Nikkei quickly established an international presence, beginning with their entry into the Canadian market in 1972. Today, Nikkei has a presence in ore than 1 60 countries and has recently introduced its Global Growth Strategy, targeting revenues of 527 billion by the end of 2015. However, these levels of noTABLE success are undeniably accompanied by greater pressure to cut costs and improve the bottom line. Nines reliance on offshore sourcing and production comes with heightened risks Of unethical labor practices, including child labor.
In fact, Nikkei sources “99% of its products offshore, primarily in China (38%) and South East Asia (61 %),” with this region also home to “660,000 employees of independent contract companies” that reduce Nikkei apparel (Ragman, and Verbose 3-18). A deeper look into the company’s history reveals several social responsibility blemishes on an otherwise repuTABLE corporate record. In 1 996, an undercover Life magazine report on child labor practices in Pakistan was the match that started the fire of investigations on various companies operating there.
The article, featuring a picture of a young boy stitching a Nikkei soccer ball (Figure 1), included various testimonies of “children as young as six” sold to factories for “as little as $15 branded, beaten, blinded as punishment for wanting to go home” Schoenberg 38-48). According to the EUNICE database of country statistics, Pakistan has the 6th largest population, with 21% of its residents below the international poverty line of $1. 25/day and an average IN of $1,120, making it one of the poorest countries in the world.
Although Pakistan has passed laws concerning child labor, enforcement is weak and millions of children work up to ten hours a day, six days a week (Schoenberg 38-48). Only a year after the Life article, another account of Nikkei employing child labor surfaced in a March 1 997 article in The New York Times, titled “Ins Boot Camps. As described in the article, Nikkei factories in Vietnam were exposed for primarily employing young women from ages 15-28, who were treated like slaves during their eight-hour shifts.
Interviews with these workers revealed that they were only allowed one bathroom break per shift and subjected to “various forms of humiliation and corporal punishment,” including being forced to stand outside in the heat for prolonged periods of time, a technique called “sun-drying” (Herbert). Like Pakistan, Vietnam has an extended history of illegal child labor activity. According to Vietnamese Labor Law, it is orbited that children under 18 years Of age be “engaged in heavy work or work under conditions that are not suiTABLE for their mental or psychological well-being. The working conditions in Nine’s Vietnamese factories clearly violated the requirements spelled out in the country’s Labor Laws. As consumer awareness rose in the late 1 ass’s about these alleged working conditions, Nikkei became a direct target for criticism, fueling boycotts and protests from angry consumers, Nags, and activist groups. Nine’s primary reaction to the accusations was defensive.
They claimed they were to aware of the extent of the child labor and attempted to justify that their suppliers who employed the workers at these facilities were ultimately responsible and not the Nikkei Corporation itself. However, as the backlash intensified, the company decided to accept responsibility for the claims. Nikkei chairman Phil Knight acknowledged and addressed these issues in a 1998 public statement by conceding “the Nikkei product has become synonymous with slave wages, forced overtime and arbitrary abuse” (Cushman Jar. . The shareholders of Nikkei, unfortunately, didn’t seem to be all that affected by the evaluation of these child labor practices, as shown in the Nikkei common stock history chart below (Figure 2). There was a slight drop in soccer ball sales for Nikkei, but they made up for these losses by strengthening their ad campaigns by featuring Michael Jordan (who had just recently Won an NAB National Title). In 1 996, Nikkei joined the Apparel Industry Partnership in hopes of instituting an industry-wide code of conduct.
Changes were made through Nine’s cooperation with the International Labor Organization and EUNICE in 1997 with the announcement of the Shallot Child Labor Elimination Project, n initiative signed by various different organizations agreeing to end child labor in Pakistan. Pressure from critics, who were trying to turn the Nikkei swoosh into a symbol of child labor and exploitation, forced Nikkei to adhere to U. S. Safety and health standards abroad. Today, Nikkei has no children employed in the Shallot district.
The average age of workers is 22, with the youngest being 18. Each factory in Shallot now has a free lunch, free medical clinic, a day-care for children, and a recreation center (Schoenberg). The current steps taken by Nikkei to prevent child labor are laid out in their mission tenement, which states “wherever Nikkei operates around the globe, the company is guided by the following Code of Conduct, and binds its business partners to the code’s principles… It then goes on to cover the issue of forced labor by asserting “that it and its suppliers and contractors do not use any form of forced labor prison or otherwise,” including child labor of any kind (Bureau of International Labor Affairs). Nikkei does not want to be seen as a company that employs or supports child labor, so they have explicitly spelled out their position towards these practices in their code of conduct to avoid true repercussions at all costs. The ethics of child labor is a controversial issue that poses a significant challenge for corporations involved in international business.
Companies utilizing global supply chains are largely dependent on offspring and outsourcing their products and services, making it increasingly difficult to sufficiently monitor the legality of every part in the process. Labor laws and the legal working age for children vary across different countries and companies have an ethical responsibility to be aware of these differences and to abide by them. Our interviews with a number of stakeholders invested in Nikkei Corporation revealed differing opinions in regards to the morality of child labor practices.