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  - July 28, 2008 -  

Retailers Try to Control Overseas Manufacturers

Investigation Reveals Child Labor Violations; Supplier Deception

By Bernice Hurst, Special to RetailWire

This content from RetailWire is made possible through a partnership between RetailWire and Supply Chain Digest to share content relevant to each other's readers.

Each business morning on, retailing execs get plugged in to the latest industry news and issues with key insights from a "BrainTrust" of retail industry experts. Here are excerpts from one of these unique RetailWire online Discussions, along with results from's Instant Polls.

For the past few years, retailers in the U.S. and Europe have reassured consumers worried about overseas manufacturers' working conditions by saying that they monitor them frequently to ensure that workers are not mistreated or underpaid (by their own countries' standards). They have particularly emphasized steps taken to eliminate child labor. Their efforts have satisfied many and resulted in booming sales.

Following an investigation for a BBC television program, however, one of Britain's lowest priced fashion retailers, Primark, has dropped three of its Indian suppliers for sub-contracting embroidery work to companies using child labor. Sarah Arnott's report of the story in The Independent included a statement from Primark's parent, Associated British Foods (ABF), that, "Under no circumstances would Primark ever knowingly permit such activities, whether directly through its suppliers or through third-party sub-contractors." They stressed their quick response and said that they acted immediately after "being made aware of the facts...canceling all new orders with the factories concerned and withdrawing from sale the embroidered garments involved."

ABF chairman George Weston also said that because the suppliers had denied the charges and been guilty of "wholesale deception," the company was not working with them to change conditions as they might have otherwise.

Discussion questions: Do you think the retail industry is doing an adequate job looking after its outsourced workers? Are consumers recognizing these efforts? How can retailers persuade consumers that they are doing the best they can?  

(Global Supply Chain and Logistics Article - Continued Below)




RetailWire Instant Poll Results:


RetailWire BrainTrust Comments:

The "on-the-shelf" expectancy of product quality at a low accessible price would seem to register higher with a great many American consumers than the out-of-sight welfare of workers producing the products. Thus, retailers find themselves in a dilemma: either go with marketing's flow and try to get prices that appeal to today's consumer needs and desires or spend a portion of their time monitoring working practices in overseas cultures which may have different standards and values. Sounds a little like a Catch 22, doesn't it?

Gene Hoffman, President, Corporate Strategies International

Gene Hoffman, President, Corporate Strategies International, Says:
The "on-the-shelf" expectancy of product quality at a low accessible price would seem to register higher with a great many American consumers than the out-of-sight welfare of workers producing the products.

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Many overseas inspections by American retailers' agents are done using the script from the movie Stalag 17. The inspectors inform the factories (prison camps in the movie) well in advance of their expected arrival date. On the date they arrive, all is well. The workers (prisoners in the movie) do not complain.

Hard to determine the provenance of every item in the supply chain? Tell that to kosher inspection organizations. They operate in every country on Earth, and have to document the source of every ingredient as well as its transportation and packaging, every step of the way.

Can't tell if the workers are being treated humanely? Can't tell if unconscionable child labor is being used? Install a few surveillance cameras connected to the internet at every factory. Don't tell the factory when you'll be watching and recording.

Mark Lilien, Consultant, Retail Technology Group

I run a sourcing and supply management company in Asia and spend a lot time sourcing and auditing in India for our western clients. I am western and we have western ethics and processes - random auditing, to name a significant one. In the last 2 years I audited 100+ suppliers in India. Child labour, pollution, no health and safety, no accident insurance, paying staff below the minimum wage - all found. We do not find forced work very often. We work to improve suppliers to western expectations or we do not trade with them.

However, to raise consciousness, much of the 1bn + population lives in poverty. In many families children are the breadwinners. The next best alternatives to work are not great; begging, having a hand cut off for greater returns or prostitution. Or collecting and selling cow dung in towns with no gas or electricity.

Ineffective government and corruption is a key factor and this has held back investment and subsequently trade. Profit expectations of big companies in the West and low quality B2C sales and only competing on price are others.

And we will still find child labour in India until the next best alternatives for them improve. Trade will make that happen.

Steve Bramhall, Managing Director, SB Purchasing

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