The ethical situation is that of Nike. Originally, Nike manufactured most of its apparel and shoes in South Korean and Taiwan factories due to low wages. Nike did not think about the minimum wage or labor standard regulations in these countries. Nevertheless, labor organizations and unions began to form and spread in these countries, forcing Nike to seek manufacturing contractors in Vietnam, Indonesia, and China. In these countries, Nike paid its workers mere cents, which led to huge savings and revenue for the company. The money saved from manufacturing was used for aggressive campaigns that included widespread and highly visible sponsorships with celebrities, athletes, and sports teams (Oviedo, 2022). The revenue continued to increase, and this attracted the attention of journalists who were increasingly becoming aware of the inequity and labor injustices in Nike’s sweatshops. One of the reasons why Nike became popular and had a surge in its revenue was attributed to the huge savings for not paying their workers living or fair wages. The workers in these sweatshops were working in poor conditions.
The issue of inequality and labor injustice was fueled by a lack of labor organizations and unions in the regions where Nike had established “sweatshops.” The lack of minimum wage laws and labor standard regulations enabled Nike to continue paying low wages to its workers in its factories in China, Vietnam, and Indonesia.
Initially, Nike responded to the allegations by first denying that they had not wronged their workers in the “sweatshops.” The then director defended Nike that they did not own the factories and, therefore, they could not control the ongoing activities. Nike continued to oppress its workers in its factories. Shortly, the executives realized their mistakes and started moving towards mitigating the negative publicity the company was getting. The next move was to create the Nike Code of Conduct. The code of conduct focused on benefits and compensation policies, voluntary employment, age requirements, clean and safe working spaces, and sustainability practices. The Nike Code of Conduct was distributed to all its suppliers and factories globally and domestically (Oviedo, 2022). Within the first five years of establishment and implementation, the company had already carried out over 600 audits to ensure their factories complied with the Nike Code of Conduct.
Despite the company’s efforts to enact the code of conduct, exposure from the media highlighting its unethical labor practices revealed that the company had not fully resolved the issue. The company also received a lot of public disgust and criticism for the poor labor conditions and low wages inside the sweatshops following the media exposure. Protests erupted during the 1992 Summer Olympics, where Indonesian workers were interviewed about the abuses. This was to confirm what the media had been reporting about Nike. The company also created a department to implement changes in the “sweatshop” in an effort to clean its tainted image. College and university students in the US teamed up with the Worker Rights Consortium (WRC) to protest against their school’s athletic teams and departments sponsored by Nike (Oviedo, 2022). University and college students called their schools to terminate sponsorships with Nike.
From Nike’s scandal, the essence of professional ethics in every company, regardless of its industry of operation, cannot be overstated. Professional ethics are key in building credibility and trust with workers, suppliers, and the wider society. Had Nike incorporated professional ethics in its operations, it would not have suffered a tainted brand image that cost the company a lot of money, time, and resources to clean up. Professional ethics help maintain the reputation and integrity of the profession and ensure that companies are responsible for their actions.
References
Oviedo, E. (2022). A Look into Voluntary Nongovernmental Organization (Ngo) Certifications on Labor Conditions in International Trade Law: Nike, a Case Study. South Carolina Journal of International Law & Business, 18(2), 126–148.
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