NYT: ‘As China’s Workers Get a Raise, Companies Fret’

June 2, 2011 § Leave a comment

The New York Times

By KEITH BRADSHER

Published: May 31, 2011

HONG KONG — Wages are surging this year inChina and among its main low-wage Asian rivals, benefiting workers across the region. But the increases confront trading companies and Western retailers with cost increases and are making higher prices likely for American and European consumers.

Bruce Rockowitz, the chief executive of Li & Fung, the largest trading company supplying Chinese consumer goods to American retail chains, said in a speech here on Tuesday that the company’s average costs for goods rose 15 percent in the first five months of this year compared with the same period last year. Executives at other consumer goods companies have encountered similar or larger increases.

Airline flights to Vietnam, Bangladesh, Indonesia and other low-wage Asian countries are packed these days with executives looking for alternatives to double-digit wage increases in China. But wages are rising as fast or faster in many of these countries, following China’s example, while commodity prices have surged around the world, leaving buyers with few places to turn.

Bangladesh raised its minimum wage by 87 percent late last year, yet apparel factories there are still struggling to find enough workers to complete ever-rising numbers of orders. “Everywhere you see signs saying ‘people wanted,’ “ said Annisul Huq, the chairman of the Mohammadi Group, a large Bangladesh garment manufacturer.

The Gap surprised financial markets on May 19 by announcing that a 20 percent jump in costs from suppliers by the second half of this year would depress its profits, prompting a 17.5 percent plunge of its shares the next day. Coach, the luxury handbag company, announced in January that it would try to reduce its reliance on China to less than half of its products within four years, from 80 percent now, by moving production to Vietnam and India.

Yet wages in Vietnam have been rising as fast as Chinese wages, or faster, while India has posed many problems for large-scale manufacturers. Mr. Rockowitz said that India’s infrastructure — roads and ports — was “really poor,” while labor issues, including government regulations, make it hard to build Chinese-style factories for tens of thousands of workers.

With costs rising in China and few alternatives elsewhere, “you have the perfect storm for raising prices,” said Bennett Model, the chief executive of Cassin, a Manhattan-based line of designer clothing. The company’s costs have risen 25 to 35 percent in the last year for cotton and fur garments alike.

Cassin has begun experimenting with garment production in Guatemala with some success, Mr. Model said, adding that many garment companies were still leery of buying from anywhere except China. “Everybody’s scared of the quality — you spend so many years training a factory” to meet detailed specifications, he said.

Yet with 14 million people, Guatemala has the population of only a single large Chinese metropolitan area like Shenzhen or Guangzhou.

Workers in developing countries all over the world are becoming more aware of pay elsewhere through the Internet and the use of social media like Facebook, increasing the pressure for higher wages, Mr. Rockowitz said.

Li & Fung handles about 4 percent of American retailers’ imports from China of virtually all kinds of consumer goods, according to investment analysts. The exception is electronics, which tend to be imported directly to the United States by other companies like Apple.

Mr. Rockowitz and other executives predict that the extremely high concentration of factories in southeastern China near Hong Kong will give way to a dispersal across the country in the next five years. Workers are becoming much more reluctant to spend up to three days on buses and trains from the interior to reach coastal factories, particularly when the growth of domestic spending in China is creating more jobs in the interior.

Even the recent opening of high-speed rail routes that cut travel times up to 80 percent has not been enough to revive the flow of migrants. “They don’t have to take a 1,000-mile trip to the coast — there’s a shortage of people, unbelievable,” said Douglas Hsu, the chairman and chief executive of the Far Eastern Group, a big Taiwanese multinational with extensive investments in mainland China.

And wages in China’s interior have been rising even faster in percentage terms than in coastal provinces, steadily narrowing what was once a pattern of much higher wages in coastal export zones.

Many companies have another reason for staying in China these days: that is where their sales are growing fastest. “If the market is in China, which in many cases it now is, there’s much less incentive to move,” said Charles Oliver, the senior partner of GCiS China, a market research company in Shanghai.

China has become the world’s largest market for a long list of products, like cars and steel. Producing and selling in China protects companies from later facing “Buy Chinese” policies, antidumping cases or other Chinese import restrictions.

Manufacturing in China allows companies to incur costs in renminbi, the same currency as a growing part of their sales. That insulates them from one kind of currency volatility even as the renminbifluctuates more against the dollar and euro.

Rising wages and strengthening currencies in Asia are making it less attractive to move higher-value industries like auto manufacturing out of the West. But little mentioned by almost anyone making or trading consumer goods in Asia these days is the possibility of moving these relatively labor-intensive manufacturing industries back to the United States or Europe.

Mr. Rockowitz was dismissive of the idea in his remarks on Tuesday at the Foreign Correspondents’ Club.

“The Western world does not have the work force to do this kind of business,” he said. “For ‘made in Italy,’ the workers are old now and there are no new workers coming in.”

The Quran on those who Exploit

May 22, 2011 § Leave a comment

“WOE UNTO THOSE who give short measure: those who, when they are to receive their due from [other] people, demand that it be given in full – but when they have to measure or weigh whatever they owe to others, give less than what is due! Do they not know that they are bound to be raised from the dead [and called to account] on an awesome Day – the Day when all men shall stand before the Sustainer of all the worlds? “(Quran 83: 1-6)

I have been thinking a lot about these verses, and wondering about production around the world. There is an expectation that when we buy commodities in North America, we pay the full price – no bargaining, no compromise. Companies make billions off of this. But how do they reward those who make their goods? They pay them meager wages, barely enough to live on. They often don’t even pay their North American workers enough or give them benefits (think Walmart). During the market crisis, heads of corporations paid themselves millions in bonuses, while the common citizen paid the price of their company bailouts.   God in the Quran addresses these sorts of people by the use of the word ‘wail’ ( وَيْلٌ), the definition meaning ‘woe unto you’ or ‘destruction, ruin, or doom unto you’ and they are later in the same chapter promised Hellfire. Exploitation, even on a small scale, is a very serious offense in the Quran. Are we a part of this? Do we even care?

I remember a few years ago MSA National was giving a scholarship to Muslim students from Chevron-Texaco. I wrote them a long letter explaining that it makes no sense for those who believe in Islam and its truth to accept money from a company that has raped (I didn’t use that word exactly) parts of Nigeria (along with other places in the world, but I used Nigeria as an example) and has put almost nothing back. How can we as Muslims be a part of that? The outer forms of worship (prayer, fasting, etc.) mean nothing when we’re accepting money stained with the blood of those who were exploited for oil.

I never received a response. This may be overly cynical to say, but I don’t think many Muslims care about exploitation as long as they don’t see it, don’t hear it, and don’t think about it. Looking Muslim and acting Muslim as well at following religious ritual is enough. This example was of a group simply accepting money from a major oil company, but many are directly involved in these dealings. Even on a small scale, cheating on business deals is a norm among many I’ve observed.

God curses those who exploit others, and those who are unfair in their business transactions. Ritual is not enough, if we do not make sure our actions are fair and just, we’ll be answerable to Him for what we’ve done to others.

See Morgan Spurlock’s New Documentary

May 9, 2011 § Leave a comment

Pom Wonderful Presents: The Greatest Movie Ever Sold

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Just saw this a week and a half ago at the Hot Docs Film Festival. For anyone interested in product placement and the infiltration of advertising in all aspects of our existence, this is the documentary to see. What I thought the movie highlighted well is how inescapable advertising is (unless you live in a remote area) in North America and how much it has become part our normal landscape. I now come to expect odd insertions of lines advertising products in movies and tv shows and almost don’t notice them anymore. It was a good reminder of how much our minds are jammed and polluted by all of this stuff.

CTV: UBC named Canada’s first Fair Trade Campus

May 8, 2011 § Leave a comment

 Congrats to UBC for leading the way. Hope to see this on other campuses across Canada!!

UBC named Canada’s first Fair Trade Campus
CTV

By: Kendall Walters, ctvbc.ca

Date: Thursday May. 5, 2011 5:07 PM PT

There’s something different about the way the University of British Columbia wakes up and smells the coffee in the morning – the steaming caffeine poured into warm mugs across campus is fair trade.

UBC just became the first Fair Trade Campus in Canada. The Fair Trade Canada designation follows Vancouver’s recognition as a Fair Trade City this time last year.

Coffee, tea and chocolate bars sold at UBC and student society AMS-run eateries are ethically purchased and provide equitable compensation to farmers for their product.

The commitment does not include campus franchises – Starbucks, Tim Hortons and White Spot.

Kaan Williams is the director of fair trade with the UBC chapter of Engineers Without Borders. He was instrumental in pushing the designation initiative forward.

“It’s not just a recognition of past activity at UBC,” he said. “It’s also a commitment to retain the momentum that UBC has.”

The campus had already put into effect many policies fitting with Fair Trade Canada’s designation requirements. UBC has offered fair trade coffee for the past decade; the campus sold nearly 1.5 million cups of fair trade coffee in the last year alone.

“All the reactions I’ve heard so far were enthusiastic and excited,” Williams said. “People are excited to see some recognition for what’s going on here at UBC.”

Only a few extra steps had to be put in place to meet designation restrictions.

The campus dedicated itself to using fair trade products whenever possible, Williams said. That’s why it’s gone beyond the minimum requirements of the designation.

Fair Trade Canada asks that Fair Trade Campuses sell only fair trade coffee and offer at least three fair trade teas and one fair trade chocolate bar option.

Nearly all of the teas offered at UBC are fair trade and campus eateries are also selling fair trade tropical fruit such as bananas.

“We’re always looking for new things to use as well,” Williams said.

The designation has already fueled action by local businesses.

Vancouver-based coffee companies Milano and Ethical Bean have jumped on board. Milano produced its first fair-trade certified blend of coffee for UBC.

And there’s buzz in the air of fair trade designation hopes at several other Canadian universities. Williams has already been contacted by other institutions interested in following UBC’s example.

Andrew Parr is the managing director of UBC student housing and hospitality services. He was closely involved in the designation.

He said the campus wasn’t aiming to be the first fair-trade certified in Canada, but he said he thinks it’s a nice message to other institutions.

“This is something that is feasible and doable and worth doing,” Parr said.

The initiative is a matter of educating students on something more than the subject matter they study in the classroom, Parr said, adding he hopes the move can help UBC students become more socially-conscious citizens.

Williams agreed.

“That’s a nice way that we as an institution are able to make an influence in a broader community,” he said.

UBC joins 100 global universities that have already made the commitment.

American Apparel Adventure

May 5, 2011 § Leave a comment

It was only a few months ago that I discovered American Apparel is a sweatshop-free, made in America clothing line (hence the name American Apparel). Before that, I’d passed it many times but never went in – it seemed like the same sort of clothing you could find at Old Navy or Banana Republic. But upon discovering their merchandise is not produced in sweatshops, I decided it was worth checking out.

Turns out I was completely wrong about it being a generic clothing store. There are many pieces in fashion now that are eighties revival that I like, some that I sort of understand, some that I would never wear but think might look trendy on a few brave souls. But I could only describe their line as Denise Huxtable whacked out totally eighties-style clothing. I actually stood confused at the front of the store for a few minutes  because I felt like I’d walked into the wrong decade.

After looking around a bit, I found a shirt that I actually liked and ended up buying. That was a lucky find though because I’m neither ‘trendy’ enough nor brave enough to wear most of the clothing in the store. They do have undergarments and nice accessories which I think would be worth a trip there a few times a year. But otherwise, I was pretty disappointed. Maybe the solution is for me to be more daring in my clothing choices? Maybe not.

The Guardian: Apple’s Chinese workers treated ‘inhumanely, like machines’

May 2, 2011 § Leave a comment

The Guardian UK

Gethin Chamberlain
Saturday 30 April 2011

Investigation finds evidence of draconian rules and excessive overtime to meet western demand for iPhones and iPads

An investigation into the conditions of Chinese workers has revealed the shocking human cost of producing the must-have Apple iPhones and iPads that are now ubiquitous in the west.

The research, carried out by two NGOs, has revealed disturbing allegations of excessive working hours and draconian workplace rules at two major plants in southern China. It has also uncovered an “anti-suicide” pledge that workers at the two plants have been urged to sign, after a series of employee deaths last year.

The investigation gives a detailed picture of life for the 500,000 workers at the Shenzhen and Chengdu factories owned by Foxconn, which produces millions of Apple products each year. The report accuses Foxconn of treating workers “inhumanely, like machines”.

Among the allegations made by workers interviewed by the NGOs – the Centre for Research on Multinational Corporations and Students & Scholars Against Corporate Misbehaviour (Sacom) – are claims that:

■ Excessive overtime is routine, despite a legal limit of 36 hours a month. One payslip, seen by the Observer, indicated that the worker had performed 98 hours of overtime in a month.

■ Workers attempting to meet the huge demand for the first iPad were sometimes pressured to take only one day off in 13.

■ In some factories badly performing workers are required to be publicly humiliated in front of colleagues.

■ Crowded workers’ dormitories can sleep up to 24 and are subject to strict rules. One worker told the NGO investigators that he was forced to sign a “confession letter” after illicitly using a hairdryer. In the letter he wrote: “It is my fault. I will never blow my hair inside my room. I have done something wrong. I will never do it again.”

■ In the wake of a spate of suicides at Foxconn factories last summer, workers were asked to sign a statement promising not to kill themselves and pledging to “treasure their lives”.

Foxconn produced its first iPad at Chengdu last November and expects to produce 100m a year by 2013. Last year Apple sold more than 15m iPads worldwide and has already sold close to five million this year.

When the allegations were put to Foxconn by the Observer, manager Louis Woo confirmed that workers sometimes worked more than the statutory overtime limit to meet demand from western consumers, but claimed that all the extra hours were voluntary. Workers claim that, if they turn down excessive demands for overtime, they will be forced to rely on their basic wage: workers in Chengdu are paid only 1,350 yuan (£125) a month for a basic 48-hour week, equivalent to about 65p an hour.

Asked about the suicides that have led to anti-suicide netting being fitted beneath the windows of workers’ dormitories, Woo said: “Suicides were not connected to bad working conditions. There was a copy effect. If one commits suicide, then others will follow.”

In a statement, Apple said: “Apple is committed to ensuring the highest standards of social responsibility throughout our supply base. Apple requires suppliers to commit to our comprehensive supplier code of conduct as a condition of their contracts with us. We drive compliance with the code through a rigorous monitoring programme, including factory audits, corrective action plans and verification measures.”

Islamic Relief: An Islamic Perspective on Fair Trade

April 25, 2011 § Leave a comment

The international relief and development organization Islamic Relief has published an in-depth analysis on fair trade according to Islamic principles:

An Islamic Perspective on Fair Trade

The growth of international trade has brought about significant economic benefits and prosperity to many. However, small-scale producers in many poor countries, particularly those whose livelihoods depend upon the farming of a single crop, are unable to compete in a world market controlled by large multinational companies and distorted by the subsidies provided by rich countries to their producers. As a consequence, farmers in poor countries have few options for generating an income and many live in poverty often unable to meet even their most basic needs. Fair trade is a response to these conditions.

European and North American Fairtrade labelling bodies, non-governmental organisations and various faith-based organisations have all been instrumental in promoting fair trade. Indeed, for ethical and moral reasons, many Christian faith-based organisations have adopted a clear and unequivocal position in support of fair trade. Is an Islamic perspective on fair trade also supportive? Do Islamic principles and teachings encourage Muslim organisations to be equally active? And does an Islamic perspective provide additional insights? In order to address these questions, this paper presents an Islamic perspective on fair trade. It does this by outlining the key principles upon which fair trade is based, such as sustainability, fairness, equity, and workers rights, and examines relevant Islamic teachings.

This investigation finds that the principles of Islam are not silent on issues of fair trade and trade justice. Indeed, there is a rich heritage in Islam of high moral standards, ethics, values and norms of behaviour, which govern personal, professional and business life. In the area of business and commerce Islam obliges buyers, sellers and consumers to act honestly, fairly and with integrity in their daily business practices – for business is not something that can be treated separately from all other aspects of social life. Islam also obliges workers to be treated fairly, and with dignity and respect. Since the fair trade movement is primarily concerned with fairness, equity and justice, it seems that the principles of fair trade and the teachings of Islam are entirely congruent. With references from the Qur’an and ahadith this analysis demonstrates that, from an Islamic perspective, there are indeed strong and clear faith-based reasons for supporting fair trade initiatives. Through supporting fair trade, Muslims can ensure that producers receive a fair price that guarantees a living income and decent working conditions with longer-term contracts that provide greater security and ensure more sustainable development.

Read full article: http://www.islamic-relief.com/InDepth/downloads/Islam_and_Fairtrade.pdf

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