Monday, March 17, 2008

Nike, China, and the Olympics

It looks like the 2008 Beijing Olympics are shaping up to be a major occasion for discussion of all kinds of social, ethical, and environmental issues. From human rights, to pollution, climate change, and a whole host of other issues, campaigners and activists are using the global pulling power of the Olympics to focus on some of the darker sides of the Chinese economic miracle. We've already had the Hollywood movie director Steven Spielberg resigning from his role in the games in protest against China's support for Sudan in the wake of the Darfur crisis. And, with corporations taking an ever greater role in global sporting events like these, we can expect the anti-corporate movement to get in full swing for a summer of olympian protests.

Some companies though are taking the lead in getting their story straight early. Nike is one of the forerunners here with the recent publication of a China supplement to its corporate responsibility report, 'Innovate for a Better World'. It makes for interesting reading.

To begin with, the report makes it clear that Nike and China's fortunes are inextricably linked. Not only are a third of all Nike shoe's produced in China, but China has also become the company's second biggest market. Mark Parker, the Nike CEO and President has this to say in his introduction to the report:

"For Nike the Beijing Olympics provide an opportunity to share China’s importance to our business. China produced 35 percent of Nike’s footwear in fiscal 2007 and is a substantial sourcing market for our apparel and equipment. This year we’re on course to achieve $1 billion in sales – making China our second largest market outside the U.S. China is key to our continued growth and success. Nike and China will succeed together."

Make no mistake, Nike needs China right now, probably more even than China needs Nike. So for Nike it is critical for the integrity of their hard won, newly minted reputation for corporate responsibility that the Olympics do not go seriously awry when it comes to ethical issues. And getting their defence lined up before the criticisms come flying in looks to be a good strategy at this stage. Nike isn't just sitting hoping that it doesn't get fired on, but is actually putting its head above the parapet and publishing data to show whats going right with their China operation. OK, so its less expansive about what's going wrong, but that's hardly much of a surprise. And taking the step to publish the report in the first place - and to make sure it is based on documented evidence - is interesting in itself as a strategy to try and diffuse the potential problems that might arise as the world starts focusing its attentions on China during 2008.

Nike has had to learn the hard way that defensiveness and secrecy in the face of ethical criticisms isn't always the best option, so we shall see if this new approach to transparency works out the way they're hoping. There is always the danger of course that by drawing attention to their operations in China, Nike just ends up as the main focus of attack - or even that it spurs their critics to dig even further to find some bad news. But, from where we are sitting now, it looks like a good way to start getting ready for a summer of considerable heat.

Like many other texts, our new CSR textbook includes a case on Nike's adventures in Asia, so it will be interesting to see how this next chapter turns out, and whether the Olympics comes to be regarded as a case study of Nike's increasing confidence in this arena, or an own-goal that teaches us all something new about the perils of conducting responsible business in China

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