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The Role of IHRM in Cross-Cultural Ethnical Issues and Corporate Social Responsibility

The Role of IHRM in Cross-Cultural Ethnical Issues and Corporate Social Responsibility. Group Members: Q iuyi Huang, Shaorong Liao, Juan Kwang Li, Wen Qiao Li, Yuen Kwun. Yuen Kwun Wong (Joyce.W) -- Profile of U.S.A. China and Thailand

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The Role of IHRM in Cross-Cultural Ethnical Issues and Corporate Social Responsibility

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  1. The Role of IHRM in Cross-Cultural Ethnical Issues and Corporate Social Responsibility Group Members: Qiuyi Huang, Shaorong Liao, Juan Kwang Li, Wen Qiao Li, Yuen Kwun

  2. Yuen Kwun Wong (Joyce.W) -- Profile of U.S.A. China and Thailand -- Nike Overview of in the U.S.A. and Asian Pacific Region • Shaorong Liao (Michelle) --Subcontracting in IHRM and related issues --Nike business standard -- Critiques • Juan Kwang Li (Joyce.K) --Case study: Yu Yuen factory in China • Qiuyi Huang (Ivy) --Case study: MSP Sportswear in Thailand • Wen Qiao Li (Lily) --Recommendation --Conclusion

  3. U.S.A. Profile (PCN)

  4. U.S.A. Profile (PCN) • Government Type: Constitution-Based Federal Republic • Political Parties: Democratic Party, Republican Party • President: George W. Bush (Central Intelligence Agency)

  5. U.S.A. Profile • Labor Force:147.4 Million • GDP Purchasing Power Parity - $40,100 • Investment (gross fixed):15.7% of GDP • Export: 795 Billion • Import:1.476 Trillion (Central Intelligence Agency)

  6. U.S. A. Business Sector

  7. U.S. A. Profile (cont.) • Literacy rate: 97% • Long-term problems -- High medical and pension cost -- Trade and budget deficits (Central Intelligence Agency)

  8. China Profile

  9. Culture Description in China • Important Business Concept : “GuanXi” = Relationship • “GuanXi” definition: Networking of relationships among various parties that cooperate together and support one another (Export Information Organization)

  10. Culture Description in China (cont.) • “GuanXi” in Chinese culture -- Legalized -- Not relate to bribery -- Quotation: “Connections are more important than strategy for a company to succeed in Asia” (Export Information organization)

  11. Social Description In China (cont.) • Population --1.3 Billion • Literacy Rate: 86% • Problem: Drug Abuse, Corruption ,Violation of Property Rights and Pollution (Central Intelligence Agency)

  12. Economic Description In China • Labor Force: 778.1 Million • GDP: --Real Growth Rate: 9.1% -- Per Capita: Purchasing Power Parity - $5,600 • Investment (gross fixed): 46% of GDP • Exports: 194.7 Billion • Imports: 158.8 Billion (Central Intelligence Agency)

  13. Business Sector in China

  14. Political Description In China • Government type: Communism • Political parties:Chinese Communist Party, 66.35 million members; 8 minor parties under communist supervision • President: Hu Jin Tao (Central Intelligence Agency)

  15. Important Recent Changes in China • 1989: Student Movement in Tiananmen Square • 2001: Joined the World Trade Organization • 2003: General Secretary Hu Jin Tao was elected as President (Bureau of East Asian and Pacific Affairs)

  16. Challenges to the Chinese Expatriate and IHRM • Corruption • Intellectual Property Rights • Crimes (Bureau of East Asian and Pacific Affairs)

  17. Thailand Profile

  18. Culture Description In Thailand • Important Business Concept:Cooperate Structure -- Powerful connection is respected -- Family comes first before business Ex: Top management is often family (FGI world)

  19. Social Description In Thailand • Population:65,444,371 • Literacy rate:97.1% Male, 93.9% Female • Problem:AIDS (Central Intelligence Agency)

  20. Economic Description In Thailand • Labor Force: 34.9 Million • GDP -- Real Growth Rate: 6.1% -- Per Capita: Purchasing Power Parity - $ 8,100 • Investment (gross fixed) --22.5% of GDP • Export: 75.99 Billion • Import: 65.3 Billion (Central Intelligence Agency)

  21. Business Sectors In Thailand

  22. Political Description In Thailand • Government type: Constitutional monarchy • Political parties: Multi-party system and Communist Party is prohibited • Executive-king: Phumiphon Adunyadet (Central Intelligence Agency)

  23. Important Changes in Thailand Recent History • 1988: Chatichai Choonavan, the leader of the Thai Nation Party (democratic party) was first elected as prime minister • 1996: Chuan formed a coalition government • 2001: Telecommunications multimillionaire Thaksin Shinawatra and his Thai Rak Thai (TRT) party won victory on platform of economic growth and development. (Bureau of East Asian and Pacific Affairs)

  24. Challenges to the Expatriate and IHRM In Thailand • Language Barriers • Religion Issue • Thai People Are Not Organized • Strict Custom (FGI World)

  25. Culture Gap Between U.S.A. (PCN) and China & Thailand (HCN) (FGI World)

  26. Nike In The U.S.A. • Contract Factory --109 apparel contract factories --12 equipment contract factories • 14% of Nike apparel was made in the U.S. Cole Haan,Hurley and Converse are subsidiaries in us region. • Store: More than 80 stores (Nike)

  27. Asia Pacific Region Of Nike • Employees: 3,000 • First subcontracted factories are in Taiwan and Korea (1977) • Nike Office: Australia, China, Hong Kong, Japan, Korea, New Zealand, Southeast Asia (Singapore, Malaysia, Philippines, Thailand), and Taiwan. • Factory: 150 (Nike)

  28. Subcontracting In IHRM • Implementations on monitoring subcontractor --Assign expatriate staff in host country --Hire country-based investigator to monitor implementation of the company’s code of conduct --Use inspector from the company headquarter (IHRM, 2005)

  29. Nike Code of Conduct • Management practices that respect the rights of all employees, including the right to free association and collective bargaining • Minimizing our impact on the environment • Providing a safe and healthy work place • Promoting the health and well-being of all employees (Nike)

  30. Specific Standard Of Conduct • Forced Labor • Child Labor • Compensation • Benefits • Hours of Work/Overtime • Environment, Safety and Health • Documentation and Inspection (Nike)

  31. Specific Standard Of Conduct (cont.) • Compensation --Provide at least the minimum wage or the prevailing industry wage, whichever is higher --Provide each employee a clear, written account for ever pay period --Eliminate deduction on employee pay for disciplinary infractions (Nike)

  32. Specific Standard Of Conduct (cont.) • Hours of Work/Overtime --Comply with legally mandated work hours --Compensate overtime fully according to local law --Inform employee if mandatory overtime is a condition of employment at the time of hiring --Provide one day off in seven, no more then 60 hours per week, or complies with local limits if they are lower (Nike)

  33. Subcontracting Issues in IHRM • Not enough implementation on monitoring • Local buying agents and quality control representatives to do the monitoring • The code of conduct is not really being enforced by the subcontractors --Subcontractors would further subcontract to other local firms --The foreign-owned contractor and its expatriates impose their own work practices upon the host country workforce (IHRM, 2005)

  34. Subcontractor in South China • Yue Yuen Industrial Holdings Co. Ltd. --Locates in Dongguan --Established in 1989 --Belongs to the Taiwanese shoe company, Pao Chen Cooperative --Produces for Nike, Reebok, Adidas, Clarks and new Balance --Employs total 140,000 workers and 12,000 are producing for Nike (China Labor Watch)

  35. Nike’s Subcontractor in China

  36. Yue Yuen Shoes Factory • A giant shoe manufacturer branch under BaoCheng Group • A giant shoe manufacturer branch under BaoCheng Group • Location: Gaobu Town, Dongguan City, Guangdong Province, China • Labor Force:12,000 workers

  37. Ethnical Issues in Yue Yuen Factory • Contract • Discrimination • Work hours & Overtime • Compensation

  38. Discrimination • Since 1999, the factory has adopted a policy of mainly employing female workers • The factory only employs female workers aged from 18 to 25. • Male workers are only employed with the specific approval of section managers; Ratio: 1 of 15

  39. Why is discrimination an issue? • China’s Labor Law: Laborers shall not be discriminated against in employment due to their nationality, race, sex, or religious belief. (China Labor Law, Ch.2, Article 12) • Nike’s Code of Conduct:There shall be no discrimination based on race, creed, gender, marital or maternity status or political beliefs, age or sexual orientation. (Nike)

  40. Contract • Nike’s Code of Conduct: N/A • China’s Labor Laws: • An employees’ probation period should not exceed six months. Moreover, if a worker accumulates ten years service at his or her place of employment, the employer is obliged to sign a long-term contract with the employer (China Labor Laws,Ch.3, article 20)

  41. Contract (Cont.) • China’s Labor Laws: • The draft collective contract shall be submitted to the workers representative assembly or all the employees for discussion and passage. Collective contracts shall be signed by and between the labor union on behalf of the employees and the employer. (China Labor Laws, Ch.3, article 33)

  42. Why is contract an issue? • Only “group leaders” sign the collective contracts in the name of the workers • The workers never see the contract and not aware of the details of the contract • Many workers have been working at the factory for over ten years, but remain employed on annual basic

  43. Work Hours & Overtime • Through its private connections, the factory was granted permission by Dongguan Labor Department to have the workers work as many as 82 hours of overtime. • Workers have to work 8 hours on Saturdays, the legal rest days.

  44. Work Hours & Overtime (Cont.) • 7:30 to 11:30a.m. Working • 11:30 to 1:00p.m. Lunch • 1:00 to 5:00p.m. Working • 5:00 to 6:00p.m. Dinner • 6:00 to 8:30p.m. Overtime Work hrs: 10.5 hrs/day (M-F) Saturday: 8 hrs/day overtime Total: 60.5 hrs/wk; 242 hrs/mo. (China Labor Watch)

  45. Why is working hours an issues? • Nike’s Code of Conduct: The contractor complies with legally mandated work hours; No more than 60 hours of work per week on a regularly scheduled basis, or complies with local limits if they are lower. (Nike) • China’s Labor law: The state shall practice a working hour system wherein laborers shall work for no more than eight hours a day and no more than 44 hours a week. The work time to be prolonged shall not exceed, however, 36 hours a month. (China’s Labor Laws, Ch.4, article 36 & 41)

  46. Compensation • Nike’s Code of Conduct: The contractor provides each employee at least the minimum wage, or the prevailing industry wage, which is higher. (Nike) • China’s Labor Law: The employer shall pay laborers wages no lower than local standards on minimum wages.(Dongguan:RMB 450/mo.) (China’s Labor Laws, Ch.5, Article 48)

  47. Compensation (Cont.) • No less than 150 per cent of their wages if the laborers are asked to work longer hours • No less than 200 per cent of their wages if no rest can be arranged afterwards for the laborers asked to work on days of rest • No less than 300 per cent of their wages if the laborers are asked to work on legal holidays (China’s Labor Laws, Ch.5, Article 44 )

  48. Why is compensation an issue? • Reality:Monthly wage RMB 512/mo. Including overtime paid (U.S. $62.4) • Should: Monthly minimal: $54.8/mo. Weekdays overtime:$23.50/mo. Saturdays overtime: $19.84/mo. Total minimum wage: $98.14/mo. (China Labor Watch)

  49. The Fact • Assume one pair of Nike Jordan sells for $130…. How much money goes to the workers who made the shoes? • Answer: $1.5 (China Labor Watch)

  50. Nike Subcontractor in Thailand • MSP Sportswear Co, Ltd. -- Locating in Huatalea Moung, Nakornrachaseama -- Managing by the Austrian director

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