Far Eastern Economic Review, July 13, 2000, p. 76

In Review – Books 

Paying the Price

By Dan Biers 

ASIA HAS BEEN the workshop of choice for Western multinational Firms for quite some time now. By and large, that relationship has greatly benefited the region, bringing jobs and technology that have powered economic development. 

The dark side of the global marketplace , however, is that working conditions at the factories churning out cuddly toys, button-down shirts and faddish tennis shoes can be harsh-if not downright abysmal. Hours can be long and pay a pittance, employees sometimes are subjected to physical abuse with no right to organize and fight back.

I recall visiting workers at one factory in Southern China who were packed 17 to each dormitory in a decrepit residential block. They complained bitterly of unpaid back wages and the erratic behavior of a boss who on one occasion forced them to kneel down in front of her as punishment after a few employees nodded of during a break. 

Such conditions exist because governments often consider the foreign investment more important than the welfare of individual workers. Authoritarian governments in particular want no part of independent Labor groups that fight for workers’ rights. And whenever it is suggested that groups such as the World Trade Organization take the baton and set global minimum labor standards, poorer countries cry protectionism.  

For now is often is the multinationals that are the best bet for ensuring that their subcontractor factories are substantially better than the Dickensian hell-holes that still exist around the world. Don’t get the wrong idea-in most cases this is not altruism at work. Under increasing pressure from non-governmental organizations and American university activists, big business now realizes that contracting with overseas sweatshops can endanger the integrity of one’s brand. Just ask Kathy Lee Gifford, the American talk show celebrity who was trashed for putting her name on products allegedly made by foreigners working in appalling conditions. 

Corporate Conscience  

In Levi’s Children, Journalist Karl Schoenberger examines how one American multinational tries to safeguard labor standards abroad. The book focuses on the struggle by Levi Strauss & Co, the legendary San Francisco-based marker of blue jeans, to do the right thing and at the same time maintain a healthy bottom line. At the core of the book is the simple question: If Levi Strauss – which prides itself on highly principled corporate behavior – can’t make this tricky balancing act work, who can? 

Levi Strauss’s record for putting ethics high is impressive, Schoenberger notes that the company was ahead of its time with progressive policies, from desegregating factories in the American South to supporting AIDS education. In 1992, the company issued a global code of conduct that said Levi Strauss bore responsibility for the actions of foreign partners who ran the favorites making Levi’s clothes. The same year, it halted doing business in Burma, which is ruled by a ruthless military regime. A year later, it created a sensation by vowing to step back from China, which is often accused of human-rights violations. 

Yet translating the best of intentions into substantive action is no easy task. Some critics charge that Levi Strauss’s code of conduct was flawed because the company did not make it a formal practice to talk directly to overseas workers. Schoenberger argues that the privately held company’s obsession with secrecy is the biggest threat to its tradition of social access to top corporate officials.” No company can claim to practice social responsibility without making a genuine commitment to transparency,” he argues. 

Sometimes, the bottom line has forced compromise. In 1998, the company reversed itself on China, arguing that staying out of the country” while others are solidifying footholds in one of the world’s fastest-growing ecomomies would threaten its commercial interests.

The book is a must-read for anyone interested in corporate ethical behavior in a dog-eat-dog global market. Schoenberger tells the Levi Strauss story engagingly, although the book suffers from not enough detail about working conditions in the company’s offshore factories was denied, the book would have benefited from interviews with workers. After all, much of the fuss is over their well-being. And that is why the sometime-quixotic journey of Levi Strauss will remain important to developing Asia. 

Meanwhile, Levi’s sales continue to slump and Schoenberger thinks that is partly because the company “had become exhausted by its ethics,” specifically by a “touchy-feely management style” that bogged down decision making. Yet he is upbeat that the business can recover, and there are reasons to believe the company’s social conscience will prevail. 

For one, Levi Strauss is opening up. Writing in The New York Times in June, well after he finished writing the book, Schoenberger notes that the company has started to open its books wider to investors. And he finally got the chance to sit down with Levi Strauss Chairman Robert D Haas, scion of the family that has owned the company for five generations who had much to say about running a business while maintaining core values.(Sample:” You have to have a financially viable business or all the words about values can ring hallow.”) Indeed, Schoenberger’s book would benefit with the addition of those comments. 

In addition, a former human-rights official with the US government, Gare Smith, joined the company last year. And in his Times story, Schoenberger says that Levi Strauss sent an e-mail message in May warning overseas executives that they could not try to cut costs at the expense of the company’s code of conduct. For Multinational executives seeking guidance on how to be a responsible global citizen, Levi Strauss remains as good a model as any. 

#