Business Policy

 International Expansion: A
Company’s Motivation and
Risks

 Child Labor in Global Marketing

Lesley Allen D. Kabigting

Mirela Claire Tayag

Pres. Geraldine Lim, MBA

Professor

Contents:
International Expansion: A Company’s Motivation
and Risks

Why Do Companies Go International?

 Improving Profit Margins

 Competing for New Sales
 Diversifying the Business
 Recruiting New Talent

Biggest Challenges of International Business

 It creates timing issues

 Language can become a tremendous barrier
 Currency fluctuations can completely eliminate profits
 There is no possible way to ignore local politics
 International businesses are going to have timing issues:
 You can’t do business somewhere when you don’t know the market

Child Labor in Global Marketing

Definition of Child Labour
Brief History
Causes of Child Labor
National Laws Often Include Exemptions
Workers’ rights are repressed
The global economy intensifies the effects of some factors
Four general principles that underpin all children’s rights:
The International Labor Organization (ILO)
Industries that rely on child labor
 Child Labour in Fashion Industry

What can businesses do?

The 10 worst performing countries in 2019
Ten Global Companies That Still Use Child Labour (as of 2018)
How Child Labour risk stack up for populations
Global Statistics from United Nations as of 2018
International agreements that require action by businesses
Conventions on the Rights of the Child
Why should companies care?
What can companies do?
Sources
International Expansion: A Company’s Motivation and
Risks:
Why Do Companies Go International?
Companies go international for a variety of reasons. In general, companies go international
because they want to grow or expand operations. More specific motives include generating more
revenue, competing for new sales, investment opportunities, diversifying, reducing costs and
recruiting new talent. Going international is a strategy that is influenced by a variety of factors
and is typically implemented over time. Sometimes, governments will incentivize expansions into
global markets.

 Improving Profit Margins

Domestic companies constantly look for opportunities to add customers and revenue streams.
When growth strategies are used up on the national level, the next path is to seek out
international growth. Distributing your products in additional countries increases your customer
base. As you offer compelling solutions and build loyalty across international markets, revenue
strengthens and escalates as well.

There are also significant cost savings that can be associated with going international. A company
may want to reduce costs by relocating closer to a supplier or benefit from lower production costs
by expanding operations to another country. Doing business internationally may open up new
investment opportunities. Further, a lower cost of acquiring customers may be another compelling
reason to expand internationally.

 Competing for New Sales

Closely connected to the goal of improved profit margins is the desire to increase sales. Even if
company operators generally are satisfied with revenue levels, international expansion can further
improve overall revenues. The race to expand internationally is often about gaining a presence in
foreign markets. Being the first to arrive in a new market can provide significant advantages.

If you don't enter a ripe market with your solution, competitors do. Not only do you miss the
revenue source, but you lose out on other valuable assets that you could use to promote your
company at home and abroad. In some cases, a strong domestic company gets overrun by a lesser
player that succeeds globally and grows big through global synergy.

 Diversifying the Business

The international expansion allows a company to diversify its business in a couple of key ways.
First, you spread the risk of slowing demand across multiple countries. If one market never gains
or loses interest in your offerings, you can pick up the slack with success in other countries. In
addition, you can connect with suppliers in international markets and take advantage of raw
materials and resources unavailable in domestic markets.

Also, companies often enhance innovation and develop additional variations of their solutions
when they operate in multiple countries. Product diversification similarly insulates you from the
risks of declining interest in a particular item.

For example, Xiaomi, one of the most popular smartphone manufacturers in China, seeks to
expand in India over the next few years. In addition to mobile devices, the company is planning to
sell electric folding bikes, self-balancing scooters, fitness bands and other products. This will
allow it to reach a wider audience and diversify its operations.

Huawei wants to expand its services outside China by 2020. Honor, one of its top-selling brands, is
going to be launched on the Russian, Indonesian and Indian markets.

 Recruiting New Talent

Operating in international markets also gives you access to a larger and more diversified talent
pool. Employees who speak different languages and understand different cultures enhance
connections with a broader customer base. Having an international brand that is well reputed will
invite top talent to your company. You can also structure global work teams in a way that allows
for synergy in building a global brand.
 Offshoring is the relocation of a business process from one country to another—typically
an operational process, such as manufacturing, or supporting processes, such as
accounting. Typically this refers to a company business, although state governments may
also employ offshoring

 Advantages of Offshoring

1. Economies of Scale
When a company sets up office or a factory abroad, it is not just capitalizing on
comparative cost advantages on labor but also on existing economies of scale.

Other cost items such as power, Internet connectivity, rent may be lower in the host
country than the country of origin. In fact, the expectation of most companies that
offshore is to realize at least a cost savings of 70%.

A company can also take advantage of the comparative cost advantages by diversifying
positions or negotiating for volume discounts when purchasing assets or services.

2. Close Collaboration

Offshoring gives the company greater control through closer physical collaboration.

Shared space collaboration has the advantage of overseeing the conduct of work without
the filters or delays associated with technology. While there are software programs that
allow clients to view the work of its outsourcing partner, latency issues with the
terminating carrier can compromise the benefits of real time analytics.

3. Favorable Government Policies

There are some governments that grant special exemptions and incentives to companies
that invest in their economy.

These include tax exemptions and access to cheap credit which could improve the bottom-
line of the business.

 Disadvantages of offshoring

1. Increase Unemployment

The biggest criticism versus companies that offshore is that it increases the level of
unemployment of the local economy. Offshoring & Outsourcing

The aforementioned companies Caterpillar and Nike have been accused of taking away
jobs from Americans and displacing their existing work force in favor of other nationalities.

These companies argue that by offshoring they are able to improve profitability by
lowering costs and increasing revenue. Thus, the increased profits can be used to improve
facilities and programs of the principal company.

2. Cultural and Social Differences

The client will be immersed in the culture and social practices of the host country. This
may have an effect on productivity and communication.

Unlike outsourcing, time zone differentials may work against the offshoring company
because production could end up being delayed due to changes in manpower availability.

3. Security Issues

Whenever you are sharing, transmitting data to another party, you are always at risk of
security breach and compromised data integrity.

There will always be transfer issues when it comes to data even when there is shared
space collaboration.

The decision on whether you should outsource or offshore will depend on the size and
complexity of your operations, the scope of work that you need transferred and of course,
your resources.
  Outsourcing is an agreement in which one company hires another company to be
responsible for a planned or existing activity that is or could be done internally, and
sometimes involves transferring employees and assets from one firm to another.

 Advantages of outsourcing

1. Reduces Cost of Operations

The cost of hiring an external agency or a third party service provider is lower than setting
up in-house operations for a number of reasons:

An external agency is a separate entity; it is an enterprise that is responsible for its own
cost of operations.
An external agency has the experience to get the job done according to expectation. If you
create an in-house department, you will have to invest in the infrastructure and hire the
right talent.
An external agency does not need additional training expenses. An orientation or overview
of the project may be required. But if you put up an in-house agency, you will have to
invest in training, research and development.

2. Improves Productivity

By outsourcing select business processes you can improve productivity because your
company can focus its resources on its core functions.

The cost savings from outsourcing can be repurposed to fund revenue- generating programs
of the company. For example, the cost savings can be used to improve business
infrastructure or enhance its marketing and promotional program.

3. Increases Flexibility

A company can increase its flexibility with outsourcing by taking advantage of time zone
differentials. By simply adjusting work shifts, it is possible to have your business managed
for 16 hours by an external agency.

 Disadvantages of outsourcing
1. Cultural and Social Differences

There will be a period of adjustment needed for your company to accommodate certain
example, if you contract an agency from the Philippines or India you will have to develop
an understanding of their deeply rooted spiritual beliefs the dates of which may conflict
with your work schedule.

2. Communication Problems

Hand- in- hand with cultural and social differences are communication problems. There
arise because of differences in perspectives.

For example, North American companies tend to do business in a straight- forward

manner. On the other hand, service providers from the Philippines are more introverted.
They tend not to say much and keep to themselves.

For the North American client it may be taken as a sign of aloofness, uncertainty or
incompetence. But in reality, it is just part of their nature as a soft- spoken people.

3. Security Issues

Despite the promulgation of the Data Protection Act in several popular outsourcing
destinations, security breach and data integrity will remain serious issues.

Even with tight IT networking protocols and safety measures, concerns on security will
always come up in the absence of close collaboration.

Biggest Challenges of International Business

  It creates timing issues

A business with an international presence must deal with the different time zones that exist on
the planet. You know the saying that it’s always 5 o’clock somewhere? It’s true. It also means that
when it is 8am in Seattle and you’re just getting to work, it’s 11pm in Singapore where your other
business might be. The changes in hours can make it difficult for an international business to
coordinate.

 Language can become a tremendous barrier

If a business is entering into a new market, especially a new business, then the local language can
become a barrier toward success. This barrier is slowing coming down with apps and software that
translate words into a workable language, but this technology is still very imperfect. What a small
business owner may think is a compliment might actually be a grievous insult.

 Currency fluctuations can completely eliminate profits

American companies experienced this in 2015. With the dollar strengthened against the Euro at
near historical levels, anticipated profits suddenly disappear based on the fluctuations of value in
international currencies. There might also be fees in currency exchanges, especially through
credit card transactions, that further dip into the profit margins. When the home monetary unit
trades lower, it’s actually better for business, and that isn’t always better for the consumer.

 There is no possible way to ignore local politics

The political environment internationally can look very different than the domestic political
environment. It isn’t uncommon for international governments to seize control of a business if
they determine it is their best interest to do so. Should that happen, the entire operational profits
can disappear, yet there would still be an expectation to work and function as normal. Not every
country lets a company operate as it wants, so this must always be considered.

 International businesses are going to have timing issues:

Delivery of product is a constant challenge for the international business. It is standard procedure
for new manufactured items created internationally to take 60+ days for them to be shipped to a
preferred location. Payment guarantees, tariff considerations, and other costs are all required to
be in place. Products are going to need to go through customs checkpoints as well. If there’s a
breakdown in the shipping process, it could be 6 months or more for a product to make it to the
market.

 You can’t do business somewhere when you don’t know the market

Going global often means visiting the foreign market in person to understand local needs. The
value proposition that works locally will not likely work internationally. Even if this is partnership
or franchise, without seeing the market personally, an authentic presentation can never really be
developed.

The pros and cons of expanding a business internationally show that there are some increased
costs, but there is a good chance to experience increased profits as well. If a business can absorb
the costs of expansion and has their international manufacturing process nailed down, then a
company of virtually any size can develop a global presence. This gives everyone the chance to
access the most valuable and affordable goods that can meet their needs.
Child Labour - the employment of children in an industry or business, especially when illegal or
considered exploitative.

In the world's poorest countries, around 1 in 4 children are engaged in child labour, the highest
number of whom (29 percent) live in sub-saharan Africa. In 2017, four African nations (Mali,
Benin, Chad and Guinea-Bissau) witnessed over 50 percent of children aged 5–14 working.
Worldwide agriculture is the largest employer of child labour. The vast majority of child labour is
found in rural settings and informal urban economies; children are predominantly employed by
their parents, rather than factories. Poverty and lack of schools are considered the primary cause
of child labour.

Brief History
Child labor began to rise in the late 1700s into the early 1800s.
Around this time, the Industrial Revolution was in full swing and
many families did not have the means to provide for themselves
or their families. This is when children were being forced to
work on family farms. Many families moved from their rural
neighbors into industrialized cities. In these cities, many
children were put to work in the mills and in the factories.
Around this time, child labor was not looked at as a negative
idea. The labor was cheap and benefited the families the
children came from. Once most families worked in the cities,
many job opportunities were made available for children to
work.

Children working was viewed as a positive act due to

the fact that it acted as a training for the children. The
boys would were apprenticed until the ages of eighteen
or twenty- one while the girls were apprenticed until
they were eighteen or married.

With the money the children were making, they

provided for their families in need, pay for education,
and even pay for a marriage that will take place in the
future. Many children were forced to leave their
families behind to go work and often times, they would
never see their family again. The boys would often work
more on the heavy side while the girls did less heavy
work like working in sewing mills.

With all these children working, production skyrocketed. Companies were benefiting from the
effects of child labor. Children were paid very little so it did not cost the companies barely
anything to keep the children working there. Since they were little, children were able to get in
between small spaces that the adults were not able to get through. However, by doing this
children were left in bad shape.

By putting children to work in the factories, sweatshops, and mills created many harmful effects
on their bodies. Children are much weaker than adults and their bodies do not do an efficient job
in resisting any illness that come their way during the job. Children are not able to stand for long
periods of time which can cause damage to the child’s legs and back. Because children are
working many long hours, they did not receive the proper nutrition that their young bodies
needed.

For the children working in the factories, safety are not made clear to the children so when they
are asked to place their hands in a machine that is not off, they were not aware of the risk they
were taking. Many fingers, locks of hair, hands and other body parts were removed as a result of
lack of safety regulation in the work place.
Causes of Child Labor:
Child labor persists even though laws and standards to eliminate it exist. Current causes
of global child labor are similar to its causes in the U.S. 100 years ago, including poverty,
limited access to education, repression of workers’ rights, and limited prohibitions on
child labor.

 Poverty and unemployment levels are high.

Poor children and their families may rely upon child labor in order to improve their
chances of attaining basic necessities. More than one-fourth of the world's people live in
extreme poverty, according to 2005 U.N. statistics. The intensified poverty in parts of
Africa, Asia, and Latin America causes many children there to become child laborers.

 Access to compulsory, free education is limited.

In 2006, approximately 75 million children were not in school, limiting future
opportunities for the children and their communities. A 2009 report by the United Nations
estimated that achieving universal education for the world's children would cost $10-30
billion -- about 0.7% - 2.0% of the annual cost of global military spending.

 Existing laws or codes of conduct are often violated.

Even when laws or codes of conduct exist, they are often violated. For example, the
manufacture and export of products often involves multiple layers of production and
outsourcing, which can make it difficult to monitor who is performing labor at each step of
the process. Extensive subcontracting can intentionally or unintentionally hide the use of
child labor.

 Laws and enforcement are often inadequate.

Child labor laws around the world are often not enforced or include exemptions that allow
for child labor to persist in certain sectors, such as agriculture or domestic work. Even in
countries where strong child labor laws exist, labor departments and labor inspection
offices are often under-funded and under-staffed, or courts may fail to enforce the laws.
Similarly, many state governments allocate few resources to enforcing child labor laws.

National Laws Often Include Exemptions:

Examples:

Nepal - minimum age of 14 for most work plantations and brick kilns are exempt.

Kenya - prohibits children under 16 from industrial work but excludes agriculture.

Bangladesh - specifies a minimum age for work but sets no regulations on domestic work or
agricultural work.

Bolivia - becomes first nation to legalize child labour

Bolivia has become the first country to legalize child labour after a law was signed by Vice-
President Alvaro Garcia Linera

The new legislation was first approved by Congress earlier and now the signature from Linera
means the age that children can legally work is to be lowered from 14 to 10.

Under the new legislation, children above the age of 10 will be allowed to become self-
employed workers as long as they have enrolled in school and have the permission of their
parents.

Children over the age of 12 will be permitted to take on contract work, again with parental
consent and compulsory school attendance. The law to lower the age in which children can
legally work, is all part of the Bolivian government’s plan to help Bolivians living in poverty.

It is hoped that adding another wage to a family’s income could alleviate the financial burdens
that a large proportion of Bolivians face.

Senator Adolfo Mendoza, one of the bill's sponsors told the Associated Press: “Child labour
already exists in Bolivia and it's difficult to fight it. Rather than persecute it, we want to protect
the rights and guarantee the labour security of children."
Child labour is something that is engrained in Bolivian culture, with a large percentage of the
adolescent population having to work.

It is estimated that a total of 1 million of Bolivia’s children between the ages of 5 and 17
currently work, making up 15 per cent of the country’s workforce.

Even the President, Evo Morales, worked as a 14-year-old herding Llama in his hometown of
Isallawi.

Workers’ rights are repressed.

Workers’ abilities to organize unions affect the international protection of core labor standards,
including child labor.

The global economy intensifies the effects of some factors.

As multinational corporations expand across borders, countries often compete for jobs,
investment, and industry. This competition sometimes slows child labor reform by encouraging
corporations and governments to seek low labor costs by resisting international standards. Some
U.S. legislation has begun to include labor standards and child labor as criteria for preferential
trade and federal contracts. However, international free trade rules may prohibit consideration of
child labor or workers’ rights.

The effects of poverty in developing countries are often worsened by the large interest payments
on development loans. The structural adjustments associated with these loans often require
governments to cut education, health, and other public programs, further harming children and
increasing pressure on them to become child laborers.

There are four general principles that underpin all children’s rights:

 Non-discrimination means that all children have the same right to develop their
potential in all situations and at all times. For example, every child should have equal
access to education regardless of the child’s gender, race, ethnicity, nationality, religion,
disability, parentage, sexual orientation or other status

 The best interests of the child must be "a primary consideration" in all actions and
decisions concerning a child, and must be used to resolve conflicts between different
rights. For example, when making national budgetary decisions affecting children,
Government must consider how cuts will impact on the best interests of the child.

 The right to survival and development underscores the vital importance of ensuring
access to basic services and to equality of opportunity for children to achieve their full
development. For example, a child with a disability should have effective access to
education and health care to achieve their full potential.

 The views of the child mean that the voice of the child must be heard and respected in
all matters concerning his or her rights. For example, those in power should consult with
children before making decisions that will affect them.

International Labor Organization (ILO)

 Founded in October 29, 1919 by the Paris Peace Conference

 is a United Nations agency whose mandate is to advance social justice and
promote decent work by setting international labour standards 
 It was the first specialized agency of the UN. The ILO has 187 member
states: 186 of the 193 UN member states plus the Cook Islands are
members of the ILO.
 The tripartite structure is unique to the ILO where representatives from
the government, employers and employees openly debate and create
labour standards.
According to ILO, not all work done by children should be classified as child labour that is to be
targeted for elimination.

 Children’s or adolescents’ participation in work that does not affect their health and
personal development or interfere with their schooling, is generally regarded as being
something positive.
 This includes activities such as helping their parents around the home, assisting in a family
business or earning pocket money outside school hours and during school holidays.
 These kinds of activities contribute to children’s development and to the welfare of their
families; they provide them with skills and experience, and help to prepare them to be
productive members of society during their adult life.

The term “child labour” is often defined as work that deprives children of their childhood, their
potential and their dignity, and that is harmful to physical and mental development. It refers
to work that:

 is mentally, physically, socially or morally dangerous and harmful to children

 Interferes with their schooling by: depriving them of the opportunity to attend school; obliging
them to leave school prematurely; or requiring them to attempt to combine school attendance
with excessively long and heavy work.

Worst forms of child labour

Worst forms of child labour has priority to be eliminated as defined by Article 3

International Labour Organisation Convention 182:

 Article 3 International Labour Organisation Convention 182 - Convention

concerning the Prohibition and Immediate Action for the Elimination of the Worst
Forms of Child Labour (Entry into force: 19 Nov 2000)

 All forms of slavery

 Child prostitution
 Illicit activities (e.g. drug trafficking)
 Hazardous work which will harm the health, safety or morals of children.

Despite high levels of economic growth and improvements on poverty and education, progress on
child labour has stalled in the manufacturing countries most entwined with global supply chains.

These are the key findings of our latest annual Child Labour Index, which shows that
manufacturing hubs, including China, India, Bangladesh, Vietnam and Cambodia, have registered
no tangible improvement in the ranking of 198 countries since 2016.

Nearly 1 billion living in countries where child labour poses an ‘extreme risk’

To put the issue of child labour in context, we’ve (Verisk Maplecroft) identified 27 countries –
which account for roughly 12% of the world’s total population, or 900 million people – as
‘extreme risk.’

Industries that rely on child labor:

Cotton
Cotton-picking is done by children all over the world, but
particularly in countries whose economies rely heavily on its
harvest - like in Ivory Coast, where it provides a livelihood
for 3 million people. According to the NGO Cotton
Campaign, it is also a major problem in Uzbekistan and
Turkmenistan, where children are sometimes forced to work
in the cotton sector.

Coffee
According to the International Labour Organization (ILO),
agriculture is where the worst and most common forms of child
labor are found. Coffee plantations employ children to pick beans
in Colombia, Tanzania, Kenya, Uganda, Mexico, Nicaragua,
Dominican Republic, Honduras, Panama, El Salvador, Guinea, and
Ivory Coast.
Bricks
The US Department of Labor lists 15 countries using child labor
to produce bricks for construction projects. These countries
include Argentina, Brazil, China, Ecuador, North Korea and
Peru.

Garment industry
Perhaps most famous for its oppressive sweatshop conditions in
Cambodia and Bangladesh, the garment industry employs
children all around the world. Here, Syrian refugees, including
children, are seen producing shoes in Gaziantep, southeastern
Turkey.

Sugarcane
Sugarcane harvesting is carried out by children in countries
such as Guatemala, the Philippines and Cambodia, amongst
others. ILO found thousands of children working in
sugarcane production in the Philippines, some as young as
seven years old.

Tobacco
ILO says that the tobacco industry is one of the most
hazardous for child workers due to the long hours,
extreme heat, exposure to dangerous chemicals, having
to carry heavy loads and risk of attack from animals. The
average child worker in the tobacco industry works
around 10 hours a day.

Gold
Child labor in mines, particularly gold mines, is common
in some parts of Africa, Asia and South America.
Children either risk death from explosions in mine
shafts, or must stand for hours in riverbeds sifting for
small nuggets of gold. Because of unclean water, the
children working in the gold industry are at high risk of
contracting dysentery, malaria, meningitis and
tuberculosis.
Child Labour in Fashion Industry:
Where is it happening?
Children work at all stages of the supply chain in the fashion industry: from the production of
cotton seeds in Benin, harvesting in Uzbekistan, yarn spinning in India, right through to the
different phases of putting garments together in factories
across Bangladesh.

In the cotton industry, children are employed to transfer

pollen from one plant to another. They are subjected to
long working hours, exposure to pesticides and they are
often paid below the minimum wage. In developing
countries where cotton is one of the main crops, children
are enlisted to help harvest the delicate crop and reports
suggest they work long hours sowing cotton in the spring,
followed by weeding through the summer months.

At the next step of the chain, in the yarn and spinning mills,
child labour is rampant. The SOMO (STOP CHILD LABOUR ORG) report found that 60% of workers
at the mills it investigated in India were under-18 when they started working there; the youngest
workers were 15 when they joined.

Children also work in the “cut-make-trim” stage, when clothes are put together. SOMO says: “In
garment factories, children perform diverse and often arduous tasks such as dyeing, sewing
buttons, cutting and trimming threads, folding, moving and packing garments. In small workshops
and home sites, children are put to work on intricate tasks such as embroidering, sequinning and
smocking (making pleats).”

What are the challenges?

One of the biggest challenges in tackling child labour in the fashion supply chain is the complex
supply chain for each garment. Even when brands have strict guidelines in place for suppliers,
work often gets sub-contracted to other factories that the buyer may not even know about.

Ovaa says: “Companies that sell their products in Europe and the US have no clue where the
textiles come from. Maybe they know their first supplier and there are codes of conduct in place,
but further down the chain in the lower tiers it is very difficult to understand where the cotton
comes from.”

Tackling child labour is further complicated by the fact it is just a symptom of larger problems.
Where there is extreme poverty, there will be children willing to work cheaply and susceptible to
being tricked into dangerous or badly paid work.

Lotte Schuurman at the Fair Wear Foundation says if parents have no education they will end up
in low-paid work; their children will be forced to work, they will miss out on their education, and
they too will end up in low-paid work as adults. “You need to get out of that vicious circle of
poverty to decline child labour,” she says.

The Fair Wear Foundation has a list of over 120 brands that have signed up to its code of labour
practices, which do not allow for the use of child labour. Accredited brands must ensure with
regular audits that all of the suppliers in the cut-make-trim stage of production meet these
standards, meaning it goes beyond most companies’ in-house policies.

Other accreditation schemes exist, such as the Fairtrade Label Organisation, the Global Organic
Textile Standard and the Ethical Trading Initiative, but all of them struggle with the lack of
transparency in the textile and garment supply chain.

*The ILO estimates that at least 6 million children are in forced labour

What can businesses do?

The Fair Wear Foundation has a list of over 120 brands that have signed up to its code of labour
practices, which do not allow for the use of child labour. Accredited brands must ensure with
regular audits that all of the suppliers in the cut-make-trim stage of production meet these
standards, meaning it goes beyond most companies’ in-house policies.

Other accreditation schemes exist, such as the Fairtrade Label Organisation, the Global Organic
Textile Standard and the Ethical Trading Initiative, but all of them
struggle with the lack of transparency in the textile and garment
supply chain.

Schuurman says there are practical steps that companies can take to
rid their supply chains of child labour. “Brands can start off by
creating a supply register. Fashion brands normally have 200 or
more suppliers. You should start by knowing who your
manufacturers are and visiting them.” On these visits, she says
brand representatives must watch out for signs the factory is sub-
contracting; they should be concerned, if the factory does not have
enough workers for the amount of t-shirts it produces.

Companies can also address their purchasing practices, which can

make working conditions worse. Schuurman says: “To meet tight
deadlines or unanticipated orders, factories may sub-contract without informing the buying
companies. Sometimes that is enforced by the brand; it puts too much pressure on the factory.”
Companies can adjust their purchasing practices to lighten the load and ensure the factories they
have inspected fulfil their orders, she says.

It is also important to make workers aware of their rights so they know where to file a complaint.
“Although most clothing brands don’t own their own factories, they do have a lot of influence. We
want to work with brands that want to work with their factories,” says Schuurman.

The 10 worst performing countries in 2019:

1. North Korea (ranked 1st and highest risk globally)

2. Somalia

3. South Sudan

4. Eritrea

5. Central African Republic

6. Sudan

7. Venezuela

8. Papua New Guinea

9. Chad

10. Mozambique

India and China had a high level of reported incidents and had made "no tangible improvement"
on reducing child labour risks since 2016, when Verisk Maplecroft started collecting directly
comparable data.

There was also little headway in other countries whose industries are enmeshed in global supply
chains, including Ethiopia, Bangladesh, Turkey and Vietnam.

"The economic momentum of many countries is yet to trickle down to the poorest in society," said
Oscar Larsson, a human rights data analyst at the UK-based company.

"Child labour is still prevalent across many sectors and if countries aren't taking action it is up to
companies to see they have the tools to ensure it's not happening under their watch."

There are about 150 million child labourers around the world, according to the International
Labour Organization (ILO), the majority working on farms in Africa and Asia.

The ILO has said the world is unlikely to meet a target of ending child labour by 2025, which is
part of 17 global development goals agreed in 2015 at the United Nations.
The Child Labour Index aims to help businesses identify and root out child labour in their often
complex international supply chains, where a lack of direct oversight and many layers of
subcontracting can conceal workplace abuses.

The scores were calculated by assessing laws against child labour, the extent to which regulations
are enforced, and the frequency and severity of known child labour incidents.

A total of 27 countries -- which account for more than 10% of the world's population -- were found
to have an "extreme risk" of child labour, with Somalia, South Sudan, Eritrea and the Central
African Republic completing the top five on the index.

"The risks on child labour are still very high and too little progress is being made on tackling the
issue," Jos de Voogd from international children's rights group Terre des Hommes told the Thomson
Reuters Foundation.

"Businesses are reluctant to screen their whole supply chain, with the excuse that it is too
complicated, which means no one feels responsible for the lowest tiers... Companies need to be
encouraged to take action."

Ten Global Companies That Still Use Child Labour (as of 2018)

1. Nestlé
Despite signing an industry agreement in 2001 to eradicate child labour from their Ghana and Ivory
Coast-based cocoa farms, Nestlé - one of the largest and most recognisable consumer brands in
the world - continues to receive criticism for the ongoing employment abuses in their supply
chain. In 2005, a lawsuit brought against the company by former child workers lead to a damning
investigation by the Fair Labor Association (FLA), and although the confectionary giant
subsequently introduced new measures to tackle the problem, clearly they have not worked.

Terry Collingsworth, the human rights lawyer who filed the original lawsuit, alleged in October
2018 that Nestlé has since failed to meet its own eradication targets, with the US appeals court
allowing his longstanding legal challenge to proceed; the Swiss-based food producer are now also
facing a separate class-action lawsuit from US human rights activist Dannell Tomasella, who claims
that the company are lying to consumers by failing to disclose their ongoing involvement in child
labour. For their part, Nestlé acknowledges that the 'risk of child labour' in its supply chain cannot
be 'fully removed' but that they are 'determined to tackle the problem'.

2. H&M
Swedish fashion retailer Hennes & Mauritz - better known as H&M - are no strangers to human
rights controversies; it has faced allegations of neglect in regards to workers' rights across its
various production factories, while its sustainability practices have also drawn criticism in recent
years. Perhaps the most alarming charges levelled at the fast fashion giants, though, concern the
reports that they have been using child labour in Myanmar, Bangladesh and Cambodia - and paying
as little as 13 pence an hour for the privilege.

An alarming drop in their 2018 profits suggests that customer patience may be growing thin, but
H&M seems undeterred about their ethical and moral role in this process; in a public statement,
the company was quick to point out that the legal working age in Myanmar is 14. Unfortunately,
despite the issuing of a token condemnation of general child labour practices, this blaise attitude
suggests that H&M are unlikely to change their ways anytime soon.

3. Philip Morris
The tobacco industry has long been comfortable in its role as public enemy number one, and it's
therefore unsurprising to find no less than three of it's biggest players on this list; one of them,
the US cigarette giant Philip Morris - which owns Marlboro - has a long history of exploiting
children.

In 2010, the company admitted that children as young as 10 had been forced into labour on its
contracted tobacco farms in Kazakhstan, with allegations by the Human Rights Watch (HRW)
suggesting that passports had been confiscated in order to prevent them escaping; the HRW also
claims that Philip Morris was then 'slow' to implement their suggestions for tackling the issue.
Clearly, there are still ongoing issues with their providers elsewhere in the globe, too, with a
Guardian investigation published in June 2018 alleging that child labour on the company's
contracted farms - particularly in Malawi – is 'rampant'.
4. Microsoft
Despite Microsoft's global reputation as both a top employer and a philanthropic pioneer,
allegations surfaced in October 2018 that child labour was being used to extract cobalt for the
company in the Democratic Republic of Congo (DRC); investigators for Amnesty International claim
that children as young as 7 are mining the product in toxic and hostile conditions for 12 hours a
day.

Unsurprisingly, Microsoft has moved quickly to address the allegations, producing a report in late
2018 that details the actions they have taken to eradicate this practice; Amnesty remains
skeptical, though, stating that while there is 'real evidence of change' on the ground in the DRC,
there is still a 'long way to go' to meet both their own concerns and international standards in
general.

5. Sports Direct
Another global company that has struggled with its public image and perception, Sports Direct –
and, in particular, its controversial owner, Mike Ashley – have repeatedly come under fire for
dubious employment practices; the UK-based clothing and sports equipment giant can now add
child labour to its charge sheet.

The company's Lonsdale clothing line – a key part of Sports Direct's public brand – is produced in
factories in Myanmar, with testimonies from workers detailing how the practice is rife. The
company doesn't seem too bothered, though, describing the workers' statements as 'anecdotal and
uncorroborated', before later claiming to condemn child labour practices.

6. British American Tobacco (BAT)

Despite being the biggest listed tobacco company in the world (Lucky Strike, Pall Mall and
Rothmans are among its brands), BAT has faced numerous accusations of enabling child labour
practices; in 2016, reports surfaced of children working in hostile conditions on BAT tobacco farms
in Bangladesh, something that the company stringently refutes.

In spite of their protestations, concern is still present over the welfare of children and their labour
use on BAT's tobacco farms all over the world; Marty Otanez, an academic at the University of
Colorado, claims that child labour is present 'in every segment [of] the tobacco production
process', and that BAT see any proposed changes as a threat to their annual profit sheets. The
company itself, meanwhile, is happy to continue turning a blind eye, despite the accusations put
to them; speaking at its AGM in April 2018, chairman Richard Burrows claimed that BAT has 'not
got any questions to answer in respect of these issues'.

7. Apple
Apple has cultivated a reputation as an innovative brand, always at the forefront of technology
and a dream job for many graduates and interns. But, perhaps unsurprisingly for a company that
produces so many units, questions have been raised about what exactly goes on in its supply
chain; following the discovery that a Chinese contractor was employing 74 minors in 2013, the
company also admitted that its best-selling iPhone X product was being made by schoolchildren.

There were fresh claims in October 2018, too, of school students under the age of 18 being made
to manufacture Apple Watches under the guise of a company 'internship'. The contractor in
question, based in southwest China, also manufactures products for other tech giants such as Dell,
Amazon and Siemens. The company says that it wants to end all child labour practices, although
its contractors are still permitted to hire 'interns' to work in such a way.

8. New Look
The UK-based fashion retailer is also involved in the Myanmar factory scandals that have bought
H&M and Sports Direct into disrepute; unlike its competitors, though, New Look is at least willing
to accept that there is an issue, and have pledged to 'work with suppliers and partners in Myanmar
to address the findings'. This includes a remediation programme in which underage workers are
removed from factories, returned to school and reimbursed with a similar wage.

The company also claims to have let their suppliers know that they are 'against' the use of Uzbek
raw cotton due to child labour exploitation there, although by their own admission, they still
place responsibility for the investigation of cotton sourcing in the hands of their contractors – not
themselves.

9. Japan Tabaco Inc (JTI)

Japan Tobacco International (JTI) are also involved in the child labour cases involving tobacco
farmers in Malawi; unlike their competitors, though, JTI buys the tobacco leaf directly, meaning it
has a key say in the prices that are set and the conditions that workers operate in. In the
Guardian's June 2018 report, researchers found that children work at their family's behest on the
tobacco farms, a practice that is condoned by JTI (and other leaf buyers) with the justification
that 'handling dried tobacco is not considered as hazardous [as working with wet leaves]'.

Indeed, according to the report, JTI (and BAT) consider it not just acceptable, but even
beneficial, for children between 13 and 15 to work on the farms, provided it is 'light work,
permitted by local law'. It also points out that its internal ARISE scheme has removed more than
39,000 children from labour exploitation across the world.

10. Hershey's
Like Nestlé, the US-based confectionary giant, Hershey's, has run into serious labour explotation
problems on their west African cocoa farms; like Nestlé, they are also now facing legal action for
their practices from Dannell Tomasella, who has also targeted Mars. Tomasella's lawsuit – filed, as
with the Nestlé case, by law firm Hagens Berman – claims that Hershey's have repeatedly
abandoned any serious attempt to implement the Harkin-Engel Protocol of which they are
signatories, resulting in widespread child labour practices on their supply farms.

The company, which sells popular confectionary including Kit Kats, Peppermint Patties and Reese's
Peanut Butter Cups, argues that it 'does not tolerate, and is committed to preventing, child labour
across the entire supply chain', but according to Tomasella and his legal advisors, Hershey's is
simply not doing enough.

How Child Labour risk stack up for populations:

Global Statistics from United Nations as of 2018

In terms of prevalence, 1 in 5 children in Africa (19.6%) are in child labour, whilst
prevalence in other regions is between 3% and 7%: 2.9% in the Arab States (1 in 35
children); 4.1% in Europe and Central Asia (1 in 25); 5.3% in the Americas (1 in 19)
and 7.4% in Asia and the Pacific region (1 in 14).
Almost half of all 152 million children victims of child labour are aged 5-11 years.42
million (28%) are 12-14 years old; and 37 million (24%) are 15-17 years old.
Child labour is concentrated primarily in agriculture (71%), which includes fishing,
forestry, livestock herding and aquaculture, and comprises both subsistence and
commercial farming; 17% in Services; and 12% in the Industrial sector, including
mining.
Child labour in the Philippines
In the Philippines, there are 2.1 million
child labourers aged 5-17 years old
based on the 2011 Survey on
Children  of the Philippine Statistics
Authority (PSA). About 95 per cent of
them are in hazardous work. 69 per
cent of these are aged 15-17 years
old, beyond the minimum allowable age
for work but still exposed to hazardous
work. 

Children work in farms and plantations, in dangerous mines, on streets, in factories, and in
private homes as child domestic workers. Agriculture remains to be the sector where most child
labourers can be found at 58 per cent.Children work in mercury-laden water and in dangerous
conditions to search for gold in Camarines Norte, Philippines (ILO/G. Carreon).

Although regional financial struggles are a major cause of child labor in the Philippines, the global
economy is another factor. According to the Pulitzer Center on Crisis Reporting, the escalating
price of gold has driven mining operations in the Philippines to new levels, and many mining
companies make use of children. As many as 18,000 children are involved in regional gold mining
operations across the Philippines, and currently the country ranks 18th in terms of gold
production. As the demand for gold increases, along with its price, so too will the number of
children forced to work.

Gold production in the Philippines is highly dangerous. Young boys and teenagers are often forced
to descend into watery pits in a process known as compression mining. With only a tube to allow
them to breathe underwater, they fill bags with ore before returning to the surface. Aside from
the obvious physical dangers of this type of work, children and teenagers face other risks when
working in the mining industry, such as exposure to mercury, which is used to leech gold from
rock.

ChildFund has operated in the Philippines since 1954 to stop child labor and address the problems
that lead to it. ChildFund Philippines is one of six implementing agencies of ABK3 LEAP:
Livelihoods, Education, Advocacy and Protection to Reduce Child Labor in Sugarcane, which
reaches 52,000 children and 25,000 households. Through this partnership, ChildFund aims to
reduce the number of children forced to work by improving access to education. Other projects
are currently under way to raise awareness of the dangers of child labor and the industries that
support it, such as sugarcane farming and deep-sea fishing.

International agreements that require action by businesses

The UN Guiding Principles for Business and Human Rights (also
known as the ‘Ruggie Principles’) contain the most important
international guidelines on the role businesses are expected to
play in eliminating child labour, for example. They also set out
the obligations of governments to ensure that businesses adhere
to these guidelines. Businesses and governments together have
to ensure that problems are solved for the victims. The UN
Principles are endorsed internationally and included in shortened
form in the Organization for Economic Co-operation and
Development (OECD) Guidelines.

The OECD guidelines give companies practical advice on cross-

border business and corporate social responsibility. These are
recommendations by the governments of the OECD countries,
mostly Western countries, to companies in their countries on how to conduct themselves abroad in
areas like human rights, the environment and avoiding involvement in corruption.
Conventions on the Rights of the Child
The Universal Declaration of Human Rights (UDHR) was adopted unanimously by the United
Nations General Assembly in 1948. This declaration may well be the most important document in
international agreements between countries on human rights, including the rights of children.

The International Convention on the Rights of the Child (ICRC) recognizes the right of every
child to be protected from economic exploitation and from performing work that is hazardous or
harmful to their health and development or that interferes with their education. It also requires
governments to set a minimum age for employment and to provide for appropriate hours and
conditions of employment. (Article 32.1.)

The most concrete international agreements on combating child labour are the conventions of the
International Labour Organisation (ILO) concerning the minimum age for the admission to
employment (138) and on the prohibition and immediate action for the elimination of the worst
forms of child labour (182).

Why should companies care?

Association with child labour will likely damage a company's reputation. This is especially
true in the case of transnational companies who have extensive supply and service
chains, where the economic exploitation of children, even by a business partner, can
damage a brand image and have strong repercussions on profit and stock value.
Child labour is damaging to a child’s physical, social, mental, psychological and spiritual
development because it is work performed at too early an age. Child labour deprives
children of their childhood and their dignity. They are deprived of an education and may
be separated from their families. Children who do not complete their primary education
are likely to remain illiterate and never acquire the skills needed to get a job and
contribute to the development of a modern economy. Consequently, child labour results
in under-skilled, unqualified workers and jeopardizes future improvements of skills in the
workforce
Children have the same human rights as adults. But by virtue of their age and the fact
that they are still growing and gaining knowledge and experience, they have some
distinct rights as children. These rights include protection from economic exploitation
and work that may be dangerous to their health, safety or morals and that may hinder
their development or impede their access to education. The complexity of the issue of
child labour means that companies need to address the issue sensitively, and must not
take action which may force working children into more exploitative forms of work.
Nevertheless, as Principle 5 states, the goal of all companies should be the abolition of
child labour within their sphere of influence.

What can companies do?

Developing awareness and understanding of the causes and consequences of child labour
is the first step that a company can take toward action against child labour. This means
identifying the issues and determining whether or not child labour is a problem within
the business. Companies sourcing in specific industry sectors with geographically distant
supply chains need to be particularly vigilant. However, child labour also exists less
visibly in developed, industrialized countries where it occurs, for example, in some
immigrant communities.
Discovering if child labour is being used can be difficult, for example in the case where
documents or records are absent, and companies may consider using local non-
governmental organizations, development organizations or UN agencies to assist in this
process.
If an occurrence of child labour is identified, the children need to be removed from the
workplace and provided with viable alternatives. These measures often include enrolling
the children in schools and offering income-generating alternatives for the parents or
above-working age members of the family. Companies need to be aware that, without
support, children may be forced into worse circumstances such as prostitution, and that,
in some instances where children are the sole providers of income, their immediate
removal from work may exacerbate rather than relieve the hardship.
In the workplace
 Be aware of countries, regions, sectors, economic activities where there is a
greater likelihood of child labour and respond accordingly with policies and
procedures
 Adhere to minimum age provisions of national labour laws and regulations and,
where national law is insufficient, take account of international standards.
 Use adequate and verifiable mechanisms for age verification in recruitment
procedures
 Avoid having a blanket policy against hiring children under 18, as it will exclude
those above the legal age for employment from decent work opportunities.
 When children below the legal working age are found in the workplace, take
measures to remove them from work
 Help to seek viable alternatives and access to adequate services for the children
and their families
 Exercise influence on subcontractors, suppliers and other business affiliates to
combat child labour
 Develop and implement mechanisms to detect child labour
 Where wages are not determined collectively or by minimum wage regulation,
take measures to ensure that wages paid to adults take into account the needs of
both them and their families

In the community of operation

 Work in partnership with other companies, sectoral associations and employers’
organizations to develop an industry-wide approach to address the issue, and build
bridges with trade unions, law enforcement authorities, labour inspectorates and
others
 Establish or participate in a task force or committee on child labour in your
representative employers’ organization at the local, state or national level.
 Support and help design educational/ vocational training, and counseling programs
for working children, and skills training for parents of working children
 Encourage and assist in launching supplementary health and nutrition programs for
children removed from dangerous work, and provide medical care to cure children
of occupational diseases and malnutrition
Sources:

https://www.iqualifyuk.com/library/business-management-section/the-impact-of-globalisation-
on-international-business/

https://outsourceworkers.com.au/offshoring-and-outsourcing/` `

https://www.maplecroft.com

International Labour Organization

https://labs.theguardian.com/unicef-child-labour/

https://www.unglobalcompact.org/what-is-gc/mission/principles/principle-5

https://www.childfund.org/child-labor-in-the-philippines/?no_redirect=true

https://www.unglobalcompact.org/what-is-gc/mission/principles/principle-5

https://www.un.org/en/events/childlabourday/background.shtml