Vietnam
In the mid 1990s, NIKE was riding high, it’s signature “swoosh” the epitome of cool. Then, reports emerged that its subcontractors in Asia, particularly in Vietnam, were underpaying and mistreating workers. The outcry turned into a public relations disaster for NIKE, one from which it still has not fully recovered. Human rights groups, not reporters, were the first to uncover the abuse in Vietnam. Yet reporters and NIKE itself should have seen trouble coming. The case is a textbook example of how one country’s history and culture helped create a hostile environment for a company like NIKE.
When NIKE arrived in Vietnam in 1995, the country was just emerging from two decades of post-war isolation. Vietnam ranked as one of the world’s poorest and most overpopulated countries. But it had a semi-literate work force that was already earning praise from pioneering foreign investors for diligence. Freedom of association was illegal, meaning workers could not form their own unions or strike at will. And the authoritarian, communist government was eager to manufacture for export. NIKE and Vietnam looked like a perfect match. The company quickly became the largest foreign-invested employer in Vietnam with 10 subcontracted factories and 35,000 to 40,000 jobs.
What went wrong? NIKE made several missteps that helped turn later issues inside factories into full-blown international incidents. For starters, all of NIKE’s subcontractors in Vietnam were South Korean and Taiwanese. Yet, there are few people more hated by the Vietnamese than the Koreans (who fought with the U.S. in the Vietnam War and were guilty of numerous atrocities in southern Vietnam) and ethnic Chinese (who made up the majority of boat people driven out of Vietnam in the 1970s and 80s). The Korean and Taiwanese factory managers quickly gained reputations as harsh managers - an oil-and-water match with young, reticent Vietnamese women from the countryside.
Nor did NIKE understand the venerated status of blue
When NIKE arrived in Vietnam in 1995, the country was just emerging from two decades of post-war isolation. Vietnam ranked as one of the world’s poorest and most overpopulated countries. But it had a semi-literate work force that was already earning praise from pioneering foreign investors for diligence. Freedom of association was illegal, meaning workers could not form their own unions or strike at will. And the authoritarian, communist government was eager to manufacture for export. NIKE and Vietnam looked like a perfect match. The company quickly became the largest foreign-invested employer in Vietnam with 10 subcontracted factories and 35,000 to 40,000 jobs.
What went wrong? NIKE made several missteps that helped turn later issues inside factories into full-blown international incidents. For starters, all of NIKE’s subcontractors in Vietnam were South Korean and Taiwanese. Yet, there are few people more hated by the Vietnamese than the Koreans (who fought with the U.S. in the Vietnam War and were guilty of numerous atrocities in southern Vietnam) and ethnic Chinese (who made up the majority of boat people driven out of Vietnam in the 1970s and 80s). The Korean and Taiwanese factory managers quickly gained reputations as harsh managers - an oil-and-water match with young, reticent Vietnamese women from the countryside.
Nor did NIKE understand the venerated status of blue