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
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
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.
Corporations & the Third World