Nike supply chain report reveals problems in China

27 March 2008
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27 March 2008

Nike has admitted its Chinese supply chain is suffering from a lack of transparency, problems with wages and the use of underage workers.

This month the sportswear manufacturer published its first country-specific supply chain report, revealing some problems. China is the firm's largest sourcing area, with 180 manufacturers contracted to produce goods, including footwear.

After conducting audits on its supply chain, the company found the top three problems in management in China were: inefficient compliance with the company code of conduct; a lack of training and awareness of the code; and poor communication of factory standards by suppliers to workers.

Nike's factories in China employ more than 210,000 people and worker problems identified in the report included fake factory documents, 167 cases of workers with "incorrect identification" and two current cases of workers under Nike's minimum age of 18. A 15-year-old girl was found working at a footwear supplier. Some suppliers were also slow to increase wages in response to laws.

Mark Parker, CEO of Nike, said the firm has established "aggressive business targets aimed at improving working conditions in contract factories".

Dawn McLaren, senior analyst (labour standards) at Ethical Investment Research Services, told SM firms often have problems sourcing in emerging countries such as China because they don't own the factories. But she argued buyers still have a huge responsibility.

"If a company constantly makes last-minute changes to an order or requires products to be delivered in an unrealistic time-frame, this is likely to result in workers being forced to work excessive hours."


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