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BusinessWeek cover story reveals the real challenge of ethical sourcing – its all about the margins

BusinessWeek’s current cover is on sweatshops and the harsh realities of compliance with corporate codes of conduct. See:

http://www.businessweek.com/magazine/content/06_48/b4011001.htm?campaign_id=nws_insdr_nov18&link_position=link1

The story highlights how codes imposed by companies doesn’t mean the suppliers actually treat workers any better. Mainly this is an economic issue, but also workers just want to work longer hours in many cases.

For once, an article produced by US journalists actually has the gumption to state an opinion at the end, and the businessweek one is a neat summary of the situation:

“Ultimately, the economics of global outsourcing may trump any system of oversight that Western companies attempt. And these harsh economic realities could make it exceedingly difficult to achieve both the low prices and the humane working conditions that U.S. consumers have been promised.”

China has been exporting deflation to the West since 1997. With rising inflation in the west, and potentially growing consumer credit squeeze, how much longer can this continue? Surely not forever, particularly with the Democrats now in the US set to give the Chinese a harder time about the RMB exchange rate. Alongside this Chinese factory margins are going down and down, from very thin to razor thing. When will be the tipping point, and what will happen then, bearing in mind the Chinese need to ensure social stability? Will we simply pay more over here in the West?

Answers on a postcard…or post a comment.

Toby Webb, Editor

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