Globalisation
The Brand Goes Global
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.
Early
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for All Stars
From
http://sneakers.pair.com/
chucks.htm
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)
Converse Success
 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.
From http://www.insidehoops.com/converse-history.shtml (Accessed 5th Feb 2007)
Converse and WWII
 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.
From http://en.wikipedia.org/wiki/Converse
Converse Goes Overseas
 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.
From http://en.wikipedia.org/wiki/Converse
The Return of the Chuck
In the early 21st Century, the Converse Chuck Taylor AllStar 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.
Converse in the World Media
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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 AllStars.
# 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.
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
Converse Sweatshops
 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.
From http://chucksconnection.com/articles/ConverseArt16.html
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.
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Corporations and Globalisation
 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.
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.
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’
Free Trade Zones
 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.
FTZs
 Usually, these zones are
 In 2002 there were 43
set up in underdeveloped
million people working in
parts of the host country,
about 3000 FTZs spanning
the rationale being that the
116 countries producing
zones will attract
clothes, shoes, sneakers,
employers and thus reduce
electronics, and toys. The
poverty and
basic objectives of EPZs
unemployment and
are to enhance foreign
stimulate the area's
exchange earnings,
economy. These zones are
develop export-oriented
often used by
industries and to generate
multinational corporations
employment opportunities.
to set up factories to
 Sweatshops are generally
produce goods (such as
located in FTZs.
clothing or shoes).
Corruption in FTZs
 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 thirdworld nations.
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.
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
Global Employment
 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.
From http://www.monitor.net/monitor/sweatshop/ss-global.html
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 Telstra and British Airways have
relocated much of their call centre work to India, where
wages are a fraction of the Australian level. The workers are
given crash courses in Australian culture, everything from
soap operas to football, so they can chat knowledgeably with
the callers, who don't suspect that they are speaking to
someone in Delhi or Bombay.
The Dark Side of a Global World
 Sweatshops in the largest freetrade 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.
From http://books.guardian.co.uk/departments/politicsphilosophyandsociety/story/0,,371869,00.html
The Dark Side of a Global World
 Women like Carmelita Alonzo,
who sewed clothes for the Gap
and Liz Claiborne, had a twohour 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 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 antisweatshop movements have sprung
up in recent years, first as local
efforts but soon spreading globally.
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.
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?