Globalisation

1. Globalisation The Brand Goes Global

2. Globalising Converse As we have seen in class, companies no longer operate within national boundaries. They can not only market products on a worldwide scale, they can also move their base of production to countries where cheap labour and tax breaks are available. The rationale is generally financial. More than just a shoe, the Converse Chuck Taylor All Star became an American Cultural Icon. By looking at their history, we can also see a snapshot of America’s role in Globalisation.

3. Early Advertisement for All Stars From http://sneakers.pair.com/ chucks.htm

4. The Early History of Converse • 1908 – Marquis M. Converse opens the doors of the Converse Rubber Shoe Company in Malden, Mass., USA. He starts the company with winterized footwear for men, women and children. • 1910 – Converse produces 4,000 shoes daily • 1915 – Converse canvas tennis shoe business climbs, doubling by 1918 • 1917 – World’s first performance basketball sneaker debuts – the Converse All Star From http://www.insidehoops.com/converse-history.shtml (Accessed 5th Feb 2007)

5. 1923 – THE pinnacle moment in the history of Converse: Converse adds Chuck Taylor’s signature to the All Star® patch, giving birth to what would become an American icon. 1930s - 1950s: The nation’s interest in basketball surges. Games are also televised overseas, increasing awareness of Chucks. Concurrently, Converse’s record-breaking war manufacturing effort earns it the United States’ “E for Excellence” distinction. Hollywood helps the wildly popular shoes transcend the sport to become deeply entrenched in popular American culture, like jeans and soda. Converse Success From http://www.insidehoops.com/converse-history.shtml (Accessed 5th Feb 2007)

6. When America entered World War II in 1941, Converse shifted production to manufacturing footwear, apparel, boots, parkas, rubber protective suits, and ponchos for pilots and troops. The war provided great exposure for their shoes, as the US Military adopted the Chuck. Widely popular during the 1950s and 1960s, Converse lost much of its apparent near-monopoly from the 1970s onward, with the surge of new competitors such as Nike, Adidas and Reebok who introduced radical new designs to the market. Converse and WWII From http://en.wikipedia.org/wiki/Converse

7. This loss of market share, combined with poor business decisions forced Converse to file for bankruptcy on January 22, 2001. When the company subsequently changed hands that year, the last factory in the United States was closed. Thereafter, manufacturing for the American market was no longer performed in the United States, but instead in a number of Asian countries, including China, Indonesia and Vietnam. On July 9, 2003, the company accepted a $305 million purchase offer from rival Nike. Converse Goes Overseas From http://en.wikipedia.org/wiki/Converse

8. The Return of the Chuck In the early 21st Century, the Converse Chuck Taylor All-Star is the most successful shoe in history, and has enjoyed recent popularity thanks to a resurgence of “old skool” trends. Over 750 million pairs have been sold worldwide. They no longer seem to be worn by their original target market of basketballers (at least not in the professional sphere), but instead they are now marketed to the mainstream teenager. Some are so enthusiastic about the sneakers that they have a vast, ever-growing collection. They are also quite influential in pop-culture; Converse Chuck Taylor All-Stars have been popular for decades in the American punk and indie rock scenes, and Hollywood has popularized Chucks in countless motion pictures.

9. Converse in the World Media Recent success for the All Star is due to exposure in global media. Here are a few examples: # In the first season of 24, Rick Allen is wearing a pair of blue Chuck Taylor All-Stars. # B.J. Hunnicutt, in the television series M*A*S*H, is always seen wearing a pair of black hi-top Chuck Taylor All-Stars. # In the British sci-fi series Doctor Who, the signature costume of the Tenth Doctor includes a pair of cream, black or maroon Chuck Taylors, depending upon the Doctor's choice of a brown or blue suit. # Most of the boys in The Wonder Years wear white or black Chuck Taylors throughout most of the series.

10. Global Media * Rapper Tupac Shakur in the track California Love raps "in L.A. we wear Chucks not Ballys" * Ice Cube in the song Friday (for the movie of the same name): "He's bout hard as Darth Vada in his sweat shirt, khakis and Chuck Taylors. Just see him in the drive way, gettin beat like a smoka fool 'cuz it's Friday." * The All American Rejects (Tyson Ritter,Nick Wheeler, Chris Gaylor, and Mike Kennerty) wear Converse in their music videos. * Rapper Snoop Dogg makes references to "Chucks" in his songs. From rapper WC, "Steppin' out the Navigator with braids and Chuck Taylors" - Cheddar * A pair of black Converse One Stars were Kurt Cobain's preffered pair of shoes. On rarer occasions, has also been seen wearing all stars. Cobain wore one stars when he deceased, and can be seen on the suicide photo

11. From 2001 onwards, the “essential” American Footwear was no longer made in America. It was instead made in Asian countries where workers were paid very little for their labour. In 1998, with production already being moved overseas, the head of NIKE told the National Press Club that he is "proud, not ashamed" of Nike operations, wages and facilities in Korea, Taiwan, China, Singapore, Thailand and Pakistan. Converse Sweatshops From http://chucksconnection.com/articles/ConverseArt16.html

12. Multi-National Corporations A multinational corporation (MNC) or multinational enterprise (MNE) or transnational corporation (TNC) or multinational organization (MNO) is a corporation or enterprise that manages production establishments or delivers services in at least two countries.

13. Multinational corporations have a powerful influence in international relations, given their large economic influence in politicians' representative districts, as well as their extensive financial resources available for public relations and political lobbying. Multinationals have played an important role in globalization. Given their international reach and mobility, prospective countries, and sometimes regions within countries, must compete with each other to have MNCs locate their facilities (and subsequent tax revenue, employment, and economic activity) within. Corporations and Globalisation

14. Race to the Bottom To compete, countries and regional political districts offer incentives to MNCs such as tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental and labor standards. This process of becoming more attractive to foreign investment can be characterized as either a race to the bottom, a push towards greater freedom for corporate bodies, or both. Because of their size, multinationals can have a significant impact on government policy primarily through the threat of market withdrawal. For example, in an effort to reduce healthcare costs, some countries have tried to force pharmaceutical companies to license their patented drugs to local competitors for a very low fee (thereby increasing competition in that drug category and lowering the price). When faced with that threat multinational pharmaceuticals firms have simply withdrawn from the market, which often leads to limited availability of advanced drugs. In those cases, governments have been forced to back down from their efforts.

15. A Converse Example Converse might decide that they would like to open a factory in Civite, in the Phillipines. However, a neighbouring district might decide that they would like to benefit from the Company’s presence. The two districts would then fight it out to offer the lowest tax rates, or to cut the requirement to offer healthy cover to workers or to change laws that might favour the worker in terms of, for example, sick leave. It would be like the Australian Government offering to cut the minimum wage to 50c an hour to attract overseas business. The areas countries create to attract business in such a manner are often called ‘Free Trade Zones’

16. A free trade zone (FTZ) or Export processing zone (EPZ) is one or more areas of a country where tariffs and quotas are eliminated and bureaucratic requirements are lowered in order to attract companies by raising the incentives for doing business there.. Most FTZs are located in developing countries. They are special zones where (some) normal trade barriers such as import or export tariffs do not apply, bureaucracy is typically minimized by outsourcing it to the FTZ operator and corporations setting up in the zone may be given tax breaks as an additional incentive. Free Trade Zones

17. Usually, these zones are set up in underdeveloped parts of the host country, the rationale being that the zones will attract employers and thus reduce poverty and unemployment and stimulate the area's economy. These zones are often used by multinational corporations to set up factories to produce goods (such as clothing or shoes). In 2002 there were 43 million people working in about 3000 FTZs spanning 116 countries producing clothes, shoes, sneakers, electronics, and toys. The basic objectives of EPZs are to enhance foreign exchange earnings, develop export-oriented industries and to generate employment opportunities. Sweatshops are generally located in FTZs. FTZs

18. The creation of special free-trade zones is criticized as giving business which set up operations undue influence of already corrupt governments, and as giving foreign corporations more economic liberty than is given ordinary citizens in most third-world nations. Corruption in FTZs

19. FTZ Often the government pays part of the initial cost of factory setup, loosens environmental protections and rules regarding negligence and the treatment of workers, and promises not to ask payment of taxes for the next few years. When the taxation-free years are over the corporation which set up the factory without fully assuming its costs is often able to set up operations elsewhere for less expense than the taxes to be paid, giving it leverage to take the host government to the bargaining table with more demands in order for it to continue operations in the country.

20. Converse and Child Labour • Jobs making clothes and shoes have dramatically shifted to the poorest countries in the world in the last 25 years. The majority of jobs in such industries in these countries are performed by children. From http://www.monitor.net/monitor/sweatshop/ss-global.html

21. In the past, companies created work for the communities they developed in. This is no longer the case. Many countries in Europe have lost half the jobs in these areas; in the United States alone, about one million shoe and clothing jobs have disappeared since 1980. The reason is simple: slavery wages. A German shoe maker earned an average of $18.40 per hour, compared with $1.70 for a Mexican worker. In today's global economy, both workers compete for the same job. Guess who gets the work. Global Employment From http://www.monitor.net/monitor/sweatshop/ss-global.html

22. Where are you calling from? (Another example of such globalization of work can be found in call centres (The Guardian, London, U.K., 9 March 2001). Companies such as British Airways and Debenhams have relocated much of their call centre work to India, where wages are a fifth of the UK level. The workers are given crash courses in British culture, everything from soaps to football, so they can chat knowledgeably with the callers, who don't suspect that they are speaking to someone in Delhi or Bombay.)

23. Sweatshops in the largest free-trade zone in the Philippines, have rules against talking and smiling. There is forced overtime, but no job security - it's "no work, no pay" when the orders don't come in. Toilets are padlocked except during two 15-minute breaks per day - seamstresses sewing clothes for western high-street chains allegedly have to urinate in plastic bags under their machines. The Dark Side of a Global World From http://books.guardian.co.uk/departments/politicsphilosophyandsociety/story/0,,371869,00.html

24. Women like Carmelita Alonzo, who sewed clothes for the Gap and Liz Claiborne, had a two-hour commute home, and died after being denied time off for pneumonia, a common illness in these factories. If the big brands have so much power and influence why do they not also have the power to demand and enforce ethical labour standards from such suppliers? The Dark Side of a Global World

25. The Bright Side of Globalisation Globalisation not only allows corporations to move their business practices overseas, it also allows for the spread of ideas that can work to resist such practices. For example, a number of anti-sweatshop movements have sprung up in recent years, first as local efforts but soon spreading globally.

26. The Anti-Converse A number of movements encourage consumers to boycott companies who use sweatshop labour. One aims to offer an alternative for people who no longer wish to support Converse, given their new business practices.

27. Questions • What is a Free Trade Zone? • Why would a country want to cut taxes and benefits for their workers to attract foreign business? • What effect would Converse’s bankruptcy have had on American Workers? • Should the activities of MNCs be regulated? Who should have the responsibility?