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Business Ethics Reebok - Managing Human Rights Issues " #rashanth The case covers in detail the various initiatives taken by Reebok over the years to prevent human rights violations in its footwear manufacturing operations The case also discusses the various human rights violations that were reported to have occurred in the footwear manufacturing facilities of Reebok in !hina Reebok"s efforts to address human rights and industrial relations issues in !hinese factories are also e#amined I do not know that anybody has bought a pair of Reebok shoes because of its human rights program. But we are a global corporation and we have an obligation to give back to the communities in which we live and work.1 - Doug Cahn, Director of Human Rights Programmes, Reebok International Limited. $n %anuary &''&( !hina )abor *atch& published a report on working conditions in si# factories in !hina These factories manufactured footwear products for the +S, based Reebok $nternational )imited -Reebok.( one of the leading footwear and apparel companies in the world The report highlighted the poor working conditions in these factories / similar report had been published in 0112 by two 3ong 4ong based non,profit organi5ations( which had accused Reebok"s sub, contractors6 of violating some of the provisions of !hinese labor laws in footwear factories in !hina *ith over a hundred years of operations in the footwear industry( a large workforce -estimated to be over 27(''' in &''&.( and operations in over 02' countries across the world( Reebok"s dominance in the global footwear industry was un8uestionable 3owever( with the focus of the international community drifting to human rights issues in !hinese footwear and apparel factories( Reebok 9oined the ranks of those companies that were accused of not paying sufficient attention to human rights issues Reebok had taken several measures to prevent human rights violations in its /sian footwear manufacturing operations $t had established an e#clusive human rights department -3RD. in 011: to address human rights issues in its operations across the globe( and it had also instituted a !ode of !onduct( also known as Reebok"s 3uman Rights ;roduction standards -Refer E#hibit $.( to regulate working conditions in the factories of its sub,contractors 3owever( in spite of the measures taken by the company( it had to face several allegations regarding the violation of labor laws in its !hinese operations /nalysts felt that the efforts made by the company were not ade8uate( and that the company needed to be more committed to the protection of human rights to enhance its image as a socially responsible company Backgroun$ %ote $n 0::7( %oseph *illiam <oster -<oster.( a famous athlete in the English Running !lub -Bolton( +4. made spiked running shoes in his garden shed $n the early 0:1's( he set up a company called =%* <oster > Sons( $nc (= to make handmade Ethically'!

spike shoes <oster believed that due to their superior 8uality( such shoes could help athletes improve their performance in long distance track events By 01''( the company developed a clientele of internationally reputed athletes $n 0166( <oster e#pired and the company was renamed =The Olympic *orks = $n the 017's( <oster"s grandsons , %eff and %oe , started a new company called Reebok Sports )imited? $n the 01@'s and 012's( as Reebok"s business e#panded( the company established its distribution outlets in several countries all over the world $n the 012's( the company was renamed Reebok $nternational )imited By 01:0( the company"s sales touched A0 7 mn $n 01:&( Reebok launched B<reestyle(" an athletic shoe for women( pioneering the concept of sports gear for aerobics $n the same year( the company also launched its first tennis and fitness shoe for men $n 01:?( Reebok got its shares listed on the Cew Dork Stock E#change Reebok"s name was first heard in connection with human rights issues when( in 01:@( it withdrew its operations from the Republic of South /frica -RS/. to protest against apartheid 7 $n 01::( Reebok"s 3RD was established to address human rights issues in the company"s operations across the world The company also instituted an annual Reebok 3uman Rights /ward to recogni5e and reward the contributions of young people -below the age of 6'. across the world who made efforts to prevent human rights violations in their countries $n the same year( Reebok also asked its sub,contractors in !hina to certify that they did not employ child labor in their factories The company also organi5ed a concert called B3uman Rights Cow(" along with /mnesty $nternational(@ to mark the ?'th anniversary of the +nited Cations" adoption of the +niversal Declaration of 3uman Rights $n 011&( Reebok established its !ode of !onduct , BReebok 3uman Rights ;roduction Standards " /ccording to the company( these standards were strictly implemented by all factories which produced Reebok"s products The implementation of these standards was monitored by the concerned employees of Reebok"s 3RD Reebok felt that these standards would serve as a benchmark for assessing working conditions in its footwear and sports goods manufacturing operations all over the world The company also felt that the owners of the factories could 9udge the working conditions on their own by benchmarking against these standards $n the same year( the company tied up with the )awyers !ommittee for 3uman Rights2 to start B*itness(" a pro9ect that e8uipped its 3RD staff with video cameras( fa# machines and computers to help it closely monitor issues relating to human rights abuse in its affiliated facilities across the world That year( Reebok also became a founding member of Business for Social Responsibility : $n 011?( Reebok hired the consultancy firm( Ernst > Doung to conduct the industry"s first independent audit of working conditions in Reebok"s $ndonesian footwear operations During the year( Reebok also resumed its operations in RS/ $n 0117( Reebok started manufacturing soccer balls in its facilities in /sia $n 011@( some media reports stated that child labor was being used in the company"s operations in Sialkot( ;akistan( to manufacture soccer balls Reebok responded 8uickly to these reports $ts 3RD staff monitored these facilities to ensure that people aged below 07 years were not employed The company even stuck a label on the balls -manufactured by the concerned factory. which declared =EuaranteeF Ganufactured without !hild )abor= $n 0112( Reebok shifted its manufacturing activities to a newly built factory in Sialkot $n order to provide elementary education and vocational training to the children who lost their 9obs because of its anti,child labor drive( Reebok launched a A0 mn pro9ect called Reebok Educational /ssistance to ;akistan -RE/;. in mid,0112 /s part of the pro9ect( the company tied up with the Society for /dvancement of Education1 to establish a school called !haanan $nstitute for !hild )abor Rehabilitation The school employees encouraged the families involved in manufacturing soccer balls in the Sialkot region to send their children to school instead of work /ll these initiatives helped improve the social image of the

company $n 0112( Reebok introduced a B*orkers !ommunication System" in its operations in $ndonesia to enable workers to e#press their grievances so that necessary action could be taken The workers were assured of not being victimi5ed by the management of the factory for e#pressing their grievances !omplaint bo#es were installed in places like toilets -in the factories. to ensure that workers could drop their complaints without fear ;rinted pre,paid mailers were also made available to the workers Subse8uently( the system was installed in other /sian countries such as !hina( Thailand and Vietnam $n 011:( Reebok started conducting seminars in $ndonesian factories to teach workers how to organi5e unions and engage in collective bargaining 0' $n Gay &'''( elections were held in a factory in $ndonesia( which marked the beginning of the democrati5ation of the workforce in the country $n the same year( Reebok helped the /merican !enter for $nternational )abor Solidarity -/!$)S. conduct training programs in five factories in $ndonesia to encourage the company"s worker to set up unions to address work related problems Reebok's #roblems in &hina Gultinational shoe companies -GCS!s. entered the ;eoples" Republic of !hina -;R!. in the mid,01:'s( following the liberali5ation of the !hinese economy in 01:? Due to large scale unemployment in !hina( the workers were ready to work for low wages( thus resulting in low wage,related e#penditures for GCS!s Goreover( labor laws were not strictly implemented by local governments within the ;R!( which competed with each other to attract foreign investment( especially in labor,intensive industries such as shoe manufacturing )ike most of its competitors( Reebok entered the !hinese market through the contract manufacturing route( i e ( through sub,contractors By doing so( the company could absolve itself of responsibilities relating to footwear production( while at the same time take advantage of low production costs to earn higher margins The company could also bargain with sub,contractors to fi# production deadlines and manufacturing price By the end of 011@( !hina accounted for nearly 67H of Reebok"s worldwide footwear production The figure reached ??H by 0111 -Refer E#hibit $$. 3owever( Reebok soon found that by using the contract manufacturing route it could not absolve itself of its responsibilities relating to footwear production The company had to deal with allegations by independent research agencies about human rights violation in its footwear manufacturing operations in !hina $n 011@( a report published by two 3ong 4ong based research groups , the /sia Gonitor Resource !enter00 and the 3ong 4ong !hristian $ndustrial !ommittee0& , highlighted the poor working conditions and inhuman treatment of workers in footwear factories in !hina that manufactured products for Reebok $n September 0112( another report was published by the same research agencies alleging violation of the provisions of the !hinese )abor )aw and Reebok"s human rights production standards in four !hinese footwear factories The report also highlighted the ineffectiveness of Reebok"s monitoring mechanism in preventing human rights abuse in its sub,contracted manufacturing units in !hina /ccording to the report( Reebok"s sub,contractors were not paying wages as per !hinese labor laws <or e#ample( in one factory in the Dongguan ;rovince of !hina( the legal minimum wage was +SA0 16 per day( while the actual wages paid ranged from A0 &' to A0 ?7 per day $n another factory( the legal minimum monthly wage was A?& 02( while the workers" actual pay ranged from A6' to A?& per month Similarly( provisions relating to the payment of overtime wages were also violated The workers in the factories( mostly women( were not treated properly They were forced to do early,morning calisthenics06 every day( and those who missed out on these sessions were fined Talking during working hours was not allowed The fines

for violating these rules ranged between A2 &6 and A&0 @1 -more than half the monthly wage of the workers. This practice was in contravention of !hinese )abor )aw( which stated that deducting disciplinary fines was illegal The workers were also deprived of their basic right of freedom of association The management of the factories did not permit the setting up of unions by the workers The only recogni5ed union in the country was The /ll !hina <ederation of Trade +nions -/!<T+.( which was controlled by the !hinese government /nalysts had accused the union of favoring the management *orkers" agitations were often suppressed by the management $n one such instance( in Garch 0112( when the entire assembly production department in one factory went on strike over non, payment of wages( all of them were fired /ccording to the 0112 report( while Reebok"s human rights production standards clearly stipulated that children below the age of 07 years should not be employed by its sub,contractors( it was found that the factories employed children aged between 06 and 07 The report also mentioned that there were serious violations of the provisions of !hinese labor law regarding working hours and the use of overtime The normal permissible working hours per week were ?? hours -as per !hinese )aw. and @' hours -as per Reebok"s human rights production standards. 3owever( in practice( the normal working hours per week were 2& hours -0& hours daily. $n addition( workers were forced to do overtime from & to 7 hours every day $t was also found that the management of footwear factories pressured the employees to work overtime Those who refused to do overtime were fined between A2 &6 and A&0 @2I and those who refused to work overtime for three consecutive days were fired Gany workers were e#pected to fulfill high production targets( failing which they had to work beyond the working hours( without being paid overtime /ll these practices were strictly non,permissible as per the !hinese )abor )aw *orkers had to work in e#tremely ha5ardous conditions They were e#posed to dust and noise pollution( e#cessive heat( and dangerous fumes that could cause suffocation /s a result( most of the workers suffered from headaches( dyspnea -difficult and painful breathing.( di55iness( and skin irritations The safety mechanisms in these factories were also found to be inade8uate *orkers were abused( both verbally as well as physically The management of the sub,contracted factories fired workers for reasons such as becoming pregnant and becoming overaged The food and accommodation provided by the management was also not up to the mark The workers were re8uired to stay in overcrowded dormitories in e#tremely unhygienic conditions The management did not provide any benefits such as childcare( social security( medical insurance( maternity leave and bereavement leave( although !hinese )abor )aw re8uired these benefits to be provided to workers The report also revealed that the workers in these factories were not aware of the e#istence of the company"s human rights production standards though the managements of the concerned factories were re8uired to translate it into the local language and educate the employees regarding its provisions Responding to the charges mentioned in the report( Doug !ahn( director( Reebok"s 3uman Rights program said( =/ny violations are unacceptable to us and we demand that factories take corrective action if the charges are found to be true = 0? Reebok's Res'onse $n response to the increasing allegations of human rights violations in !hina( Reebok took few steps to assess and improve the working conditions in its manufacturing facilities $n Gay 0111( Reebok( along with Gattel07 and )evi Strauss0@ -which had large operational interests in !hina.( teamed up with &0 human rights( fair trade and social investment groups to endorse a set of principles -Refer E#hibit $$$. for corporations doing business in !hina Through these measures( Reebok attempted to address issues such as the use of forced labor( child labor( inade8uate wages( long working hours( and physical or other kinds of abuse of employees This was one of the first ma9or initiatives taken by

leading +S business corporations in !hina to address human rights issues $n Garch &''0( Reebok along with Cike and /didas Salomon /E 02 -global footwear companies.( teamed up with three Taiwan,based sub,contractors and four 3ong 4ong,based CEOs to institute a pro9ect called !hina !apacity Building ;ro9ect in !hina /s part of the pro9ect( 1' people( including workers( supervisors and managers belonging to the three footwear companies( participated in a ?,day training workshop Training was imparted in various areas including occupational safety and health principles Over the ne#t three months( health and safety committees were set up and workers were also asked to e#press their views to help management evaluate and improve health( safety and environmental conditions in manufacturing facilities in !hina /n attempt was made to encourage workers to report the problems they faced to the management( e#ternal observers and CEOs One of the CEO"s( which participated in the program , !hina *orking *omen"s Cetwork , set up a mobile resource center to educate women workers in the factories about issues such as health( gender consciousness and labor rights The program covered &0(''' female workers working in Reebok"s( Cike"s and /didas Salomon"s manufacturing facilities in South !hina $n an effort to ensure lasting improvement in working conditions in the factories( workers were encouraged to set up forums to interact with the management The management was also asked to conduct elections in their factories $n %uly &''0( elections were held in the 4ong Tai plant in the Euangdong province in !hina This was the first election conducted at a Reebok footwear factory in !hina E#ternal observers were also invited to the factory to observe the election The elections were conducted without much hype and the publicity was minimal Reebok also imparted training to the workers" representatives in handling union matters such as conducting meetings( recording complaints and handling grievances Through the above measures( Reebok made an attempt to demonstrate its commitment towards human rights Over the years( Reebok"s 3RD increased the scope of its activities Reebok"s annual human rights awards remained the only corporate,sponsored human rights awards that recogni5ed the efforts of young non,violent human rights activists 0: Reebok was also among the first few companies in the +S to have 9oined the <air )abor /ssociation 01 Ine((ecti)e Measures Though Reebok improved working conditions in its !hinese and other /sian factories( analysts felt that a lot still remained to be done Reports continued to be published regularly about poor working conditions in Reebok"s footwear operations in !hina $n %anuary &''&( the !hina )abor *atch published a report after investigating working conditions -between %une &''0 and %anuary &''&. in si# Reebok shoe factories in !hina The report concluded that the steps taken by Reebok to improve working conditions and prevent human rights abuse were not sufficient /ccording to the report( some of the measures taken by Reebok were not delivering the desired results $t was found that Reebok"s non,discrimination policy( under which the management must not discriminate between men and women while recruiting and during employment( was not being implemented $n the !hinese factories( female workers outnumbered male workers by 0' to 0( indicating a bias toward the recruitment of female workers /nalysts felt that the management of these factories preferred female workers primarily because they were submissive and could be easily e#ploited They were se#ually harassed by supervisors and risked losing their 9ob if they voiced their grievances Goreover( the management did not provide accommodation to married couples( forcing them to live separately /ll these factors had a negative impact on the workers" psyche Some workers complained of mental distress while some took to drinking Some workers even committed suicide

The report also revealed that Reebok"s e#periment with elections in 4ong Tai factory left much to be desired( and that the labor union was still under the management"s control The chairman of the union was nominated by the official union( /!<T+ -/ll !hina <ederation of Trade +nions.( in contravention of the !hinese Trade +nion )aw( which stated that the head of the union must be elected freely $n addition( the factory management did not pay the activity fee -&H of the total wages of the workforce. to the union( as stipulated by the law Violations were also reported with regard to working hours and overtime The workers were asked to work overtime( on an average( :@ hours per month Though Reebok"s 3RD staff conducted inspections at these factories( the factory management warned workers against e#pressing their plight to the staff Deviations were also found in the legal minimum wages and the actual wages paid *hile the legal minimum wage ranged between 6& cents to ?& cents per hour in most of the cities( where the factories were located( the wages paid were less than &: cents *orkers who decided to hand in their resignations did not receive severance pay( as re8uired by !hinese law Employees were e#posed to to#ic fumes and had to spend long hours in high temperatures( which led to nausea and respiratory problems /ccording to the report( management did not provide a safe and healthy working environment to workers The management even fired workers who used the complaint bo# set up by the company to get feedback regarding workers" grievances &ontinuing E((orts to Im'ro)e Even though doubts were raised about the efficacy of Reebok"s measures for preventing the violation of human rights( the company continued with its efforts to improve working conditions at the !hinese factories $n /ugust &''&( Reebok took measures to reduce overtime working hours in these factories to 6@ hours per month $n Covember &''&( elections were conducted in one Reebok"s Taiwanese owned <uh )uh footwear factory in the <u9ian province of !hina Reebok had to negotiate with the factory management and the /!<T+ for several months to develop a framework for the conduct of the elections E#plaining the difficulty faced during the negotiation process( !ahn saidF =<reedom of association is going to be one of the most difficult issues in the future as global brands attempt to find appropriate ways to respect the rights of workers while not getting over involved in the process of negotiations between workers and the managersJowners of the factories =&' Reportedly( the elections( which were supervised by e#ternal observers( were conducted in a fair manner +nlike elections at the 4ong Tai factory( these elections allowed proportional representation of workers belonging to each of the seven departments of the factory $n addition( elections were conducted for all posts( including the +nion !hairman"s post( which was not contestable before E#plaining the significance of empowering the workers in the !hinese factories by conducting elections( sources at Reebok said(&0 =*e have inspections of factories( both announced and unannounced But you 9ust don"t have the assurance that things will be the same the ne#t day <actories in !hina are incredibly sophisticated at finding ways to fool us The best monitors are the workers themselves = The author is Research Associate, I !AI Additional Readings and References 1. E ecuti!e "ummar# of Re$ort on %ike and Reebok in China, www.globale#change.org, $eptember 1%%&. '. E ecuti!e "ummar# of Re$ort on %ike and Reebok in China, www.globale#change.org, $eptember 1%%&. enter for "anagement Research.

(. "tud#& Chinese 'orkers Abused (aking %ikes, Reeboks, www.news) star.com, $eptember '1, 1%%&. *. )ootball Child Labor Li!es *n, news.bbc.co.uk, April 1+, 1%%,. -. %ike, Reebok Com$ete to "et Labor Rights Pace, www.cleanclothes.org, "arch '-, 1%%%. +. (attel, Le!i "trauss, Reebok Endorse %e+ Code, www.cleanclothes.org, .une -, 1%%%. &. /irchofer Tom, Reebok Admits Problems at Indonesian )actories, www.cleanclothes.org, 0ctober 1,, 1%%%. ,. ,est )oot )or+ard at Reebok, The Economist( 0ctober '(, 1%%%. %. Bernstein Aaron, "+eatsho$s& %o (ore E cuses, Business*eek( 1ovember ,, 1%%%. 12. !allon .on, Reebok-s )a.ade of Res$ectabilit#, groups.northwestern.edu, $pring '222. 11. Bernstein, Aaron3 $hari, "ichael3 "alkin, 4lisabeth, A 'orld *f "+eatsho$s, Business*eek , 1ovember 2+, '222. 1'. 5orden "argery, Ad!antage Reebok, www.calbaptist.edu, "ay %, '221. 1(. /etting *rgani0ed, +ith 'estern Hel$, The Economist( 6ecember 1', '221. 1*. Reebok-s Human Rights "tandard and Chinese 'orkers- 'orking Conditions, www.chinalaborwatch.org, .anuary '22'. 1-. )irst )ree 1rade 2nion Elections Held in Chinese Reebok-s factor#, www.labourbehindthelabel.org, "arch '22'. 1+. China Ca$acit# ,uilding Pro3ect - *ccu$ational Health and "afet#, mhssn.igc.org, "ay '%, '22'. 1&. Ethicall# 2nem$lo#ed, The Economist( 1ovember (2, '22'. 1,. "aitland Alison, Reebok in China& 'orker Elections in 1+o "u$$lier )actories, www.cleanclothes.org, 6ecember 1', '22'. 1%. Reebok 7uman Rights 8rograms, geocities.com '2. 9andrum 4 1ancy, Bo:e " 6avid, /airos; "trategies 4ust in 1ime in the Asian Athletic )oot+ear Industr#, cbae.nmsu.edu

'1. Reebok - "etting an E am$le for )reedom of Association5, www.iblf.org. ''. www.reebok.co.uk '(. www.reebokus.com '*. cbae.nmsu.edu K $!</$ !enter for Ganagement Research -$!GR. /ll Rights Reserved <or accessing and procuring the case study log on to www ecch cranfield ac uk /s 8uoted in the article( =Reebok in !hinaF *orker Elections in Two Supplier <actories(= written by /lison Gaitland in the !inancial Times( dated December 0&( &''&
0

/ Cew Dork,based independent non,profit organi5ation for !hinese labor and human rights( which works towards improving !hinese workers" living and working conditions( defending their rights( upholding international labor and human rights standards( and preparing independent labor union organi5ations that are true representatives of the workers
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$n most /sian countries( Reebok manufactured its footwear and sports goods through sub,contractors Sub,contractors were essentially middlemen who contracted workers on a daily wage basis Reebok paid a negotiated amount to the sub,contractors( according to the si5e of contract $n most cases( the factories were owned by the sub,contractors
6

The company was named after the /frican ga5elle( which was known for its incredible speed
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/n official policy of racial segregation involving political( legal and economic discrimination against non,whites
7

/n internationally recogni5ed non,governmental organi5ation that works for the protection of human rights <inanced by subscriptions and donations from its worldwide membership( it has more than a million members and supporters in over 0?' countries and territories
@

Established in 012: in the +S( its mission is to create a secure and humane world by advancing 9ustice( human dignity and respect for the rule of law
2

/ +S,based global non,profit organi5ation that helps member companies achieve commercial success in ways that respect ethical values( people( communities and the environment
:

/n CEO based in $slamabad( which undertakes several human rights related activities
1

!ollective bargaining consists of negotiations between an employer and a group of employees so as to determine the conditions of employment The result of collective bargaining procedures is a collective agreement Employees are often represented in bargaining by a union or other labor organi5ation
0'

/n independent non,government organi5ation -CEO.( which focuses on /sian labor problems The center"s main goal is to support democratic and independent labor movements in /sia
00

Established in 01@2( it is an independent non,government organi5ation -CEO.( which supports workers" movements in !hina and 3ong 4ong
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06

*arm up e#ercises conducted by workers before commencing work

/s 8uoted in the article( =StudyF !hinese workers abused making Cikes( Reeboks= posted on the website www news,star com dated September &'( 0112
0?

Gattel is one of the world"s leading toy manufacturing companies $ts products include Barbie dolls( <isher,;rice toys( 3ot *heels and Gatchbo# cars( /merican Eirl dolls and books( and various Sesame Street( Barney( and other licensed items
07

/ famous +S,based apparel company( established in 0:76 $t became reputed for its blue 9eans
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/ +S,based sports goods company( which produces and markets sports e8uipment( footwear and apparel under the brand names of /didas( Salomon( Taylor Gade and Gavic
02

/s 8uoted in the article( =/dvantage Reebok(= written by Gargery Eordon( posted on www callbaptist edu( dated Gay 1( &''0
0:

/n initiative under which corporates work with labor and human rights advocates to establish voluntary workplace standards and monitoring re8uirements for footwear and apparel industries
01

/s 8uoted in the case study( =Reebok , <reedom of association in $ndonesia(= posted on the website( www iblf org
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/s 8uoted in the article( =<irst <ree Trade +nion Elections 3eld in !hinese Reebok factory(= in the website www labourbehindthelabel org( Garch &''&
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E*hibit I+ Reebok Human Rights #ro$uction ,tan$ar$s -. %on-retaliation #olicy Every factory producing Reebok products will publici5e and enforce a non, retaliation policy that permits factory workers to speak with Reebok staff without fear of retaliation by factory management /. %on-$iscrimination Reebok will seek business partners who do not discriminate in hiring and employment practices( and who make decisions about hiring( salary( benefits( advancement( discipline( termination and retirement solely on the basis of a person"s ability to do the 9ob 3. 0orking Hours12)ertime *orkers shall not work more than @' hours per week( including overtime( e#cept in e#traordinary business circumstances $n countries where the ma#imum work week is less( that standard shall apply *orkers shall be entitled to at least one day off in every seven day period 3. Force$ or &om'ulsory 4abor Reebok will not work with business partners that use forced or other compulsory labor( including labor that is used as a means of political coercion or as punishment for holding or for peacefully e#pressing political views( in the manufacture of its products Reebok will not purchase materials that were produced by forced prison or other compulsory labor and will terminate

business relationships with any sources found to utili5e such labor 5. Fair 0ages Reebok will seek business partners who share our commitment to the betterment of wage and benefit levels that address the basic needs of workers and their families as far as possible and appropriate in the light of national practices and conditions Reebok will not select business partners that pay less than the minimum wage re8uired by local law or that pay less than prevailing local industry practices -whichever is higher. 6. &hil$ 4abor Reebok will not work with business partners that use child labor The term =child= generally refers to a person who is younger than 07 -or 0? where the law of the country of manufacture allows. or younger than the age for completing compulsory education in the country of manufacture where such age is higher than 07 7. Free$om o( Association Reebok will seek business partners that share its commitment to the right of employees to establish and 9oin organi5ations of their own choosing Reebok recogni5es and respects the right of all employees to organi5e and bargain collectively 8. ,a(e an$ Healthy 0ork En)ironment Reebok will seek business partners that strive to assure employees a safe and healthy workplace and that do not e#pose workers to ha5ardous conditions $ource; www.reebok)usa.com

E*hibit II+ Reebok9s Athletic Foot:ear #ro$uction in Asia ;-<<<= &ountry ;eoplesL Republic Of !hina $ndonesia Thailand Vietnam ;hilippines Taiwan SourceF www cbae nmsu edu > #ro$uction ??H &1H 0@H &H &H &H

E*hibit III+ Business #rinci'les Frame$ by ?, Business &or'orations 2'erating in &hina ;May -<<<= /s companies doing business in !hina( we seek to hear and respond to the concerns of workers making our products *e want to ensure that our business practices in !hina respect basic labor standards defined by the $nternational )abor Organi5ation( and basic human rights defined by the +nited Cations +niversal Declaration of 3uman Rights and encoded in the $nternational !ovenants on Economic( Social and !ultural Rights( and !ivil and

;olitical Rights( signed by the !hinese government( as well as in !hina"s national laws To this end( we agree to implement and promote the following principles in the ;eople"s Republic of !hinaF Co goods or products produced within our company,owned facilities or those of our suppliers shall be manufactured by bonded labor( forced labor within prison camps or as part of reform,through,labor or re,education,through,labor programs Our facilities and suppliers shall provide wages that meet workers" basic needs( and fair and decent working hours( at a minimum adhering to the wage and hour guidelines provided by !hina"s national labor laws and policies Our facilities and suppliers shall prohibit the use of corporal punishment( as well as any physical( se#ual or verbal abuse or harassment of workers Our facilities and suppliers shall use production methods that do not negatively affect the occupational safety and health of workers Our facilities and suppliers shall not seek police or military intervention to prevent workers from e#ercising their rights *e shall undertake to promote the following freedoms among our employees and the employees of our suppliersF freedom of association and assembly( including the right to form unions and to bargain collectivelyI freedom of e#pressionI and freedom from arbitrary arrest or detention Employees working in our facilities and those of our suppliers shall not face discrimination in hiring( remuneration or promotion based on age( gender( marital status( pregnancy( ethnicity or region of origin Employees working in our facilities and those of our suppliers shall not face discrimination in hiring( remuneration or promotion based on labor( political or religious activity( or on involvement in demonstrations( past records of arrests or internal e#ile for peaceful protest( or membership in organi5ations committed to non,violent social or political change Our facilities and suppliers shall use environmentally responsible methods of production that have minimum adverse impact on land( air and water 8uality Our facilities and suppliers shall prohibit child labor( at a minimum complying with guidelines on minimum age for employment within !hina"s national labor laws *e will work cooperatively with human rights organi5ations to ensure that our enterprises and suppliers are respecting these principles and( more broadly( to promote respect for these principles in !hina *e will issue an annual statement to the 3uman Rights for *orkers in !hina *orking Eroup detailing our efforts to uphold these principles $ource; <"attel, 9evi $trauss, Reebok 4ndorse 1ew ode< posted on the website, www.cleanclothes.com, dated .une -, 1%%%. &A,E A%A4@,I, Reebok's Aoing all that it shoul$ - P 6 ,aner3ea The case of Reebok"s trysts with the issue of human rights violations presents a

topical issue in an interesting manner $t is the story of a company that has done a lot for protecting human rights and still has been critici5ed by the activists for violating the same )et us first e#amine what Reebok has done for the cause of human rights chronologically -Refer Table $. !onsidering all these steps taken by the company( $ personally feel Reebok has done very well in upholding human rights in its operations in !hina and other parts of /sia The main criticism of the activist groups has been about monitoring and enforcing the steps taken by the factory owners 3owever( the primary responsibility of adhering to certain laws of the land is vested with the !hinese government rather than Reebok $t may be argued that Reebok should have taken it up with the !hinese authorities for enforcement of basic rules they had framed 3owever( this is easier said than done Based on my personal e#periences and the e#perience of my colleagues in the 9oint venture company $ headed( $ know how difficult it is for outsiders to force their way into the !hinese Bureaucracy ;robably Reebok could have improved their liaison with the activist groups and briefed them about the steps they were taking and the problems they were facing vis,M,vis the law enforcing agencies The activist groups would have then taken up the issues in media -both print and electronic. Simultaneously( Reebok could have taken up the issue with other +S companies who were facing similar problems( and worked out a strategy to tackle the government departments /ny comment on Reebok without reference to its biggest competitor Cike would be incompleteI Cike"s factory workers have filed more complaints about violation of labor rights than any other shoe,maker $n 0112( Cike"s wage dispute had led to a strike involving 0'''' workers in $ndonesia( 06'' workers in Vietnam and 6''' workers in !hina( as per the Elobal E#change website Cike"s !ode of !onduct( as mentioned in this website is( =$n the area of human rights in the communities in which we do business( we seek to do not only what is re8uired but what is e#pected of a leader=. 3owever( here the issue of the gap between practice and preaching comes into play There were some disputes about minimum wages paid to workers in factories manufacturing Reebok shoes as well in !hina But the company had put in place procedures that prevented any strike in its operations Reebok never made any lofty and ambitious claimsI rather( it adopted a matter of fact approach( as is evident from the 8uote given in the beginning of the case by Doug !ahn( the company"s Director 3uman Rights program *e can safely conclude that Reebok has done more on human rights than any other shoe,maker in the world /nother issue that has been raised in the case is about the condition of female employees in the factories of the sub,contractors( which is deplorable( to say the least 3owever( it may not be out of place to state that the position of women in !hina is itself abysmal $n her column named BTrouble /t 3ome" in 1ews =eek -%an &'( &''6 pp &?.( Sarah Schafer states that one out of every three !hinese husbands hits his wife and that the suicide rate among !hinese women is highest in the world -a fact many believe to be directly related to spousal abuse. $n a country that has a known history of five centuries of mistreating and oppressing its women( how much can an GC! do within a couple of decades( unless the culture of the country is changedN There are some visible changes since 0117 when the +C"s fourth *orld !onference on *omen was held in Bei9ing But it would take a long time to change the mindset of the country"s male,dominated society So far as employing a large proportion of women workers is concerned( $ do not think there is anything wrong with that $n fact( it is a step in the right direction as economic independence is the precursor for empowerment of women There are many small and medium companies in the +S -or for that matter in $ndia and other countries. that employ more women than men The reason being that women are found to be more law abiding( disciplined and sincere towards their work $t may be argued that employers do not employ women for a missionary 5eal( but for their own selfish

goals( but the fact remains that they did take a step in the right direction To sum up( $ would like to 8uote from a speech by ;rof David %ones who teaches ;ublic and !onstitutional )aw in the School of Eovernment at ;ortland State +niversity( Oregon $n this speech titled BCike"s !orporate SpeechF Overwhelming the Voice of !iti5en" -www globale#change org dated /pril 6'( &''6.( he saidF =Since businesses have the power and wealth to influence governments( they should be able to successfully pressure both +S and !hinese governments to find new ways to promote human rights issues as part of their bilateral dialogues /dditionally( we hope that such a change will encourage the *TO to consider labor conditions during the multilateral discussion about !hina"s entry into the *TO= On the face of it( it is indeed a profound and good statement( particularly the first sentence But is the second sentence somehow trying to make the sensitive issue of labor conditions appear to be a potential Con,Tariff BarrierN Bable I 0 Reebok showed its first concern for human rights when it withdrew from South /frica in 01:@ to protest against /partheid & $n 01::( the company established the 3uman Rights Division -3RD. to look after 3RD issues across their worldwide operations The company also instituted an /nnual Reebok 3uman Rights /ward for people below the age of 6' years to inculcate the spirit of honoring human rights of all employees 6 /long with /mnesty $nternational( the company organi5ed a concert named B3uman Rights Cow" to celebrate the ?'th anniversary of +C"s adoption of +niversal Declaration of 3uman Rights ? $n 011&( Reebok established its code of conduct called BReebok 3uman Rights ;roduction Standards" which is a very comprehensive guideline that many companies followed The main purpose of the document was to help the owners of the factories to benchmark their practice with this standard 7 $n the same year( the company tied up with the B)awyers !ommittee for 3uman Rights" to start a pro9ect that provided staff with video cameras( fa# machines and computers for closely monitoring violation of human rights issues $n the same year( Reebok became a founding member of a +S,based non,profit organi5ation that helps companies respect ethical values( people( communities and the environment( while achieving commercial success @ $n 011?( Reebok contracted Ernst > Doung( a reputed consultancy firm to carry out an independent audit for the first time in the history of the industry 2 Reebok took corrective action on hearing about the use of child laborers in its soccer ball manufacturing unit in ;akistan : $n 0112( Reebok introduced the B*orkers !ommunication System" in $ndonesia and subse8uently in !hina( Thailand( and Vietnam *orkers were encouraged to e#press their grievances without getting victimi5ed 1 *orkers were taught to organi5e unions and to start collective bargaining in $ndonesia in 011: and subse8uently in !hina also 0' $n the same year( an e#clusive 3uman Rights Department was started to address the human rights issue all over the world and to adhere to the BReebok 3uman Rights ;roduction Standards" as mentioned in point -?. above

00 $n 0111( after it faced increasing criticism from various activist groups about human rights violations( Reebok 9oined Gattel and )evis Strauss in teaming up with &0 human rights( fair trade and social investment groups( and endorsed a document named Business ;rinciples framed by the +S Business !orporations Operating in !hina -Gay 0111 . 0& $n Garch &''0( Reebok along with Cike and /didas Salomon /E and four 3ong 4ong based CEOs started a pro9ect called !hina !apacity Building ;ro9ect( wherein 1' people were trained on various aspects -particularly in occupational safety and health ha5ards. One of the CEOs also set up a resource center to educate women workers about gender e8uality( health and labor rights 06 *orkers forum were set up and in %uly &''0( elections were held at 4ong Tai plant in the Euangdong province in !hina 0? $n /ugust &''&( Reebok took steps to reduce overtime hours in !hinese factories to 6@ hours per week 07 $n Covember &''&( elections were held in <u9ian province of !hina and also in the Taiwanese factory

Reference O 0?,'6,'2,'& K $!</$ ;ress /ll Rights Reserved The author is trainee analyst at icfai press. K $!</$ ;ress /ll Rights Reserved The footwear manufacturing business is one of the most notorious businesses in the world when it comes to the issue of violation of labor rights $n fact( in this industry( violation of labor rights has attained such e#treme proportions that pro, labor organi5ations all over the world have been forced to sit up and take notice *hat is it that makes the workers in this industry e#perience such hardshipsN *hy is it that we do not hear of such large,scale violations of labor -and human. rights with respect to any other industryN Cot a very difficult 8uestion to answer One of the primary reasons why such practices in the factories of this industry went unnoticed for many years is the nature of work involved in the manufacturing of footwear Since this work does not re8uire high skills and talent -leaving out the designing issue.( most of the employees at the factory level happen to be unskilled( poor people 3owever( they fulfilled what is the biggest criteria for being selected for such a 9ob , the ability to do hard physical labor The ne#t biggest factor working against these workers is the fact that most of the footwear manufacturing companies -referring mainly to Cike and Reebok. have taken a smart( well thought,out decision to outsource their manufacturing operations to Third *orld countries such as !hina( $ndonesia and Taiwan The companies did not even have to establish an e#tensive infrastructure in these countries since a large portion of the work was carried out through sub, contractors These sub,contractors took care of all the ma9or responsibilities( leaving the large corporations to brand the products that came out of the factories and make billions out of selling them all over the world

To understand why Reebok( Cike and many others go to these countries( we have to understand certain ground realities /ll these countries offer labor that comes very cheap as compared to any other part of the world Thus( the low,wage bill lure acts as a strong factor in luring companies to set up manufacturing operations in these regions Secondly( the governments of these countries in their eagerness to attract more foreign investment often do not care to strictly enforce labor laws , something which has proven to be a Bhidden" boon for these companies The interplay of all the above factors results in the companies being able to cut their manufacturing costs considerably( without any concern about the working standards of the labor employed $t is 8uite appalling to note how those very companies who strictly adhere to all human rights related issues and implement various labor welfare schemes in their home countries( are responsible for making thousands of workers sweat it out in inhumane working conditions /gain( this is a direct conse8uence of the fact that the labor pool in *estern countries is well aware of its rights and is far more educated than their counterparts in the developing nations The poverty of the masses in Third *orld countries force them to work under any circumstances and earn their livelihood Caturally( they are then e#tremely susceptible to e#ploitation( given the fact that they 9ust cannot afford to lose their 9obs /s many of us are aware( the case of Reebok is not an isolated one $n fact( Cike has been at the forefront of most of the controversies related to sweatshops and labor e#ploitation Cike has been critici5ed sharply by human rights organi5ations the world over for ill,treatment of the workers by the supervisors in its factories at Vietnam( se#ual abuse of women( and paying less than minimum wages to the workers $t even faced legal suits for creating and lying about sweatshop conditions in its factories in /sia 3owever( the fact that Cike"s name has been maligned more than Reebok"s( does not necessarily make Reebok a lesser evil Bhe Reebok Issue /s is evident from the case study( Reebok has constantly worked towards protecting its workers" rights To address such issues( the company had instituted a 3uman Rights Department -3RD. as well $t had its own code of conduct for protection of human rights Reebok was also the first company to get an audit conducted on the working conditions in its factories <or a company with such a good track record of protecting employee rights( the instances of human rights violations at its manufacturing plants in !hina and other /sian countries would indeed have come as an unwelcome development So( what went wrong despite Reebok"s strong focus on protecting labor rights and its instructions to the !hinese contractors to strictly adhere to its standardsN <irst( it appears that at no point of time did Reebok show a serious interest in directly involving itself in the day,to,day operations of its factories in !hina and other developing countries On the other hand( as the case shows( it did the above things diligently for its *estern factories <or the /sian operations( the company 9ust passed on instructions to the sub,contractors regarding human rights issues -for instance( asking them to certify that no child labor was employed in the manufacturing processes. $t had not bothered to check whether these instructions were actually being carried out or not Second( the initiatives it had taken to stop the e#ploitation of laborers in its factories look ad hoc in nature $n other words( these measures seem directed at cooling down the agitations by various non, governmental organi5ations On a positive note( Reebok"s problems in !hina are not entirely its own making $t is a widely reported fact that in !hina( any sort of Blabor movement" is unwelcome Even the unions are reportedly lackadaisical in their approach towards protecting the dignity of employees and ensuring their welfare $t can be argued that irrespective of the efforts taken by any multinational operating in !hina( the unions find means to fool them in such a way that even surprise visits are not enough to e#pose any irregularities This is the reason why in spite of the measures taken by Reebok to get things back to normalcy at its !hinese factories( analysts and protestors of its practices were not satisfied

0hat More &an Reebok Ao! $n addition to the measures already implemented( Reebok needs to undertake a few other steps that could help it regain the confidence of the international community in its labor practicesF ;ressuri5e the sub,contractors to establish and strictly implement minimum wage standards and working conditions <or those unwilling to co,operate( the company could even look at walking out of the contract Engage the sub,contractors in a constructive dialog( clarify all human rights related issues( and devise mutually acceptable and beneficial solutions $ncrease its association with non,governmental organi5ations as well as the workers themselves to monitor the overseas factories The author is $enior !aculty "ember at I !AI Business $chool, 8une. K $!</$ !enter for Ganagement Research -$!GR. /ll Rights Reserved <or accessing and procuring the case study log on to www ecch cranfield ac uk