Introduction
Competitive advantages direct the trend toward international business and multinational corporations. [1]. Interestingly, a situation may arise where multinational corporations are not subject to international laws because they do not have the requisite international legal personality, not subject to host country laws because they do not directly control workers there, and are sparingly regulated by their home countries. [2].
In China, workplace conditions are grisly. Over 126,000 workers died in 2005 as China had the highest illness and injury rate in world history. [3]. This harms everyone from workers in China to the U.S. economy who is short between 500,000 and 1 million manufacturing jobs due to cost advantages gained from quashing Chinese workers’ rights. [4]. And perhaps it affects the products put out by Chinese manufacturers. A series of recalls, many involving children’s toys, recently shifted the spotlight toward Chinese factories and raised concern over safety standards and corporate accountability abroad.
Incentives to Act Responsibly Abroad.
The opportunity to profit from cheap labor abroad is high, even at the expense of worker rights and existing laws. [5]. Multinational companies have begun to incorporate standards for social responsibility abroad, often at the request of Western countries consumers. [6]. Some such standards are SA8000 established by Social Accountability International, the Workplace Code of Conduct established by the Fair Labor Association, and the Apparel Certification Program created by Worldwide Response Apparel Production. [7].
Still, Chinese regulation leaves something to be desired. Multinational corporations are responsible for regulating themselves and government regulators merely go through the motions. [8]. The incentive for multinational to act is not intrinsic and “essentially, consumer demand is the cause of corporate social accountability standards in the global supply chain.” [9].
Corporate Social Responsibility in China
A vast problem exists. The AFL-CIO recently filed a petition against the Chinese government stating that millions of children and forced laborers are compelled to work, while factories pay pittances such as 15 to 50 cents per hour. [10]. These allegations, among others, support the claim that China violates Section 301 of the Trade Act of 1974 by denying freedom of association and rights to collective bargaining, exploiting millions of child laborers, exploiting millions of forced laborers, violating its own minimum wage and overtime requirements, and failing to enforce safety and health standards in the workplace. [11].
Last year, China’s legislature ignored pleas by some foreign investors and enacted a broad set of new labor laws aimed at protecting workers by requiring written contracts for employment and providing for collective bargaining so that workers may improve their wages and benefits. [12]. This was a big first step, but China must follow through. Establishing corporate social responsibility in China has found resistance due to protectionism, commercialization, and imbalance of bargaining power. [13]. Essentially, Chinese suppliers believe that quality certifications and social audits serve little purpose. [14]. Improvements are necessary, but the government acts at the will of the people and it is often up to the market to spark regulation; that responsibility falls on the shoulders of consumers that drive both sales and corporate change. [15].
Current Problems
In August 2007, Mattel recalled nearly 1 million toys manufactured in China, earlier in 2007 RC2 recalled 1.5 million Thomas the Tank Engine trains allegedly covered in poisonous lead paint. [16]. Sometimes, the solution seems simple. Carter Keithly, president of the Toy Industry Association, says “If there was no lead paint, then we wouldn’t have this problem.” [17]. So why can’t companies get this right? Many companies face difficulties putting out low-price products that conform to socially acceptable guidelines. [18]. Yet, is that problem specific to certain manufacturers or prevalent in many industries? Chinese consumers currently wait for the government to regulate itself and favor protecting the environment over improving labor conditions. [19]. But the United States imports nearly $1 Billion in Chinese goods every day. [20]. U.S. consumers can affect the market and Chinese social responsibility; it is their duty to do so.
Conclusion
Perhaps China simply needs more time to hammer out the details of corporate responsibility in its legal system or maybe they don't have enough incentive to do so. The United States, as a global leader, sets the bar for corporate responsibility; Western consumers impact marketplaces both in the U.S. and abroad and hope to provide corporations with the proper incentive to conform to accepted norms of behavior. Consumers exert great influence on corporations to act responsibly and those in China drive corporate social responsibility standards. While legislation drags its feet, buyers must voice their choice and demand socially responsible companies and manufacturers to prompt significant change in the big machine.
Sources
[1] Li-Wen Lin, “Corporate Social Accountability Standards in the Global Supply Chain: Resistence, Reconsideration, and Resolution in China.” 15 Cardozo J. Int’l & Comp. L. 321, 323 (Fall 2007).
[2] Id. at 323-24.
[3] AFL-CIO, Key Issues of “Section 301 Petition Against the Chinese Government” (June 2006) (available: http://www.aflcio.org/issues/jobseconomy/globaleconomy/upload/china_keyelements.pdf) (Last visited April 13, 2008).
[4] Id.
[5] Lin, 15 Cardozo J. Int’l & Comp. L. at 324.
[6] Id. at 324, 330.
[7] Id. at 324-25.
[8] Id. at 331-32.
[9] Id. at 338.
[10] AFL-CIO, Executive Summary of “Section 301 Petition Against the Chinese Government” (June 2006) (available: http://www.aflcio.org/issues/jobseconomy/globaleconomy/upload/china_execsum.pdf) (Last visited April 13, 2008).
[11] Id.
[12] Joseph Kahn and David Barboza, “China Enacts a Labor Law Meant to Improve Workers’ Rights”, International Herald Tribune, (June 29, 2007) (available: http://www.iht.com/articles/2007/06/29/business/labor.php).
[13] Lin, 15 Cardozo J. Int’l & Comp. L. at 331-39.
[14] Id. at 344-45.
[15] Id. at 330.
[16] Louise Story, “Lead Paint Prompts Mattel to Recall 967,000 Toys.” August 2, 2007. (available: http://blogofneworleans.com/blog/2008/04/12/in-case-you-were-wondering-what-a-superdome-sized-vagina-looks-like/) (Last visited April 13, 2008).
[17] Id.
[18] Lin, 15 Cardozo J. Int’l & Comp. L. at 365.
[19] Id. at 367.
[20] U.S. Census Bureau, “Trade in Goods (Imports, Exports and Trade Balance) with China.” April 10, 2008. (available: http://www.census.gov/foreign-trade/balance/c5700.html#2008).
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