fishcer Price extends beyond making profits for the shareholder. The companies should remember that toddlers and young children play with the toys and providing them with toys, coated with toxins and then arguing about standards and who was to blame is not becoming of a civilized organization. Toy companies that operate on Global basis have an additional responsibility in that they are obliged to ensure that the global children are not harmed or poisoned when they play with the toys. In this case, the CSR takes a different balance. The global CSR should answer questions such as should toddlers and babies be poisoned just because Mattel can procure low cost items from China and make a profit? Is it all right to argue on behalf of Mattel that thousands of babies die in the US every year from congenial diseases and accidents so what if a few die from toxins in toys? It does not make business sense to take up a profit only policy and all it needs is one child who dies because of poisoning, for the company to be shut down and go bankrupt. In such instances, the global CSR should ensure that children across the globe are not exposed to toxins, no matter how much profits are lost.
The paper has examined the concept of globalisation and CSR of global companies such as those involved in the tea industry, Nike and Mattel. These companies operate on a global scale and any policy decision they make wit regards to outsourcing, profits and consumers would have effects on a global scale. In the tea industry, large companies make profits, mark up the buying price of tea by more than 100 percent and give a pittance to the workers and farmers. Nike rampantly uses sweatshops with young children to manufacture the items at very low labour rates. Mattel has been forced to recall 20 million toys that were made in China but had very high levels of toxins. All these companies have a global CSR mission that goes beyond profits and should provide poor workers a decent return and lifestyle, ensure that children are not exploited and that products does not contain toxins.
- Barnett Megan. 2007. Mattel to China: Sorry.
- Coote, Belinda. 1998. The Trade Trap, Poverty and the Global Commodity Markets: The Price of a Cup of Tea. Oxford: Oxfam UK
- Haan De Esther. 1999. Nike: Company Profile.
- Kenyon Paul. 2000. BBC, Panorama: “Gap & Nike: No Sweat”.
- Mayer Carl. 2007. Nike Just Doesn’t Do It.
- Merle Renae. Ylan Q. Mui. 2007. Mattel and China Differ on Apology: Interpretation Sets Off Debate. Web.
- Xinhua. 2007. China: toys recalled by Mattel safe.