CASE STUDY ONREEBOK- MANAGING HUMAN RIGHTS ISSUES

‘ETHICALLY ?’

Group Members:-

Varun Dalmia -49

Dhiraj Singh -17

Manish Bisht -27

Tushar Gharwar -48

Debasish Ghosh -13

Ajay Vallabhan -03

SUMMARY The case covers in detail the various initiatives taken

by Reebok over the years to prevent human rights violations in its footwear manufacturing operations. 

The case also covers the various human rights violations that were reported to have occurred in the footwear manufacturing facilities of Reebok in China. 

Reebok's efforts to address human rights and industrial relations issues in Chinese factories are also examined.

Reebok Limited

Type Subsidiary of Adidas

Industry Sportswear and SportsGoods

Founded Bolton, England (1895)

Headquarters Canton, Massachusetts, United States

Products FootwearAccessoriesSportswear

Website http://reebok.com

MISSION STATEMENT“At Reebok, we see the world a little differently and

throughout our history have made our mark when we’ve had the courage to challenge convention. Reebok creates products and marketing programs that reflects the brand’s unlimited creative potential.”

FAMILY TREE OF REEBOKIn 1885 Joseph William Foster, founder of

Reebok set up a company called “JW Foster & Sons”, Inc.

In 1950s Foster’s Grandsons Jeff and Joe took over the company and renamed it as Reebok Sports Limited.

Uli BeckerCEO Reebok India

Mr. John WarrenCFO

Mr. Terry R. PillowSenior Vice President

Mr. Paul Fireman CEO

INTRODUCTIONReebok International, Ltd. engages in the

design, marketing, and distribution of sports, fitness, and casual footwear, apparel, and equipment in the United States and internationally.

The company offers products in the sports, fitness, and women's categories; and for basketball, running, football, soccer, baseball, track and field, and other sports, as well as provides hockey skates, sticks, and hockey-related apparel.

CONTD...Reebok International was formerly known as

Reebok USA Limited, Inc. and changed its name to Reebok International, Ltd. in June 1985.

Reebok International Limited, US-based, one of the leading footwear and apparel companies in the world.

In January 2002, China Labor Watch published a report on working conditions in six factories in China. The report highlighted poor working conditions in these factories.

Questions for DiscussionsQ1. Reebok is one of the very few companies in the US footwear and apparel industry that has consistently made efforts to improve its labor management practices and working condition in it operations in third world countries. Explain the measures taken by the company over the years to improve working condition and prevent human rights violation in its footwear manufacturing operations.

Measures taken by ReebokEarlier Reebok were accused of not paying sufficient attention

to human rights issues so they established an exclusive Human Rights Department(HRD) in 1998 to address human rights issues in its operation across the globe, and it has also instituted a Code of Conduct in 1992, known as Reebok’s Human Rights Production Standard, to regulate working condition in the factories of its sub-contractors.

In the same year the company tied up with the Lawyers Committee for Human Rights to start ‘WITNESS’, a project that the HRD staff with video cameras, fax machine and computers to help it closely monitor issues relating to human rights abuse in its affiliated facilities across the world.

CONTD...Some of the measures taken by Reebok are as follows:-

1. Non-Retaliation Policy: this policy helps the factory workers to speak with Reebok staff without fear of retaliation by factory management.

2. Non-Discrimination: Reebok were interested in those business partners who do not discriminate in hiring an employment practices and who make decision about hiring salary benefits advancement discipline termination and retirement solely on the basis of a person’s ability to do the job.

CONTD...3. Working Hours/Overtime: Workers were not allowed

to work for more than 60 hours per week including overtime, except in extraordinary business circumstances. Workers were entitled to at least one day off in every 7 day period.

4. Forced or Compulsory Labor: Reebok will not work with business partners that used forced or other compulsory labor and they decided not to purchase materials that were produced by forced prison or other compulsory labor.

CONTD...5. Fair Wages: they made relation with all those

business partner who share their commitment to the betterment of wage and benefit levels that address the basic needs of workers and their families. They will reject all those business partners who are going to pay less than the minimum wages to the laborers.

6. Child Labor: they decided not to work with business partners that use child labor.

CONTD...7. Freedom of Association: Reebok recognizes and

respects the right of all employees to organize and bargain collectively.

8. Safe and Healthy Work Environment: Reebok will seek business partners that strive to assure employees a safe and healthy work place and that do not expose workers to hazardous conditions.

Questions for DiscussionsQ2. In spite of the continuous efforts made by Reebok to prevent worker’s abuse, human rights violations in Reebok’s Chinese operations were reported on two different occasions. Discuss the problem faced by workers in China. In light of the problem faced by Chinese workers, critically analyze the efficacy of the measures taken by Reebok to improve working condition and prevent human rights violation.

PROBLEM FACED BY WORKERS IN CHINADue to large unemployment in China, the

workers were ready to work for low wages.. , thus resulting in low wage-related expenditure for MNC’s.

Hence like most of the companies Reebok entered the Chinese market through the contract manufacturing route i.e. through sub-contractors. Then Reebok found that by using the contract manufacturing route it could not absolve itself of its responsibilities relating to footwear production.

CONTD...Reebok’s sub-contractors were not paying wages as

per Chinese Labor Laws.Women were not treated properly, they were forced

to do early morning warm up exercises before commencing work everyday and those who missed out on these session were fined.

Even fines were imposed if they were found talking while working which was in contravention of Chinese Labor Law as it was illegal.

CONTD...Workers were deprived of their basic rights of

freedom of association.The management did not permit the setting up of

unions by the workers. The only recognized union i.e. the All China Federation of Trade Union were accused of favoring the management.

Worker’s agitations were often suppressed by the management.

In the factories it was found that children aged between 13 & 15 were employed.

CONTD...There were serious violation of the provision of

Chinese Labor Law regarding working hours and the use of overtime.

Laborers were fired if they refused to work overtime for three consecutive days.

Workers were given high production targets failing which they had to work beyond the working hours without being paid overtime. Even they were forced to work in an extremely hazardous conditions. As a result, most of the workers suffered from headaches, dyspnea dizziness and skin irritations.

CONTD...Workers were abused both verbally and

physically. Workers were fired for reasons such as

becoming pregnant and over aged.The food and accommodation were given less

preference from the side of management. As a result, they were forced to stay in overcrowded dormitories in extremely unhygienic conditions.

Measures taken by ReebokReebok took few steps to improve the working

condition in its manufacturing facilities which are as follows:

1. In May 1999,Reebok along with Mattel ( a US-based sports good company, which produces a market sports equipment, footwear and apparel under the brand name of Adidas,

Salomon, Taylor Made and Mavic) and Levi Strauss team up with 21 human rights, fare trade and social investment group to endorse a set of principles for corporations doing business in China.

CONTD...2. In march 2001, Reebok along with Nike and Adidas

Solomon AG teamed up with three Taiwan based sub-contractors and four Hong Kong based NGOs to institute a project called China Capacity Building Project in China.

3. A training was imparted in various areas including occupational safety and health principles.

4. Workers were asked to express their views to help management evaluate and improve health, safety and environmental conditions in manufacturing facilities in China.

CONTD...5. To encourage the workers, they were asked to

report the problem to the management, external observers and NGOs.

6. China working women’s networks were set to educate women workers in the factories about issues such as health, gender consciousness and labor rights.

7. Workers were encouraged to set up forms to interact with management and management were asked to conduct election in the factories.

CONTD...8. Reebok imparted to the workers’ representatives in

handling union matters such as conducting meetings, recording complaints and handling grievances.

9. In August 2002, Reebok took measures to reduce overtime working hours in these factories to 36 hours per month.

10. In the same year, election were conducted in Reebok’s Taiwanese owned Fuh Luh footwear factory in the Fujian province of China.

CONTD...11. Although several measures were taken by Reebok

for preventing the violation of Human Rights, but Reebok don’t have the assurance that things will be same the next day. Because the factories in China are incredibly sophisticated at finding way to fool them.

So, The Best Monitors Were The Worker’s Themselves

Questions for DiscussionsQ3. According to analysts, Reebok’s measures for improving working conditions in its Chinese factories were not sufficient. What other measures should Reebok take to tackle the problem of human rights violations in its Chinese operations? Explain in detail

ADDITIONAL MEASURES The following measures Reebok should take to tackle

the problem of Human Rights violations:-

1. No goods produced within the company owned facilities or those of suppliers shall be manufactured by bonded labor, forced labor within prison camps or as a part of reform- through- labor or reeducation-through- labor programs.

2. The facility and the supplier shall prohibit the use of corporal punishment as well as any physical, sexual or verbal abuse or harassment of workers.

CONTD...3. The facility and suppliers shall provide wages that worker

basic needs get fullfilled and there should be fair & decent working hours.

4. The facility and suppliers shall not affect the occupational safety and health of workers.

5. The facility and suppliers shall undertake to promote the following freedoms among their employees and the employees of the suppliers:-• Freedom of association and assembly • The right to form union and to bargain collectively.• Freedom of expression

CONTD...6. Employees working in the facilities shall not face

discrimination in hiring, remuneration or promotion based on age, gender, pregnancy, ethnicity or region of origin.

7. The facilities and suppliers shall use environmentally responsible methods of production.

8. The facilities and suppliers shall prohibit child labor.

And by following the above measures, the facilities in China will definitely eradicate the problems faced by the employees working over there.

CONCLUSIONThe myth that children can produce better

quality goods has been exploded and it’s clear that no industry can flourish in the long term by using children as cheap labor. Pressure from consumers and the media, combined with an increased social consciousness in businesses, are all helping to make industry child labor free.

Child labor is absolutely unacceptable to Reebok.

Reebok seeks business partners who do not use child labor.

CONTD...So its clear from the case study that Reebok

will choose that suppliers that can follow the production standards as set by them.

Any queries?

THANK YOU