My 2,000+ word paper that was published in my major’s journal. I was quite proud of this published works too. It’s long by the way.
When MNCs Go Abroad: Exploitation of the East
Abstraksi:
Dalam era globalisasi ini, tidak lagi dikenal batas-batas dan hal itu yang dimanfaatkan oleh perusahaan-perusahaan multinasional dalam berbagai segi. Memang benar juga bahwa segi politik ikut melihat keuntungan dari dunia yang bersifat borderless ini tapi segi ekonomi yang melihat lebih banyak keuntungan lagi. Banyak sekali orang-orang yang tidak menyadari langkah-langkah yang diambil oleh perusahaan-perusahaan multinasional untuk memperaih keuntungan. Disinilah letak masalah karena meskipun banyak keuntungan dengan membawa suatu hal ke dunia internasional, penting juga diteliti dan bertanya siapa yang sebenarnya beruntung: negara maju atau negara miskin? Kenyataannya konsumerisme telah naik akibat keinginan kita semua untuk memiliki hal yang sama tapi yang beruntung adalah orang yang memiliki baju bermerek atau perusahaan yang pintar-pintar mencari alternatif supaya perusahaan mereka dapat banyak untung lagi? Jawabannya mudah karena kini kita semua telah dimiliki oleh perusahaan-perusahaan besar.
Cantika Paramitha R
October 2010
Getting to Know MNCs
In an era of globalization where boundaries is no longer a problem, an endless amount of things are sent from one end of the globe to the other. Globalization has helped tear down the walls that used to limit the transfer of goods and ideas and in some way it is a good thing. We have seen how the political world has benefitted with this new global openness through different countries’ foreign policy that seeks after working with countries in the same region and even more so in the international scope. Globalization has created this strong sense of belonging where we are all global citizens of the world and it is true. Not only is this global community beneficial when fighting for equality and human rights, but it has become helpful for corporate companies. This current day and age people want to wear the same thing and do the same thing and that is what companies want to see happening. This era of extreme consumerism has helped increase the number of MNCs in the world. MNCs do not recognize borders because to them, the world is all theirs especially the Third World. Big-named companies that sell apparel goods in the likes of Nike, Adidas, Puma, etc. thrive off this transnational opportunity because it opens a lot of doors to them. The same can also be said about oil giants such as Chevron. In fact, the clothes you have on your backs, the shoes on your feet, the hat on your head, and the gasoline you put in your car might be the end product of an exploitation started by MNC giants and supported via this borderless world. The extent that MNCs are willing to take is appalling but it is rarely known by the public what those extents are. The reason behind that lack of awareness and information is simply because MNCs are clever enough to start businesses in parts of the world that have very little media attention and very weak labor laws. There is no need to look far because the region of Asia has within it a long history of violations committed by MNCs. Clearly this is not surprising because this region is notorious for corrupt government leaders, cheap labor costs, weak labor laws, and also weak human rights laws: All of which makes it a prime region to invest and start a business in.
Besides having a super power country that controls all of us, it can be said that so does money because nowadays, everything is about money. Currently the number of ways money can take us has become endless because seemingly where there is money, there is power. Even the government relies on money thus they rely on corporations especially the big ones such as Nike and Adidas. There is this interdependency because the wealth that can be garnered by having these big corporations are enormous and governments just cannot free themselves away from these corporations. The loss will be as big as the number of bills pouring in from these corporations. And it is not to say that governments in both the West and East close their eyes on these active and ongoing problems but it is more that they will take certain measures but cannot guarantee the closing or boycotting of these corporations because it is in their national economic interest that they do not do so. In simplest terms, MNCs can be regarded as an instrument of imperialist exploitation[1]. Even though MNCs are the antagonists when it comes to their actions in parts of the world including the East, their strength lies in the fact that they are supported by international regimes such as the World Bank, WTO, and IMF[2]: This gives them an advantage because the power and influence those three international regimes have is huge.
Being able to operate across national boundaries, it gives MNCs prime opportunities to enhance their economic scale and scope while reducing the risk of being caught by the public. Exploitation is clearly a word that not many MNCs want exposed to the public because it is what they do best to the poorer countries in the world. According to Karl Marx, exploitation is the ability of a capitalist institution to appropriate the surplus value generated by labor.[3] To what extent do MNCs take to earn such surplus? Among many things child labor, horrible working conditions, environmental destruction, giving incentives to corrupt leaders, their refusal in fulfilling the minimum wage limit and the list goes on. Indeed it must be mentioned here that MNCs does have responsibilities and it is often found in their CSR or Corporate Social Responsibilities but even so is it really worth it? There are some MNCs such as Chevron that provides education for its workers and even Freeport that builds hospitals and schools in areas where their workers reside in but of what quality is being put onto those things? The location that MNCs seek after are ones that are in extremely poor conditions and the things done by MNCs have done very little to help its workers.
One can imagine just how controversial the expansion of MNCs across national boundaries has become. We cannot ignore that with the expansion and establishments of MNCs abroad has helped the regional and global economy but we also cannot ignore that money should never be worth the cost of environmental destruction or even the use of children working but barely being paid the bare minimum wage. That is what it has come down to nowadays with MNCs; they go abroad and find several ways to exploit the countries they have chosen and by some cunning ways gain profit and continue to do so.
Why the East?
There are plenty of countries in the world that can become the target of any future or current MNCs’ plans for expansion but the countries that lie in the Eastern part of the world are most at risk. The region and countries chosen by MNCs are selected based on the resources already provided to them (human and natural), the conditions of its political, economic, and social sphere, and furthermore the outlook of its future if they decide to invest in that country. Another reason is because as people who live in the East and are citizens of a country that has been exploited several times by MNCs, it is strongly recommended that we know of the troubles and (often times invisible) dilemmas that our country has undergone or is facing.
To begin it should be highlighted that the countries that have or had become locations of MNC exploitations include Indonesia, India, China, South Korea, Japan, Taiwan, Thailand, Malaysia, and the Philippines. The countries that are listed above provide several factors that MNCs look for. Furthermore, it is no longer a strange fact that countries in Asia are abundant in natural resources and has now become a key driver of the global economy[4] and this obvious ability to become the next global economic powerhouse is the driving force behind the establishment of several MNCs in this region. Countries in the Asia region continue to become, if possible, a developed country and are constantly pushing the limits in their ability to keep pace with the global market. Even so countries in Asia are still bombarded with domestic issues and having corrupt leaders within their own governmental system is one of them. The problem with having a weak government system, corrupt leaders, and the drive to become the next big economic powerhouse is that it gives an easier access for MNCs to come into the country and basically become their own boss in a particular area of the country. Here such acts as the violation of child labor and the abuse done to its workers can go unseen because not many people are brave enough to speak up. Being a citizen that can be considered as powerless compared to the “big boys,” there really is not much that can be reported to the media and public.
What might happen and what has actually happened in the past is that MNCs pull out of a particular country because there has been too much media attention and protests against the company or simply because the country has become developed enough to the point where the progress of their developments can threaten the existence of the MNCs’ supposed clean sheet. For example, Nike closed down its factories in South Korea and Taiwan when the two countries changed and became developed enough that labor laws and regulations became far stricter and the workers from these two countries successfully lobbied the government to improve their wages and to start forming labor unions.[5] Now it is apparent how MNCs prefer to operate in foreign countries and this is why Eastern countries are far more vulnerable in being subjugated by big corporations, especially in the past. The history of labor unions in several Asian countries are basically none at all but it has gradually become better in recent years. The lack in the number of labor unions formed in Asia during the early days made it almost too easy for MNCs to get away with anything. MNCs depend on a small number of labor unions because they will not have to fear about protests being started by its workers and the involvement of the government can be kept at a high minimum: All of which were found and can still be found today in Asia.
The Guilty Ones
This sub-chapter will not explain too much detail on the MNCs that have committed violations in the Asia region, however the profile of those corporations that will be mentioned are Nike and Freeport. These two MNC giants have a long history within the region of Asia and the list of the violations they have committed is even longer. The exploitation of Freeport focuses specifically in Indonesia because it is where the problems brew the most. On the other hand, Nike is a giant corporation that has sweatshops in several locations in the Asia region.
Freeport is a culprit in the world of MNC exploitation because of the uneven ownership of the Grasberg mine, which is the mine that they operate. The various problems that Freeport has faced since the beginning of its establishment include the government’s role, the location of the mine, and odd division on the stake of the company. Since the early days Freeport began its operation in the Papua region, it owns ninety-percent of the Grasberg mine[6]so one can only imagine the financial benefit they can reap from this particular mine alone. The Grasberg mine is the single recoverable copper and gold reserves in the world[7] and mining is a big business for any country. Having a stabilized government is crucial when mining includes one of the business ventures the country wants to allow. For a company like Freeport, bribing officials is not a problem because the company contributed $3.4 billion in 2008[8] to the economy thus it is apparent why Freeport is such a controversial MNC. On one end of the scale they do provide plenty of economic prosperity but on the other hand, the people near the mine have to worry about health hazards and even their everyday safety. The violence had escalated so much in 2005 that there were 35 U.S. Congress members that wrote a letter to President Yudhoyono demanding something be done about the military operations and build-up in West Papua as a whole.[9] The government eventually stepped in and they did condemn the head of Newmont mining company. Although it was not the operations conducted by Freeport that was stopped by the Indonesian government, at least we are able to see that the Indonesian government is willing to take some needed action in ending such violence.
The multi-billion dollar company that we know as Nike has been synonymous to sweatshops and labor violations. Nike is literally one of the most disputed companies amongst its competitors such as Adidas, Puma, etc and it has become the concern of many different labor unions and non-governmental organizations or NGOs. Nike was first criticized by activists all across Canada and the United States in 1996 when Life magazine published an article about child labor in Pakistan. Nike’s chairman Phil Knight did in fact acknowledge how the shipment of soccer balls [part of the 1996 article] were made using child labor under horrible conditions[10]yet Knight never mentioned about how his own focus was to manufacture Nike shoes in countries that required low-wages. The struggle by Nike workers in trying to earn the bare minimum wage is not something old but rather something ongoing. Sadly enough, whilst workers found difficulties earning a wage increase, Phil Knight increased his salary and bonuses to USD 2.54 million in 2000 from the previous year’s USD 2 million.[11]Nike is considered a very lucky corporation because in truth, they are not fully responsible for all the violations made against them. What has saved Nike from this legal responsibility for working conditions and wages of its factory workers is because they were the first athletic footwear company to fully subcontract its production facilities. Thus Nike felt they had no obligation to provide a decent working condition for its workers but activists and advocates had a different opinion. Even though Nike no longer operates a sweatshop in Indonesia, they still operate in various countries in Asia. The exploitations and violations committed by Nike has been addressed many times by different and various NGOs and labor unions but nothing significant has actually been done. Admittedly, working conditions of Nike sweatshops has improved but it is still not up to a level where it can be disregarded by the general public and labor unions. Nike, along with many other MNCs, has a lot to do before the public can start believing that they have fulfilled the requirements needed by its workers.
Conclusion
It is extremely important to know just which MNCs are the culprits in the Asian region and we should all be aware that this is the consequence when MNCs go beyond national boundaries. The moment that MNCs begins operating in developing countries, there is always a risk of exploitation of different sort ranging from environment to people. Although the expansion of MNCs has helped generate more financial benefits in a country’s domestic economy and that of the world’s economy, we cannot close our eyes and pretend that no problems exist because it does. Several problems have surfaced but only a few are known to the general public because in reality, the number of problems gone unseen is far greater which should put us as a global society to shame. It is obvious that a lot more can be done to end such exploitations and futilities started by these MNCs but at the same time we cannot fully blame other people for such misdeeds.
Introspection is important because every single one of us here have become the byproduct of consumerism. We are the ones that have helped boom Nike’s profit earnings which mean more sweatshops in the world and the continuation of Nike’s labor violations. It should also be included that our desires to wear the gold necklaces or earrings are part of the reason behind the booming mining company and the exploitation of a country’s environment. When it comes to the topic of MNCs expanding across national borders, it is a fault that can be pointed to several directions ranging from the company, the government, and nonetheless, ourselves. Indeed the global market and many governments are grateful that MNCs have expanded internationally because it has boosted a country’s economy and provided jobs for its people; However it should be brought up here that a country can still earn a dollar without having to exploit or violate so many different labor laws regardless of where a country is on the map. The underlining point here is that by being responsible, a company can earn a lot more than just profit but even more so they can earn the trust of the public and the realization that fair trade is the best type of trade there is.
