Nike – A TNC
Nike’s suppliers have changed rapidly since 1989. South Korea has declined as a supplier from 60% to less than 10%. This is because South Korea has become an NIC and so wages are higher & production is more expensive. Vietnam has only just become a supplier. Both of these countries will have been affected by the presence of communism but that has now collapsed in Vietnam & so is less of an issue. Indonesia has increased its supply to 40%, as it is an LEDC with poor controls on labour & environment.
There is a lot of controversy over Nike’s exploits in SE Asia. Nike exploits LEDCs in order to produce cheaper products. Working conditions are very poor and the factories receive very little of the profits. Nike can also pollute the environment without being prosecuted due to the slack environmental laws. If labour costs increase Nike can quickly pull out which does not help the long-term future of the host country.
On the positive side they do bring jobs to the region, particularly due to the multiplier effect. They help to bring new technology & skills to the area.
Nike in Vietnam
Vietnam is 1 of the world’s poorest countries with a lot of unemployment as governments have dismantled the centrally planned economy. The clothing industry is 1 of the fastest growing areas of employment. Nike employs 30,000 people in Vietnam, mostly young women. However, Nike was accused of exploiting labour which hurt its reputation & so it now offers better working conditions.
Other ‘Economics Systems’ revision notes at A Level:
- Motor Vehicle Industry
- The Global Economy and Multinational Corporations
- The Rise of Manufacturing in NICs
- Location Models
- Stages of Economic Development
- The Iron and Steel Industry
- Nike – A TNC
- Product Life Cycle Theory
- World Trade