Nike Does It To Vietnam

by Jeff Ballinger

Multinational Monitor, March, 1997

Nike, long in the vanguard of U.S. companies producing in Asia, is now leading Corporate America's charge into Vietnam. Twenty-five thousand young Vietnamese workers currently churn out a million pairs of Nikes every month.

The lure of Vietnam is obvious. The country's minimum wage is $42 a month. At that rate, labor for a pair of basket ball shoes which retail for $149.50 costs Nike $1.50, 1 per cent of the retail price. Vietnamese newspapers report that Nike contractors even cheat many workers out of the paltry minimum wage.

Nike workers in Vietnam are also subject to other labor rights violations. The Vietnamese press contain frequent allegations of verbal, physical and sexual abuse of workers, charges echoed by Thuyen Nguyen of the New York City based Vietnam Labor Watch. Nguyen also says that Nike contractors require overtime work far in excess of permissible limits.

Vietnam is not Indonesia or China, however, and Nike has found itself more vulnerable to criticism in Vietnam. Unlike China and Indonesia-which together account for about 70 percent of Nike's shoe production-Vietnam has a vocal immigrant community in North America which stays in touch with developments back home. Vietnamese leaders appear concerned about safeguarding some vestige of the nation's socialist principles in the face of a flood of foreign investment. That lingering socialist legacy distinguishes the country from both China, where exploitation of workers in foreign shoe companies is rife and the regime does not permit critical news reports, and Indonesia, which years ago banned newspapers from reporting on the harsh conditions and minimum wage violations at sports shoe-producing factories.

Tour of duty

With the spotlight suddenly turned on its Vietnamese operations, and increasingly shining on its Indonesian factories, Nike has been caught flat footed. Last August, the company had to hurriedly dispatch two outside directors for a tour of production facilities in Indonesia and Vietnam just weeks before the company's annual shareholder meeting. The tour was prompted by a resolution filed by the General Board of Pensions of the United Methodist Church calling on the company to address the abusive practices of its con tractors. Upon her return, Jill Ker Conway, a Nike director, best selling author and visiting professor at the Massachusetts Institute of Technology, told shareholders at the annual meeting that the young Indonesian and Vietnamese workers were treated fairly. She said Nike contractors provide adequate compensation, safe working conditions and health care that is superior to what the workers received in the villages that most of them have recently left.

Conway countered reports that Nike contractors pay workers less than the monthly minimum wage of $65 a month in Indonesia and a third less in Vietnam. "I was informed of minimum wage regulations by Nike" and contractors' adherence to them, Conway told the shareholders. When told about wage violations uncovered by CBS just days before, Conway expressed confidence in Nike's expatriate staff. Since the shareholders' meeting, further reports have alleged ongoing wage violations by Nike contractors. In January 1997, the Independent Sports Shoes Monitoring Network, a collection of respected Indonesian non-governmental organizations, charged that cheating continues despite the presence of Nike-hired "monitors" from the accounting firm Ernst and Young. In an interview with Multinational Monitor, Conway expressed utmost confidence in her powers of observation- even though Nike organized her tour and provided translators in both countries and she did not contact any of the non-governmental organizations in Indonesia which have been critical of labor practices in the Nike factories for years.

The workers she chatted with in factories, lunch rooms and dormitories "did not appear to be intimidated," Conway says. Workers do want a reduction in overtime, she acknowledges, though she did not mention this criticism to share holders. Conway stands by her statement to shareholders that the length of annual leave for the Indonesian workers making Nike shoes is more than 30 days, though dozens of workers interviewed in November, two months after her visit, said the actual amount is 10 days.

The second outside director to tour Nike's Asian facilities, Georgetown University basketball coach John Thompson, told shareholders that he was "far more satisfied with my own conscience" after the visit. He expressed relief that he observed no one being "overly abused." He also said, "I did not see the kinds of things that I had heard about."

What Conway and Thompson did not uncover was widely reported in the Vietnamese press, starting in April 1996. Vietnamese news accounts reported that a Nike contractor's Korean supervisor was found guilty of beating 15 Vietnamese about the head with a shoe "upper," and that another Korean supervisor was charged with sexual molestation.

Nike Chief Executive Officer Phil Knight did mention these incidents at the shareholder meeting. Knight told the shareholders that "one Vietnamese worker was hit "on the arm." About the sexual molestation case, Knight said, "There was perhaps some misappropriate behavior. And then he touched a part he should not have."

But the Vietnamese news accounts reveal that the incidents Knight belittled were serious. In the sexual molestation case, according to the news reports, factory managers tried to buy the young women's silence, and the Korean manager fled to Seoul after charges were filed against him. Lacking independent unions and meaningful corporate codes of conduct to discipline management, some workers for Nike contractors are turning to the courts, with mixed results. A Vietnamese court recently found the Korean supervisor guilty of beating workers, and extradition may be sought for the sexual molester who fled. In Indonesia, 24 discharged Nike workers are challenging the legality of their dismissal before the country's Supreme Court. The Indonesian workers face a long wait, according to their lawyer, Apong Herlina. The Supreme Court's docket is crowded with hundreds of cases, and "only 26 decisions were issued last year," Herlina says. The case "could be settled if Nike took it up with their contractor," says Herlina, but this seems unlikely. Last summer, Nike refused even to see one of the dismissed workers when she visited the company's headquarters in Beaverton, Oregon.

Stopping Nike from trampling labor rights

That the Vietnamese press has published reports detailing abuses in Nike contractor plants is significant, because it demonstrates a government disapproval of these practices. The government tightly controls the Vietnamese media, and the appearance of dozens of stories about these incidents in recent months suggests the government is not as willing to ignore abusive behavior as its counterparts in Indonesia and China. Whether disapproval of abusive labor practices will override the government's feverish desire for foreign investment remains to be seen, but it certainly enhances the leverage of labor rights activists working to eradicate the most brutal practices connected to one of the world's greatest corporate beneficiaries of economic globalization.

Jeff Ballinger is director of Press for Change, an advocacy group leading the campaign to force Nike to ensure its contractors respect basic labor rights.

Transnational Corporations & the Third World