Nike’s shows the conflict between ethics and profits

Published by The i paper (29th March, 2021)

Like most modern multinationals, the sportswear giant Nike likes to present itself as a force for good on the planet, rather than simply a money-making machine based on the sale of sneakers. So it works hard to burnish its image with sponsorship of good causes, lofty statements about being “a brand of hope and inspiration” and strenuous efforts to ensure it is on the right side of the diversity debate. “Our belief in human potential inspires us to lead in addressing equality’s most persistent barriers,” claimed chief executive John Donahoe in the US firm’s impact report this month.

There are, of course, limits to Nike’s equality efforts. Donahoe, a white man in his sixties, was reported to have taken home $53m last year, which is more than 2,000 times what the firm’s “median” employee is paid. His chairman Mark Parker, another white man in his sixties, pocketed $18m to add to the obscene $371m that he collected during his own time as chief executive.

But this still leaves lots of cash for clever commercials to show customers that Nike is a company that drips compassion and really cares. One advert in Japan shining a spotlight on racism in the country sparked intense debate, while in the US they feature Colin Kaepernick, the courageous quarterback whose career dissolved after he started to kneel for the national anthem in protest at racial injustice. “Believe in something. Even if it means sacrificing everything. Just do it,” intones the sportsman turned social activist in one award-winning commercial.

Yet now we will see how much Nike itself is prepared to sacrifice for its beliefs – or if all those noble sentiments about justice and equality are just a branding veneer to dupe customers into handing over more money? For the firm is facing fierce backlash in China after anger erupted over a statement saying it was “concerned about reports of forced labour” in Xinjiang and would not source textiles from this region. Typical was the reaction of actor Wang Yibo, who instantly terminated his contracts with the firm. “I firmly oppose any act to smear China,” wrote the pin-up star on social media.

Nike is right to be concerned about forced labour in Xinjiang, a region that produces one-fifth of the world’s cotton. Uighurs and other Muslim minorities are suffering a savage campaign of cultural genocide in the province that involves detention of at least one million people in camps, slave labour, mass sterilisation of women, theft of children, demolition of mosques and intensive surveillance. I have heard many of the distressing reports myself from distraught victims. Yet China is not just a place for Nike to find raw materials and cheap labour, but also the key source of growth for its sales, which more than doubled there in the past five years.

It is hard for a firm to pose as an apostle of ethical capitalism when, according to one Washington Post report from last year, Uighurs are compelled to work in factories churning out millions of its trainers. Nike has faced previous accusations of profiting from ties to forced labour in the Uzbek cotton industry. Yet suddenly this backlash in Beijing puts it on the spot – not least since it comes at a time of rising tensions between the West and China, while the pandemic and even an accidental blocking of the Suez Canal raise questions about the resilience of supply chains and reliance on a country that has become increasingly belligerent under its nationalist president, Xi Jinping.

Nike is far from alone at finding itself caught in this spotlight, with videos shared of people burning their trainers, after a social media firestorm whipped up by Xi’s attack dogs. Other Western firms are feeling similar heat over their stance on Xinjiang, including Adidas, Burberry and H&M – another corporate behemoth that likes to pontificate by saying stuff such as “we respect human rights, promote inclusion and champion diversity”. The furore in China is so intense that suddenly it became impossible to find the Swedish clothing retailer on key digital platforms or even call a taxi to their shops on the biggest ride-sharing phone app. 

Meanwhile, many other prominent global brands are tainted by accusations of links to forced Chinese labour including Apple, BMW, Marks & Spencer, Volkswagen and Zara. These firms that straddle the world find themselves caught on the frontline of a new cold war between the rising superpower – with its system built on dictatorship and denial of freedom – and the old guard of democracies that has dominated the world in recent decades. 

Xi demands total compliance from companies within his borders, regardless of whether they are foreign or Chinese-run. So multinationals are forced to choose between ethics or profits – something we saw with such disturbing clarity over the Hong Kong protests when western airlines, banks and accountancy giants kowtowed so disgracefully to the Communist Party crackdown. Hollywood has also buckled to Beijing’s threats, churning out films that fit with China’s world view, while firms such as Audi and Dior have demeaned themselves by grovelling over Taiwan.

Beijing is sending a clear message: if you want to make money in our nation, you must follow our diktat.  But the problem shown by Nike is that many big firms have restyled themselves as progressive forces, pretending that social responsibility is more important than shareholder value. This reflects how customers want to buy into a brand that makes them feel good and staff want to work for firms that make the world a better place. Yet these firms are exposed as gross hypocrites if they claim to be ethical, while profiting from abuse and pandering to cruel dictatorship.

Nike’s dilemma is shared by other multinationals in a world growing more divided: should they make sacrifices for their beliefs, as proclaimed in those celebrated commercials, or hoover up big bucks in China, regardless of the consequences for humanity? Just do it. Or not.

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