Social Responsibility as a Significant Differentiator

In the past year, goods imported from China have received even more negative publicity than usual. Most notably, the discovery of children’s toys which were covered in lead-based paints shocked the country and raised outcry for greater import restrictions and regulations. The retailers which stocked these toys managed to escape much of the public backlash, blaming poor Chinese manufacturing standards. But at some level, each of these retailers is and should be held responsible for its supply chain, and the corners which are cut within it.

The side of the story that us North Americans were not exposed to was that that very same cancer-causing, lead-based paint was being applied by workers in China who were not provided with effective safety equipment, worked in poorly ventilated areas, underage in some cases, and rarely receivers of fair wages. These working conditions have been created, if somewhat indirectly, by major Western retailers’ constant push for low costs. In favor of these low costs, many companies have traditionally turned a blind eye to these substandard labour conditions.

Growing operational transparency accompanied by increasingly easy access to information has led some of these retailers to take a much more socially responsible stance, in the hopes of building consumer trust and loyalty. Many retailers have gone above and beyond current government mandates in order to promote themselves as being responsible corporate citizens. In this way they are generating strong, positive publicity for themselves, while pushing other corporations to be more socially responsible.

Nike is one of the leading retailers in this regard. They have been victimized in the past by rumors that they endorsed slave labour after it was revealed that many of their factory employees were not provided basic rights. In response to the consumer backlash, Nike has worked to turn this image around, and as of 2007 was ranked as the third most responsible corporate citizen in the world, according to Business Ethics magazine. Nike has just undertaken its first annual comprehensive review of Chinese manufacturers which act as suppliers for Nike. They publicly displayed the results, which included the finding of many falsified documents regarding employee wages and also discovered many cases of underage workers. Nike has penalized manufacturers which are in violation of new Chinese labour laws and has gone even further by developing an educational program for workers in these manufacturing countries to inform them of their rights. This program will have been implemented in every factory which supplies Nike by 2011.

Socially responsible retailing has become a way of providing increased value to an ever growing segment of worried consumers. Entire business models are beginning to spring up based on the sole advantage of offering responsible products and services. Our final case, OQOQO, is a perfect example of this, wherein the creator is attempting to create environmentally sustainable clothing, produced in socially responsible settings. While price is often sacrificed in these scenarios, the differentiation created and brand loyalty developed is a significant advantage that has been historically proven to overcome the slight price increase. Consumers of these organizations are granted greater peace of mind in the knowledge that they are supporting socially responsible corporations. It is this improved experience which will continue to drive social improvements in manufacturing countries.

Sites of Interest:

Business Ethics 100 Best Corporate Citizens 2007

Nike finds problems in China

Poor Working Conditions Plague Guangdong

Working Conditions in China: Just and Favorable?

Probe Sheds Light on Working Conditions in China