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


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

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
  • --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)
  • --Recommendation
  • --Conclusion

U.S.A. Profile (PCN)
U.S.A. Profile (PCN)
  • Government Type Constitution-Based Federal
  • Political Parties Democratic Party, Republican
  • 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
(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
  • (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 -
  • Investment (gross fixed) 46 of GDP
  • Exports 194.7 Billion
  • Imports 158.8 Billion
  • (Central Intelligence Agency)

Business Sector in China
(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 China
  • 1989 Student Movement in Tiananmen Square
  • 2001 Joined the World Trade Organization
  • 2003 General Secretary Hu Jin Tao was elected as
  • (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 -
  • Investment (gross fixed)
  • --22.5 of GDP
  • Export 75.99 Billion
  • Import 65.3 Billion

  • (Central Intelligence Agency)

Business Sectors In Thailand
(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
  • (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 Distance Uncertainty Avoidance Assertiveness Long-Term Orientation
United States 91 40 46 62 29
China 25 70 85 39 118
Thailand 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
  • Store More than 80 stores
  • (Nike)

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
  • (Nike)

Subcontracting In IHRM
  • Implementations on monitoring subcontractor
  • --Assign expatriate staff in host country
  • --Hire country-based investigator to monitor
    implementation of the companys 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
  • (Nike)

Specific Standard Of Conduct
  • Forced Labor
  • Child Labor
  • Compensation
  • Benefits
  • Hours of Work/Overtime
  • Environment, Safety and Health
  • Documentation and Inspection
  • (Nike)

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 infractions
  • (Nike)

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
  • (Nike)

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 workforce
  • (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 Cooperative
  • --Produces for Nike, Reebok, Adidas, Clarks
    and new Balance
  • --Employs total 140,000 workers and 12,000
    are producing for Nike

  • (China Labor Watch)

Nikes 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 Force12,000 workers

Ethnical Issues in Yue Yuen Factory
  • 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?
  • Chinas 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)
  • Nikes Code of Conduct There shall be no
    discrimination based on race, creed, gender,
    marital or maternity status or political beliefs,
    age or sexual orientation.
  • (Nike)

  • Nikes Code of Conduct N/A
  • Chinas 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.)
  • Chinas 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
  • (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

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.)
  • 730 to 1130a.m. Working
  • 1130 to 100p.m. Lunch
  • 100 to 500p.m. Working
  • 500 to 600p.m. Dinner
  • 600 to 830p.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?
  • Nikes 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
  • (Nike)
  • Chinas 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
  • (Chinas Labor Laws, Ch.4, article 36 41)

  • Nikes Code of Conduct The contractor provides
    each employee at least the minimum wage, or the
    prevailing industry wage, which is higher.
  • (Nike)
  • Chinas Labor Law The employer shall pay
    laborers wages no lower than local standards on
    minimum wages. (DongguanRMB 450/mo.)
  • (Chinas 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
  • (Chinas 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 overtime23.50/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
  • Answer 1.5
  • (China Labor Watch)

Nike Subcontractor in Thailand
  • MSP Sportswear Co, Ltd.
  • -- Locating in Huatalea Moung,
  • -- 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 Dismissal
  • Samai Kongtaler was dismissed a
    reduction in orders
  • On 24 November 2003,Ms Atchara Sophon and
    Kongtalei were dismissed
  • submitting workers 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
    the company believed that the union
  • would destroy the company -a totally
    unfounded claim.
  • (Clean Clothes Campaign)

Due to
Due to
Due to

Informing Of The Matter
With Relevant Associations
On November 23,04

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 representatives
  • Conciliator the company has clearly
    violated the right to organize, and attempted to
    destroy the labor union
  • The owner Mr. Peter Krautler
    no intention to rehire the dismissed workers
  • The mother of one of the union activists who was
    dismissed to be a continuation of the companys
    intimidation tactics

Respond From Nike
  • On the 23rd of December
  • Nike informed CLIST-They had requested the
    conciliator to identify the appropriate next
  • 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)

Unions Executive and CLISTDisappointed at
Nikes 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 Nikes 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
Three union activities dismissal not related To
the quality of their work
The company believed that the union would
destroy the company-a 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
  • Global Alliance for Workers and Communities
  • --A partnership between Nike, the World Bank
    and the International Youth Foundation
  • --Whether any particular standards are being
  • -- Monitoring to protect workers human
  • (Clean Clothes Campaign, 2000)

Nike Monitoring System
  • Expatriate product manager ? Site visits on a
    yearly basis
  • (Nike)
  • PriceWaterhouseCoopers ? Independent monitoring
  • --Announced
  • --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
  • Does the IHRM of Nike implement its conduct
    enough overseas?

Recommendations on Nikes HR
  • Nike should explain and enforce the Code of
    Conduct aggressively.
  • --Education of Code of Conduct
  • Emphasize the importance of Nikes Code as
  • Display Nikes Code in public places in clear
  • --Training on Code of Conduct
  • Hold training sessions on the Code of Conduct
    every three months
  • All workers in the training will receive a card
    with the Code of Conduct in their local language
  • (Andrew Young Report, 1997)

Recommendations on Nikes HR (cont.)
  • Nike should improve their Monitoring System.
  • --Form a monitoring team within the HR
    department for internal monitoring
  • Conducts periodic checking visits
  • Oversees external monitors and auditors where
  • (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 workers
  • 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
  • Questions?