Avoiding the Red tape

Originally Published: October 19, 2004
By Darren Rovell | ESPN.com

When Reebok signed Houston Rockets center Yao Ming last September, company executives were intrigued by the possibility of exploiting a relatively untapped Chinese market that had 200 million basketball fans and a growing, affluent middle class.

But for years, the greatest contribution that China had made to the shoe business was not its potential consumer base, but rather its cheap labor force that worked for long hours on little pay, ensuring large profit margins for shoe and apparel companies.

Yao Ming
Following in Michael Jordan's footsteps, Yao Ming is counting on Reebok to avoid the controversy that Nike encountered with Jordan's shoes during the 1990s.
Activists targeted companies like Nike for what they characterized as labor abuses in Southeast Asia. Reporters uncovered physical abuse, toxic exposure, below minimum wage salaries and unrealistic quota systems. And while Nike's most powerful frontman Michael Jordan distanced himself from the controversy over sweatshops in the '90s, the pressure to make sure workplace conditions are adequate could be a bigger responsibility for Yao.

Not only is Yao the country's most popular celebrity -- he carried the flag during the opening ceremonies at the Athens Olympics -- but his $100 signature shoe, which hit stores in China two weeks ago, is also made in independently owned and operated factories in his homeland.

Scrutiny concerning overseas factory conditions has dwindled recently as companies devoted resources to quell future public relations disasters. Still, the topic remains controversial as evidence by Yao's "no comment" when asked his role in advancing human rights in factories where Reebok products are made.

"We communicate what we do to our consumers and certainly let our athletes that wear our products know what we are doing as well," said Doug Cahn, vice president of the human rights program for Reebok International. "We have provided information to Yao's team of people and we look forward to interacting with him."

Since 1992, Reebok has had a human rights program, which has sought to improve working conditions in factories that make its products. The company is a member of the Fair Labor Organization (FLA), which independently monitors factories through a series of yearly, unannounced visits. Earlier this year, the FLA board of directors voted to accredit Reebok's footwear compliance program after making visits to nine factories over a period of two years.

In two Chinese factories that made Reebok shoes, workers democratically elected representatives to voice their concerns. After an FLA review of factories in China, Reebok installed first-aid kits, responded to the need of a having a venue for workers concerns through an anonymous message board and made sure that overtime, which was not being tracked at all at one factory, was recorded like regular work hours. A Reebok official did not return calls seeking comment about how much wages for workers in China have changed over the last decade, though it's safe to say that those that work in factories make much less than the average worker in China, who makes about $1,000 per year.

"They have been willing to try new and different approaches to solve traditional problems in factories," said Rutledge Tufts, the FLA's executive director.

As president of the United States Basketball Academy, Bruce O'Neil has trained players in China and recently held the first ever Chinese Basketball Association draft camp. O'Neil, who has been to the country 36 times, says he doesn't believe Yao needs to make much of a difference in working conditions in his native land. That's because, O'Neil reasons, past experience has triggered shoe company executives to fully understand how much the world is watching.

"China is a whole new country as compared to what it was 10 years ago," O'Neil said. "The working conditions are so much better in factories that have now been cleaned up as the development of China has been seen as the greatest economic opportunity in our lifetime, if not all of mankind."

Meanwhile, Reebok has committed plenty of resources and dollars to marketing in China, with this month being the company's biggest efforts in the world's most populous country.

The company was one of six sponsors of the China Games, in which Yao's Houston Rockets played the Sacramento Kings in Shanghai on Oct. 14 and Beijing on Oct. 17. Reebok has advertised on billboards and in China's largest newspaper, The People's Daily. It also produced 12 feature videos on Yao, including one on the making of his shoe, which aired on Chinese television stations.

Reebok signed a 10-year deal to be the official apparel maker of the NBA, WNBA and NBDL in 2001. Last year, it became the sole apparel licensee of league-branded products in China, which prompted the company to open its first retail store in Beijing.

Reebok has also increased its commitment with the Houston Rockets for this upcoming season and will have rotating signage at the Toyota Center, which will be seen on television broadcasts both in the United States and China.

Darren Rovell, who covers sports business for ESPN.com, can be reached at Darren.rovell@espn3.com

Darren Rovell | email

ESPN.com Sports Business reporter

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