I’ve been meaning to share this for so long! Back in July, Michael Hobbes wrote an enlightening story called “The Myth of the Ethical Shopper” for the Huffington Post.
There’s a cycle here in the U.S. (and other Western countries). We as consumers want inexpensive goods, which means manufacturers need to avoid steep U.S. /local labor costs by producing in countries that have lower standards of living, where people work for drastically lower wages. Then a story comes out — or, even worse, a catastrophe happens — that highlights poor working conditions in international factories. The same consumers who wouldn’t dream of paying more for their sneakers, phones or fast fashion will then call for boycotts of the big corporations, holding them responsible for local conditions. We say it’s all Nike’s fault, or Apple’s fault, or Primark‘s fault.
Obviously, the megabrands companies should be held to high standards. The problem is that despite their enormous reach, the big names aren’t responsible for all global manufacturing. Hobbes argues that these days, the big brands that are most likely to be targeted by consumers are also likely to be making efforts to use ethical suppliers because they have the resources to do it and a reputation to protect. He writes “Chikako Oka, a lecturer at Royal Holloway University, found that reputation-conscious companies had 35 percent fewer working violations in their Cambodian factories than did generic brands,” and notes, “It’s not the largest or the second-largest company we should be worried about anymore. It’s the 44th, or the 207th.” And it’s true. While we worry about the likes of H&M churning out disposable versions of runway fashions, there are actually hundreds of no-name companies knocking off H&M at even lower prices. (Yes, I know this for a fact!)
Meanwhile, big brands don’t always own or run their own factories. To keep up with incessant demand, they outsource production to “megasuppliers,” which, as Hobbes describes them, “are huge conglomerates that can take a design sketch, split the production between thousands of factories, box up the goods and ship them to stores in less time than they’ll stay in style.” These middlemen have existed for years, but now they’re bigger and more dominant than ever. Hobbes wrote:
“The largest apparel megasupplier, Li & Fung, which produces everything from Wal-Mart basics to Disney plush toys to Spanx, has revenues of $19.2 billion; more than Ralph Lauren, Armani and Tommy Hilfiger combined.
“The Chartered Institute of Logistics and Transport calls Li & Fung’s operations ‘ephemeral.’ It has 15,000 supplier factories in 40 countries, but doesn’t own or operate any of them. It’s a coordinator, configuring cotton suppliers, textile mills, stitching and sewing houses into a straight line just long enough to deliver one order to one buyer, and then reconfiguring them for the next.”
Hobbes says, “Li & Fung does inspect its suppliers and send reports back to its buyers. But there’s no guarantee that orders will be filled by the same factory twice, and audits are often carried out after the order has already been placed.”
Adding to the confusion, the megasuppliers can lose track of what’s happening too. Hobbes writes:
“Last year, a compliance manager for a European brand told NYU’s Center for Business and Human Rights that small factories in Bangladesh, capable of producing just 10,000 pieces per month, were accepting orders 10 times that large and then filling them through agents, small workshops, and home-based workers.”
Hobbes explains that this is how Walmart ended up involved in a devastating 2012 fire at the Tazreen Fashion factory in Bangladesh — responsible for 60 percent of the clothing being produced there — after it had inspected the factory, declared it unsafe and banned its suppliers from using it. As Hobbes describes it:
“Wal-Mart hired a megasupplier called Success Apparel to fill an order for shorts. Success hired another company, Simco, to carry out the work. Simco—without telling Success, much less Wal-Mart—sub-contracted 7 percent of the order to Tazreen’s parent company, the Tuba Group, which then assigned it to Tazreen. Two other sub- (or sub-sub-sub-) contractors also placed Wal-Mart orders at Tazreen, also without telling the company.”
Hobbes also explores the issue of goods that aren’t made for Western consumers. In Delhi, where children start learning garment production at age 8 and get paid half as much as adults, they’re often “sewing saris and embroidering clothes destined for Indian and Bangladeshi and Pakistani shelves.” He says:
“Western markets simply don’t matter as much as they used to. India produces twice as much clothing for its own consumers as it does for us. Fifty-six percent of the clothing produced in China is for the Chinese market. “
… And it’s not just developing countries selling stuff to themselves. They’re also selling a rapidly expanding share to each other. From 2008 to 2013, the fastest-growing demand for apparel was in China, Eastern Europe, India, Turkey and Brazil. Garment exports from Bangladesh to other poor countries have grown by as much as 50 percent per year.”
Hobbes says there is a way to tackle these issues and it is essential to involve local government and institutions in a meaningful way. He cites Brazil’s efforts to improve working conditions in the pig-iron industry. It wasn’t a one-step effort by any means. You’ll have to read the story yourself to understand the entire process in Brazil, but it’s worth your time. As Hobbes concludes:
“We are not going to shop ourselves into a better world. Advocating for boring stuff like complaint mechanisms and formalized labor contracts is nowhere near as satisfying as buying a pair of Fair Trade sandals or whatever. But that’s how the hard work of development actually gets done: Not by imploring people to buy better, but by giving them no other option.”