The Role of IHRM in Cross-Cultural Ethnical Issues and Corporate - PowerPoint

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					 The Role of IHRM in Cross-
 Cultural Ethnical Issues and
Corporate Social Responsibility

              Group Members:
 Qiuyi Huang, Shaorong Liao, Juan Kwang Li,
         Wen Qiao Li, Yuen Kwun
   Yuen Kwun Wong (Joyce.W)
    -- Profile of U.S.A. China and Thailand
    -- Nike Overview of in the U.S.A. and Asian Pacific Region

   Shaorong Liao (Michelle)
    --Subcontracting in IHRM and related issues
    --Nike business standard
    -- Critiques

   Juan Kwang Li (Joyce.K)
    --Case study: Yu Yuen factory in China

   Qiuyi Huang (Ivy)
    --Case study: MSP Sportswear in Thailand

   Wen Qiao Li (Lily)
U.S.A. Profile (PCN)
            U.S.A. Profile (PCN)
   Government Type: Constitution-Based Federal
   Political Parties: Democratic Party, Republican Party
   President: George W. Bush

                                 (Central Intelligence Agency)
                  U.S.A. Profile
   Labor Force: 147.4 Million
   GDP Purchasing Power Parity - $40,100
   Investment (gross fixed): 15.7% of GDP
   Export: 795 Billion
   Import: 1.476 Trillion

                                 (Central Intelligence Agency)
     U.S. A. Business Sector
30                                                U.S.A.
      Service   Industry   Agriculture
       79.4%     19.7%        0.9%

                              (Central Intelligence Agency)
               U.S. A. Profile (cont.)
   Literacy rate: 97%
   Long-term problems
    -- High medical and pension cost
    -- Trade and budget deficits
                                   (Central Intelligence Agency)
China Profile
     Culture Description in China
   Important Business Concept :
    “GuanXi” = Relationship
   “GuanXi” definition:
     Networking of relationships among various parties
    that cooperate together and support one another

                                  (Export Information Organization)
Culture Description in China (cont.)
   “GuanXi” in Chinese culture
    -- Legalized
    -- Not relate to bribery
    -- Quotation: “Connections are more important than
    strategy for a company to succeed in Asia”

                                 (Export Information organization)
    Social Description In China (cont.)
   Population
    --1.3 Billion
   Literacy Rate: 86%
   Problem: Drug Abuse, Corruption ,Violation of
    Property Rights and Pollution

                              (Central Intelligence Agency)
    Economic Description In China
   Labor Force: 778.1 Million
   GDP:
    -- Real Growth Rate: 9.1%
    -- Per Capita: Purchasing Power Parity - $5,600
   Investment (gross fixed): 46% of GDP
   Exports: 194.7 Billion
   Imports: 158.8 Billion
                                  (Central Intelligence Agency)
Business Sector in China
20                                                China
     Agriculture   Service   Industry
        49%          29%       22%
                               (Central Intelligence Agency)
    Political Description In China
   Government type: Communism
   Political parties: Chinese Communist Party, 66.35
  million members; 8 minor parties under communist
 President: Hu Jin Tao

                                (Central Intelligence Agency)
    Important Recent Changes in
   1989: Student Movement in Tiananmen Square
   2001: Joined the World Trade Organization
   2003: General Secretary Hu Jin Tao was elected
    as President

                        (Bureau of East Asian and Pacific Affairs)
Challenges to the Chinese Expatriate
             and IHRM

   Corruption
   Intellectual Property Rights
   Crimes

                         (Bureau of East Asian and Pacific Affairs)
Thailand Profile
Culture Description In Thailand
   Important Business Concept: Cooperate Structure
    -- Powerful connection is respected
    -- Family comes first before business
       Ex: Top management is often family

                                            (FGI world)
    Social Description In Thailand
   Population: 65,444,371
   Literacy rate: 97.1% Male, 93.9% Female
   Problem: AIDS

                               (Central Intelligence Agency)
 Economic Description In Thailand
   Labor Force: 34.9 Million
   GDP
    -- Real Growth Rate: 6.1%
    -- Per Capita: Purchasing Power Parity - $ 8,100
   Investment (gross fixed)
 --22.5% of GDP
 Export: 75.99 Billion
 Import: 65.3 Billion

                                   (Central Intelligence Agency)
Business Sectors In Thailand

     Service 46.7%   Industry 44.3% Agriculture 9%

                                        (Central Intelligence Agency)
Political Description In Thailand
   Government type: Constitutional monarchy
   Political parties: Multi-party system and Communist
    Party is prohibited
   Executive-king: Phumiphon Adunyadet

                                (Central Intelligence Agency)
    Important Changes in Thailand
           Recent History
   1988: Chatichai Choonavan, the leader of the Thai
    Nation Party (democratic party) was first elected
    as prime minister
   1996: Chuan formed a coalition government
   2001: Telecommunications multimillionaire
    Thaksin Shinawatra and his Thai Rak Thai
    (TRT) party won victory on platform of
    economic growth and development.

                         (Bureau of East Asian and Pacific Affairs)
Challenges to the Expatriate and
      IHRM In Thailand

   Language Barriers
   Religion Issue
   Thai People Are Not Organized
   Strict Custom

                                    (FGI World)
Culture Gap Between U.S.A. (PCN)
  and China & Thailand (HCN)
                Individualism   Power      Uncertainty   Assertiveness     Long-Term
                                Distance   Avoidance                       Orientation

United States
                91              40         46            62                29
                25              70         85            39                118
                20              64         64            34                56

                                                                         (FGI World)
              Nike In The U.S.A.
   Contract Factory
    --109 apparel contract factories
    --12 equipment contract factories
   14% of Nike apparel was made in the U.S. Cole
    Haan, Hurley and Converse are subsidiaries in
    us region.
   Store: More than 80 stores
       Asia Pacific Region Of Nike
   Employees: 3,000
   First subcontracted factories are in Taiwan and
    Korea (1977)
   Nike Office: Australia, China, Hong Kong, Japan,
    Korea, New Zealand, Southeast Asia (Singapore,
    Malaysia, Philippines, Thailand), and Taiwan.
   Factory: 150

        Subcontracting In IHRM
   Implementations on monitoring subcontractor
    --Assign expatriate staff in host country
    --Hire country-based investigator to monitor
    implementation of the company’s code of conduct
    --Use inspector from the company headquarter

                                         (IHRM, 2005)
          Nike Code of Conduct
   Management practices that respect the rights of
    all employees, including the right to free
    association and collective bargaining
   Minimizing our impact on the environment
   Providing a safe and healthy work place
   Promoting the health and well-being of all
    Specific Standard Of Conduct
   Forced Labor
   Child Labor
   Compensation
   Benefits
   Hours of Work/Overtime
   Environment, Safety and Health
   Documentation and Inspection
Specific Standard Of Conduct                            (cont.)

   Compensation
    --Provide at least the minimum wage or the prevailing
    industry wage, whichever is higher
    --Provide each employee a clear, written account for
    ever pay period
    --Eliminate deduction on employee pay for disciplinary

Specific Standard Of Conduct                               (cont.)

   Hours of Work/Overtime
    --Comply with legally mandated work hours
    --Compensate overtime fully according to local law
    --Inform employee if mandatory overtime is a
    condition of employment at the time of hiring
    --Provide one day off in seven, no more then 60 hours
    per week, or complies with local limits if they are lower

    Subcontracting Issues in IHRM
   Not enough implementation on monitoring
   Local buying agents and quality control
    representatives to do the monitoring
   The code of conduct is not really being enforced
    by the subcontractors
    --Subcontractors would further subcontract to other
     local firms
     --The foreign-owned contractor and its expatriates
     impose their own work practices upon the host country

                                              (IHRM, 2005)
     Subcontractor in South China
   Yue Yuen Industrial Holdings Co. Ltd.
    --Locates in Dongguan
    --Established in 1989
    --Belongs to the Taiwanese shoe company, Pao Chen
    --Produces for Nike, Reebok, Adidas, Clarks and new
    --Employs total 140,000 workers and 12,000 are
    producing for Nike

                                       (China Labor Watch)
Nike’s Subcontractor
      in China
         Yue Yuen Shoes Factory
   A giant shoe manufacturer branch under BaoCheng
   A giant shoe manufacturer branch under BaoCheng
   Location: Gaobu Town, Dongguan City, Guangdong
    Province, China
   Labor Force:12,000 workers
     Ethnical Issues in Yue Yuen
   Contract
   Discrimination
   Work hours & Overtime
   Compensation
   Since 1999, the factory has adopted a policy of mainly
    employing female workers
   The factory only employs female workers aged from 18
    to 25.
   Male workers are only employed with the specific
    approval of section managers; Ratio: 1 of 15
    Why is discrimination an issue?
   China’s Labor Law: Laborers shall not be
    discriminated against in employment due to their
    nationality, race, sex, or religious belief.
                             (China Labor Law, Ch.2, Article 12)

   Nike’s Code of Conduct: There shall be no
    discrimination based on race, creed, gender, marital or
    maternity status or political beliefs, age or sexual
   Nike’s Code of Conduct: N/A
   China’s Labor Laws:
       An employees’ probation period should not exceed
        six months. Moreover, if a worker accumulates ten
        years service at his or her place of employment, the
        employer is obliged to sign a long-term contract with
        the employer
                                   (China Labor Laws, Ch.3, article 20)
                     Contract (Cont.)
   China’s Labor Laws:
       The draft collective contract shall be submitted to
        the workers representative assembly or all the
        employees for discussion and passage. Collective
        contracts shall be signed by and between the labor
        union on behalf of the employees and the employer.

                                   (China Labor Laws, Ch.3, article 33)
         Why is contract an issue?
   Only “group leaders” sign the collective contracts in the
    name of the workers
   The workers never see the contract and not aware of
    the details of the contract
   Many workers have been working at the factory for
    over ten years, but remain employed on annual basic
         Work Hours & Overtime
   Through its private connections, the factory was
    granted permission by Dongguan Labor Department to
    have the workers work as many as 82 hours of
   Workers have to work 8 hours on Saturdays, the legal
    rest days.
      Work Hours & Overtime (Cont.)
   7:30 to 11:30a.m. Working
   11:30 to 1:00p.m. Lunch
   1:00 to 5:00p.m. Working
   5:00 to 6:00p.m. Dinner
   6:00 to 8:30p.m. Overtime

Work hrs: 10.5 hrs/day (M-F)
Saturday: 8 hrs/day overtime
Total: 60.5 hrs/wk; 242 hrs/mo.

               (China Labor Watch)
Why is working hours an issues?
   Nike’s Code of Conduct: The contractor complies
    with legally mandated work hours; No more than 60
    hours of work per week on a regularly scheduled basis,
    or complies with local limits if they are lower.

   China’s Labor law: The state shall practice a working
    hour system wherein laborers shall work for no more
    than eight hours a day and no more than 44 hours a
    week. The work time to be prolonged shall not exceed,
    however, 36 hours a month.
                            (China’s Labor Laws, Ch.4, article 36 & 41)
   Nike’s Code of Conduct: The contractor
    provides each employee at least the minimum wage, or
    the prevailing industry wage, which is higher.

   China’s Labor Law: The employer shall pay
    laborers wages no lower than local standards on
    minimum wages. (Dongguan:RMB 450/mo.)
                           (China’s Labor Laws, Ch.5, Article 48)
              Compensation (Cont.)
   No less than 150 per cent of their wages if the laborers
    are asked to work longer hours
   No less than 200 per cent of their wages if no rest can
    be arranged afterwards for the laborers asked to work
    on days of rest
   No less than 300 per cent of their wages if the laborers
    are asked to work on legal holidays

                                   (China’s Labor Laws, Ch.5, Article 44 )
    Why is compensation an issue?
   Reality: Monthly wage RMB 512/mo. Including
    overtime paid (U.S. $62.4)
   Should:
    Monthly minimal: $54.8/mo.
    Weekdays overtime:$23.50/mo.
    Saturdays overtime: $19.84/mo.
    Total minimum wage: $98.14/mo.

                                     (China Labor Watch)
                     The Fact
   Assume one pair of Nike Jordan sells for $130…. How
    much money goes to the workers who made the shoes?

   Answer: $1.5

                                      (China Labor Watch)
    Nike Subcontractor in Thailand
   MSP Sportswear Co, Ltd.
    -- Locating in Huatalea Moung, Nakornrachaseama
    -- Managing by the Austrian director
    Nike Subcontractor In Thailand
   Owner: Mr. Peter Krautler
   Location: Huatalea Nakornrachaseama
          Why Forming an Union?
   Increasing quota without increasing pay
   Compulsory overtime
   Poor quality of drinking water
   Verbal abuse and body searches
   Forming an union on 9 November 2003
         History of Union Organizers’
   Samai Kongtaler was dismissed Due to a ‘reduction in orders’

   On 24 November 2003,Ms Atchara Sophon and Kongtalei were dismissed
    Due to submitting worker’s demands to management

   On 12 October 2004, the union was registered, but when the union
    launched a campaign for new members on 29 the same month, three union
     executives were dismissed Due to the company believed that the union
     would destroy the company ‘-a totally unfounded claim.

                                                   (Clean Clothes Campaign)
  Informing Of The Matter
       With Relevant Associations
On November 23,04

              Center for Labor Information
                 Service and Training

         NIKE                   Faire Labor Association

              Urged them to discuss
           The matter directly with CLIST
               and the fired workers

                                                   (Clean Clothes Campaign)
      Initial Negotiation Between
    Representatives From Each Group
   On 14 December 2004
   Attendants: a conciliator from the Welfare and Labor Protection
    Department of the Ministry of Labor Thailand , two company
    representatives, three dismissed workers, CP Nothong Union and Nike

   Conciliator: stated   the company has clearly violated the right to
    organize, and attempted to destroy the labor union
   The owner: Mr. Peter Krautler stated no intention to rehire the
    dismissed workers
   The mother of one of the union activists who was dismissed to be a
    continuation of the company’s intimidation tactics
              Respond From Nike
   On the 23rd of December
   Nike informed CLIST-They had
    requested the conciliator to identify the
    appropriate next steps
   After getting in touch with CLIST,
    conciliator provided two options for
    union dismissed workers:
   Higher compensation
   Follow the standard legal procedure
    based on the Labour relations committee
                           (Clean Clothes Campaign)
 Union’s Executive and CLIST
Disappointed at Nike’s Respond

   If at the end of the day workers get referred back
    to the existing legal procedures then what is the
    use of having a Code of Conduct?

   If this means that Nike’s Code of Conduct has no
    relevance if the legal procedure is followed, then
    why bother having a code at all?

                                  (Clean Clothes Campaign)
    Updated Negotiation Between
  Representatives From Each Group
On February 16th
                                                         Met in Bangkok

                           DISMISS               NIKE


                           AMRC                  FLA

Three union activities                                  The company believed
dismissal not related                 ACILS
                                                        that “the union would
To the quality of their                                 destroy the company-a
        work                                            totally unfounded claim
           Result of Negotiation
   On March 18th,2005
   CLIST and Nike have been
    reached the agreement with three
    dismissal workers: all three
    workers will be rehired,
    including full back pay to the
    date of dismissal for two of the
    workers (the third one accepted
    settlement money which came to
    a higher amount).
                  (Clean Clothes Campaign)
   Lack of monitoring to its subcontractors
   Lack of training on code of conduct in its
    --To the management & workers
       Nike Monitoring System                                 (cont.)

   Fair Labor Association  Oversight of the
    --Selected and paid for by Nike
    --Only 10% of Nike factories selected to the assessment

   Global Alliance for Workers and Communities
    --A partnership between Nike, the World Bank and the
    International Youth Foundation
    --Whether any particular standards are being met?
    -- “Monitoring” to protect workers human rights?

                                            (Clean Clothes Campaign, 2000)
         Nike Monitoring System
   Expatriate product manager  Site visits on a
    yearly basis

   PriceWaterhouseCoopers  “Independent”
    --Selected workers to speak

                                  (Clean Clothes Campaign, 2000)
    Training On Code Of Conduct
   Are the workers be trained or informed of the
    code of conduct?
   Are managements of the subcontracting firms
    receiving enough training of conduct?
   Do the subcontracting firms implement the
    code of conduct?
   Does the IHRM of Nike implement its conduct
    enough overseas?
Recommendations on Nike’s HR
   Nike should explain and enforce the Code of
    Conduct aggressively.
    --Education of Code of Conduct
       •   Emphasize the importance of Nike’s “Code” as covenant
       •   Display Nike’s “Code” in public places in clear language

    --Training on Code of Conduct
       •   Hold training sessions on the Code of Conduct every three
       •   All workers in the training will receive a card with the Code of
           Conduct in their local language
                                                 (Andrew Young Report, 1997)
Recommendations on Nike’s HR

   Nike should improve their Monitoring
    --Form a monitoring team within the HR
    department for internal monitoring
       •   Conducts periodic “checking” visits
       •   Oversees external monitors and auditors where used
                                                 (IHRM, 2005, Chapter 8)

    --External monitoring
       •   “Ombudsman” model

                                                 (Andrew Young Report, 1997)
    Recommendations China Case
   Being knowledgeable about Code of
    Conduct and sensitive to local law.
       For example: Compensation
         Pay Legal Minimum Hourly Wage RMB $2.70 (US
         Reward those who meet expectations to motivate the
         Stop disciplinary fines to avoid discouraging the
Recommendations Thailand Case
    PCN or HCN should respect the rights of
    employees to have free association
   Promote the development of “Worker
   Multinationals should learn lessons from Nike
   Be careful to enforce their Code of Conduct
   Minimize ethical issues.
Thank You