Each of the 17 chapters in our OM text ends with an “Ethical Dilemma” made for classroom discussion. In these days of “woke” campuses, we tread lightly, but still believe students need to be prepared to face some unpleasant realities in the world. For example, in Chapter 1, we note how the U.S. sends many batteries to Mexico for the dirty job of recycling. In Chapter 6, it is a coffee spill lawsuit at McDonalds. In Chapter 7, it’s pig slaughtering.
So the headlines about Chinese factories that supply Apple, Nike, and other products now shunning Uyghur workers from Xinjiang provide another example of difficult decisions facing operations managers. The issue, writes The Wall Street Journal (July 21, 2021), is that Western countries are increasing scrutiny of forced labor from the remote region where Beijing has been accused of committing genocide against local ethnic minorities.
Chinese PPE mask producer Hubei Haixin no longer employs laborers from Xinjiang. Lens Technology, a Chinese maker of smartphone touch screens for Apple, is phasing out Uyghur factory workers transferred from Xinjiang.
The about-face by Chinese suppliers that have collectively hired thousands of Xinjiang workers through government-backed labor programs highlights the growing pressure that firms face as Western governments push multinationals to eliminate forced labor from their supply chains in China. Rights groups have accused Xinjiang authorities of mass internment and exploiting what the Chinese government calls “labor transfer” programs to force Uyghurs and other Muslims from the region to work at factories around the country. Former detainees of Xinjiang internment camps are also sometimes funneled to factories around the region in the name of poverty alleviation.
A bill in Congress would ban goods produced by Xinjiang workers in state-run programs unless importers prove otherwise. Companies with suppliers in the region face a difficult choice. They can risk being associated with forced labor or take steps to ensure that their supply chains are relying on other sources.
It is not just the U.S. firms under the gun. France opened a “crimes against humanity” probe into four well-known fashion brands including Uniqlo and Zara. Roughly 84% of Chinese cotton production comes from Xinjiang, and is known as being among the world’s best. Transferring supply chains is no easy task, given that other major cotton producing regions such as Uzbekistan have a checkered past with human rights issues.
To retaliate against foreign pressures, many Chinese are now boycotting Western manufacturers such as H&M and Adidas that have spoken publicly.
Classroom discussion questions:
- As head of manufacturing, summarize the situation for your CEO and advise a strategy.
- How can firms like Apple control their 2nd and 3rd tier suppliers?