Ethics in Business:

Secrets, Lies, and Sweatshops

This article was published in November 2006 on BusinessWeek,  and highlights the issue of unfulfilled labour rules in the factories of Chinese suppliers to American importers. Entitled “Secrets, Lies, and Sweatshops”, the article suggests that, although American companies insist that they carry out regular inspections to ensure optimal conditions at their supply factories, many of the factories have just become more skilled at hiding malpractice. For instance, the article uses the example of a major Wal-Mart supply factory in China, which covered up the poor work conditions of its employees, by presenting the Wal-Mart inspector with false, but authentic-looking, records. These records give the impression that all labour rules are being upheld, when in actuality the workers are subject to strenuously long hours, with a pay rate lower than what the company has outlined as appropriate. This issue has apparently become quite the practice in China: suppliers of major American importers keeping double records of the inner workings of the factory. Furthermore, the article states that Chinese export manufacturing totals to just under $300 billion yearly, and yet American companies still insist on lower prices from their suppliers in order to provide North American consumers with inexpensive products. The article says, “Factory managers in China complain in interviews that U.S. price pressure creates a powerful incentive to cheat on labor standards.” This ethical issue leads to the major underlying questions: How do U.S. manufacturers deal with upholding labour rules in an effective way? How do you stop the cover-up of malpractice in Chinese factories?

Article: http://www.businessweek.com/magazine/content/06_48/b4011001.htm

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