October 21, 2008

Just a thought

It has been a long time since i last blogged but time is just slipping away, although I must admit i haven't got the hang of time management as yet....

Anyway, I have been contemplating for quite a while whether or not i should write about this thing that is bagging me, since last week...I have decided to go on and write what i think, even though i have discussed it with several of my MBE colleagues...

After this mysterious introduction allow me to begin. As you remember last week we all attended the GBE (Global Business Environment) module, a very intriguing and insightful experience, particularly because we touched upon current issues such as the economic growth of China and of course the "Credit Crunch".

The most interesting point of this module-according to my opinion-was the fact that during the afternoons we were doing case studies...Real problems had to be solved and we had to do our best-always as a team-to ensure the survival and then success of our group whether we were producers, suppliers or even better a company...

Speaking of case studies, brings me to what i have been thinking about...

In many of the case studies in order to reduce the cost of production and to boost profits, companies decided to move their plants to developing countries in order to make use of the cheep labour.

Several times we had to make decisions about where is the best place to transfer the plant,Turkey?Bangladesh?or India?

Forgive me but i think this made me feel unethical....

I understand that the global market is extremely competitive, so every business is trying constantly to reduce cost and that cheap labour can be the easy way out...

But it seems that some business are taking advantage of underprivileged people's needs and aspirations of having a better life...

Besides i think that we are all more or less aware of the bad publicity certain companies have had because of being involved with child labour or other mall practices towards employees...

Maybe for a strict Business or Finance student this mentality makes sense but, we as MBE students are after quality...are this practises in accordance with excellence ??

Am i overreacting? What do u think?

I hope i didn't cause any uncomfortableness....

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  1. If we look at history, many countries (from what I can recall) have pull themselves out of poverty through being the recipient of FDI from developed nations. Taiwan for example before becoming more prosperous was basically a manufacturing machine for exporting low cost textile to the US, and until more recently being the OEM of electronic goods. Although the situation has changed somewhat with industries moving offshore to China, and facing the dilemma of business competitiveness and loss of domestic employment issues. I think without the FDI, Taiwan would still be in a far worse off position than without. what do you think?

    Nevertheless, seems to me you found yourself a good topics for your project – business ethics in developing countries :)

    22 Oct 2008, 00:34

  2. Hey Louis!

    Finally I get the chance to reply to your comment.

    What you mention about FDI is true, besides it is the most common way developed counties invest in developing countries…I don’t know much about Taiwan, I am afraid, but I will look into it.
    However I am a bit sceptical about the distribution of wealth…I mean, is the working class really benefiting from all this or are “the rich getting richer”? For example I am aware that many Greek labour-intensive companies are moving their operations to poor Balkan counties such as Bulgaria,Romania,Ukraine in order to take advantage of the cheap wages…. And i regret to say this but the quality of their life hasn’t changed…

    P.S. thanx for the suggestion, seems interesting

    28 Oct 2008, 00:24

  3. I agree with Louise about the OEM/ODM model has help Taiwan to be become a technology-famous island. And I am also worried about since most brand manufacturing companies are moving their RD centers to Benjing and Shanghai.(At the same time, some manufacturers are moving factories from China to Vietnam where they can find lower wage labours) Taiwan will lose it’s advantage of competitiveness soon. I know many foreingn professnals come to Taiwan for coordinate th OEM projects, but now they are moving to China. That’s the effect of globalization,I surpose, and it’s also the fate of developing counries striving to been globalized. This may be a “unethical” fact as Lila mentioned about. Just a talk.. I have no clue about the solution either. It’s the trend of globalization.

    29 Oct 2008, 16:35

  4. I was reading Chris’s GBE note and this quote might be of interest to you
    “The evidence on differences of labour costs is uncontentious. Evidence to support claims that MNEs are exploiting developing country workers is more mixed. The claim cannot be based on observing that wages for an apparently similar job are lower in a developing country than a developed on. Higher wages tend to reflect higher levels of economic development including provision of eduction, health and technology.” pg44

    It makes a good point about the difference in economic and social standard we use to base our moral judgement. In the developing country the wages given by the MNEs may be low in comparison to the developed countries. But in actual fact, the level of tangible benefit enjoyed by the workers in two places may not be very different, reflecting different levels of economic development. For example, paying $1/hour to a factory worker in Bangledesh and $10/hour in USA will allow both of them to live for 1 week. Both worker are happy but as the company manager which location would you invest? Would we still face the same dilemma if the situation is closer to home say paying a shoeboy $5 for a polish and a professional $10 for the same job? If we cannot detect significant difference in quality, would we say we are exploiting the shoeboy’s lower wage?

    It seems to me that as long as the workers receives the same amount of satisfaction/happiness from the wages given, then there shouldnt be any issue associated with ethics.

    06 Nov 2008, 00:15

  5. In regard to your “rich getting richer” comment and the observation of Greek companies moving into less developed countries. I would say the distribution of wealth would actually improve rather than deteriorate. In the developing countries, foreign invetment creates employment which in turn inject money into the working class which otherwise would be unemployed or work for a lower paid job. Yes you may say, then the MNEs are making a huge profit and so there is unequal distribution of wealth! Well, not really because for the MNEs the revenue are generated from the home (developed country) by selling finished goods to the richer Westerners. Not to mention other indirect ecnomic benefits such as technology transfer, increased skill base of workforce etc

    I don’t know much about Bulgaria,Romania,Ukraine but I would say to improve the general quality of life would require more than just the effort of MNEs alone. More often it would need a forward looking government to utilise foreign invetments in the way where the benefits can be transferred to the whole country. For exmaple, policies that would attract investment such as liberalisation of makret, capital , currency, stability of government etc … If such ecnomic reform is widespread and comprehensive, and assuming there is no undertable dealing like corruption, I think the quality of life of citizens of Bulgaria,Romania,Ukraine will gradually improve.

    06 Nov 2008, 00:31

  6. fishing tackle

    Very Intersting, thanks for sharing

    08 Jan 2009, 14:50

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