This is the fifth installment of an article series looking into Uniqlo’s CSR track record, and specifically into the reasons as to why they want to do business with Grameen.
(Read Part 1, Part 2, Part 3, Part 4, Part 6 and Part 7.)
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Summary of previous posts:
Uniqlo – Japan’s largest, most dynamic, and fastest growing clothing retail chain – is investing into Bangladesh, notably by striking up a joint venture with Grameen bank. The question is: Why would they do that? This series of posts is looking at Uniqlo’s global strategy, their CSR track record, and what we can learn from that about their motives for the joint venture.
In the last posts, I had a closer look at Uniqlo’s CSR strategy’s three main strands: their Japanese hiring system, their Japanese diversity and inclusion strategy, and finally, their global recycling initiative.
Today’s focus: Uniqlo’s supply chain monitoring – efforts and results.
Despite their setting up global flagship stores in locations such as New York and Singapore, and innovative approaches for western markets, it is fairly save to assume that Unqlo’s main target market area is the Asia-Pacific, where retailing chains are – overall – not as proliferated yet as in the Occident. Uniqlo has since 2007 been pushing its Asia expansion with the setting up of their business in China (2007, currently 47 stores, incl. 2 global flagship stores in Shanghai and Hong Kong), and in Malaysia (2010).
This all said, their pricing strategy is key in order to succeed in these markets – notably without loosing their unique stronghold in the Japanese market. This again goes hand-in-hand with that Uniqlo is first-and-foremost known for: being a leader in producing quality clothing for a very affordable, if not to say cheap, price. They’re quality control processes, that go hand in hand with their product design strategy (simple, original, yet durable designs in a myriad of colours), are unique in the high street fashion industry. Quality for them starts at the procurement stage: They, for instance, buy only high-quality, long-staple cotton — which can only be harvested from three percent of the world’s cotton plants – for their extra-fine cottons plain T-shirts.
This however, leads directly and logically to questioning their supply chain, the degree of knowledge they have about it, and also as to how serious they take their responsibility for upholding minimum employment and environmental standards in their production processes.
How can their clothes price wise be as cheap in price as they are?!
At 1000 JPY (~ 7£ = ~ 9$; prices in the Japanese market. UK retail price are 30 to 50% higher) for a T-shirt – what does that imply for their manufacturers? Importantly, not only for those manufacturers located in typical supplier countries such as China, Malaysia, or Vietnam, but also the substantial number of suppliers based in Japan’s Gifu prefecture, known to be Japan’s “Sweat Shop Valley”.
The doubts are unquestionable there, and so far only partly answered, or not answered at all. The fact is that in order to compete in the price sensitive market-segment – in-line with H&M, Zara and similar brands – they reality will be, that working conditions in their supplying manufacturing sites are dare and with some likelihood not at the top of the league.
Very interestingly though, despite a number of hours of desk research to track down at least some hard data on the issue (in all of the following languages: Japanese, English, Spanish, French, German) the blissful disinterest of the Japanese and international media is rather surprising. On the other hand, I’ve mentioned it before, the interest within Japan with respect to all issues CSR, lags considerably, and it with a lot of reluctance that I have to fall back on Uniqlo’s own 2010 CSR report.
They, of course – after all they sell in the UK & US, too, so some information needs to at least look objective – admit the difficulties they have, and sheds a little bit of light unto the range and scale of the problem they deal with:
Criteria: “Based on the Code of Conduct (CoC) for Production Partners, UNIQLO monitors the working environment of major sewing factories and grades the factories from A to E in accordance with our own criteria. In instances of particularly serious or alarming offenses such as child labour, the factory is given the grade of E and our contract with the factory is immediately reconsidered. We offer direction on making improvements and consulting to a factory with a grade of C or D and conduct follow-up monitoring to check progress. If progress has not been made, the contract with the factory is reviewed.”
Results: “From June to August 2009, we conducted a series of monitoring at 99 partner factories using the new criteria [belonging to a total of 70 manufacturers; RbtE]. As a result, although no factory received a grade of E as of the end of August 2009, the majority—54 factories — were given a C grade, and 16 were given a D. In April 2009, before the new criteria was implemented, a case involving child labour was found, leading to a contract review. UNIQLO fully considers the results of its monitoring, and together with our partner factories, we will continue tackling issues to make improvements and disclosing our results to the public."
In the end, the issue remains unanswered:
Other than through their own CSR report – which logically only gives a very superficial insight on what’s really going on – there’s very little material available on Uniqlo’s ‘real’ supply chain auditing performance. There are some indications their internal auditing system is at least up to the level of other large chains – e.g. TopShop or Next – but in order to know rather than just guess, there is just simply not enough material publicly available.
This again, can mean either of two things: Uniqlo does really do a decent job in auditing their suppliers and working with them on their human-rights and labour law performance. Or else, their corporate system is surprisingly robust with respect to whistle blowers. Either could be, and it’s impossible to tell which of the two cases might come closer to the truth.
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This is the fifth installment of an article series looking into Uniqlo’s CSR track record, and specifically into the reasons as to why they want to do business with Grameen. (Read Part 1, Part 2, Part 3, Part 4, Part 6 and Part 7)
