Mini Case: Nike and Sweatshop Labor

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Nike, a company headquartered in Beaverton, Oregon, is a major force in the sports footwear and

fashion industry, with annual sales exceeding $ 12 billion, more than half of which now come from

outside the United States. The company was co-founded in 1964 by Phil Knight, a CPA at Price

Waterhouse, and Bill Bowerman, college track coach, each investing $ 500 to start. The company,

initially called Blue Ribbon Sports, changed its name to Nike in 1971 and adopted the “Swoosh” logo

recognizable around the world originally designed by a college student for $35. Nike became highly

successful in designing and marketing mass-appealing products such as the Air Jordan, the best selling

athletic shoe of all time.

Nike has no production facilities in the United States. Rather, the company manufactures athletic

shoes and garments in such Asian countries as China, Indonesia, and Vietnam using subcontractors, and

sells the products in the U.S. and international markets. In each of those Asian countries where Nike has

production facilities, the rates of unemployment and under-employment are quite high. The wage rate is

very low in those countries by U.S. standards the hourly wage rate in the manufacturing sector is less

than $ 1 in each of those countries, compared with about $ 20 in the United States. In addition, workers in

those countries often operate in poor and unhealthy environments and their rights are not particularly well

protected. Understandably, host countries are eager to attract foreign investments like Nike’s to develop

their economies and raise the living standards of their citizens. Recently, however, Nike came under

worldwide criticism for its practice of hiring workers for such a low rate of pay “next to nothing” in the

words of critics and condoning poor working conditions in host countries.

Initially, Nike denied the sweatshop charges and lashed out at critics. But later, the company began...
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