Nike and Vietnam: the Impact of Globalization

Globalization is a phenomenon that has become a fact in today’s business world. Companies, always looking to cut costs and improve productivity, often look overseas to either expand current business operations or to outsource existing business operations. Companies often make the decision to go global with the hopes of taking advantage of more favorable business environments, better technologies, or relationships with suppliers and customers. While these facts are a part of globalization, there are also positive benefits, which range from lower prices to consumers, increased education for individuals within the countries where expansion occurs, and a higher standard of life for the individuals in these countries. While arguments can be made that globalization is a positive or negative force on a country or on the world economy, the debate is not likely to end any time soon. This paper will take a look at the positive impacts of globalization by examining Nike in Vietnam.
Nike has long been viewed as the poster child for problems associated with globalization. Many have accused Nike of employing workers in sweatshop like conditions in poorer countries like China, and more recently Vietnam. In addition to the sweatshop claims, people often say that Nike employs child labor, often even claiming that the child labor is forced and takes place in sweatshops. Many of these same people also suggest that Nike has taken jobs from the United States to these countries where there are fewer laws regarding work conditions and wages so that they can pay their employees less in an effort to make a higher profit with no regard to the value of human life. These are just a few of the accusations that people often make against multinational corporations such as Nike, and this list is much longer. While it is true that there have been problems at certain factories that make Nike products, the company has taken aggressive steps to ensure that all of its factories now comply with basic human rights. It is hard to argue that the conditions experienced by workers at factories in Vietnam are not still vastly different from what we experience in the West, but the culture is much different as well. Therefore, what we may view as harsh conditions may not, in fact, be so to the actual employees.
What are often unnoticed, or at least is not mentioned, are the positive effects that Nike has brought to countries like Vietnam. As stated previously, many of the benefits of globalization within a company like Nike must be looked at within the context of the culture being examined. A primary example of this would be the pay. While some may argue that a monthly pay of $72 per month is essentially the same as employing slave labor, the employees at the Nike factory in Ho Chi Minh City might say otherwise. As Johan Norbert (2004) notes, the pay of $72 per month is “almost three times the minimum wage for a state-owned enterprise,” which typically involves endless days in intense heat or rain in rice fields surrounded by water and bugs. In addition to being higher paying than previous jobs, working in a Nike factory also provides a stable source of income. These higher wages have afforded the employees other benefits as well. When the first factories opening in Ho Chi Minh City, the workers had to walk to the factories, but, within a few years, they saw significant improvements to their transportation options. Norberg (2004) also writes, “After three years, they could afford bicycles ... three years later, they could afford scooters [and after eight years], the first workers [could] afford to buy a car.” This is a reality that few people in Ho Chi Minh City experience, with less than 5% of the population owning a car. But perhaps one of the greatest benefits that globalization has brought to Vietnam is the availability to afford higher education. In the past, many children would have been put to work on farms in order for their families to survive, yet “In ten years, 2.2 million children have gone from child labour to education” (Norberg, 2004). Millions of children attending school as a result of globalization is a far cry from many of the child labor accusations previously mentioned.
Globalization is, and probably will always be, a topic that has very passionate people on both sides of the debate. While arguments both for and against globalization have valid points to make, few people really have really taken the time to look at the direct impact of this ever growing trend. From strictly a consumer standpoint, Nike’s decision to go global and create factories in a variety of countries has led to an increase from under 200 styles to almost 1200 different styles available for purchase (Locke & Siteman, 2007, p. 6). More importantly, though, are the points mentioned above, that employees in countries like Vietnam make almost 3x the wages made in their previous employment. Rarely will you hear that these employees are able to afford items such as cars while the majority of people even within their own city cannot. You will also almost never hear that, despite past abuses of child labor, millions of children have been able to get an education. This is a reality that would not have been possible if their parents were still stuck working in rice fields. This education has the abolition to create a positive cycle of growth, wealth, and education for new generations that will continue for years. If you want to see the direct impact that globalization can have, the case of Nike in Vietnam provides a solid starting point to see the positive effects that have come about as Nike has expanded to have workers in over 50 countries.

References

Locke, R. M., & Siteman, A. J. (2007, February 20). The Promise and Perils of Globalization:
The Case of Nike. Retrieved May 31, 2008, from http://web.mit.edu/polisci/research/locke/nikepaperFINAL.pdf

Norberg, J. (2004, February). Why Not Globalization? Retrieved May 31, 2008, from http://www.readersdigest.ca/mag/2004/02/globalization.html

References: Locke, R. M., & Siteman, A. J. (2007, February 20). The Promise and Perils of Globalization: The Case of Nike. Retrieved May 31, 2008, from http://web.mit.edu/polisci/research/locke/nikepaperFINAL.pdf Norberg, J. (2004, February). Why Not Globalization? Retrieved May 31, 2008, from http://www.readersdigest.ca/mag/2004/02/globalization.html