Fast Company

Building the Right Model for Business in China

Like it or not, for most major shoe manufacturers, China is the place to be. Pretty much whatever you need to make shoes--from factories with trained and available labor, to the largest concentration of leather tanneries on earth, to component suppliers of the mundane and the exotic--you can find in Guangzhou Province. As a "one-stop shop," China offers efficiency both in time and resources--scarce commodities from any CEO's point of view. And not just efficiency--our Chinese suppliers meet our quality standards consistently and deliver on time, as promised. They have the knowledge and the infrastructure to support the business, make quality product and meet our expectations. It makes for a pretty compelling case to do business in China.

Of course, competing in the global economy is not about simple choices--and sourcing from China, with issues of environmental practice and respect for the dignity and human rights of workers, serves as a prime example of how brands like ours must struggle to balance the demands of the marketplace with the demands of the civic square. How does the CEO of a publicly traded company, responsible to shareholders every 90 days, balance the allure of high quality and low cost with substantive concerns about human rights and environmental consequences? My view, 15+ years after we first began working in South East Asia is that the CEO's answer to the question, "Commerce or justice?" needs to be "Yes." High quality, low cost ... accountability for decent working conditions, fair pay, high standards of environmental practice ... this is not a pipe dream, rather, a reality that can be delivered--if you're willing to do the work.

StellaHQ
Stella International facilities in Guangdong Province

Doing the work means not checking your principles at the door; sometimes that's surprisingly easy and sometimes it's just plain hard...and expensive. For Timberland in China, this has meant engaging from the beginning with factory owners on an explicit set of performance outcomes demanded from our "code of conduct." Over 15 years, we've learned--getting the performance we expect requires clear standards, a regular measurement and management process, and equal parts commitment from the brand and the factory. We've seen this model of principles + passion + hard work yield real progress--as with Stella International, one of the premier manufacturers anywhere in the world, and a longtime Timberland factory partner. Stella makes high quality shoes and believes, from founder / CEO down through their ownership team, in the model of brand + principles + factory + hard work = a sustainable relationship. Stella gets it. With other partners, we've seen the same inputs yield very different outcomes--including one where we invested years of effort only to conclude that the factory owners were mouthing the words but not living the principles. Leaving that factory group cost us millions.

Even with leaders like Stella, who get it, what worked before--a mutual commitment to a code of conduct--doesn't suffice any longer. As activists insisted, so our entire industry grew more accountable for human rights in the supply chain. Increased accountability led to more codes of conduct, more frequent audits ... and greater frustration. Faced with any number of brands operating in the same factory, each with their own codes, audits and expectations, factories became overwhelmed with "human rights inspection fatigue." And while brand after brand clamored for "compliance," NGOs and activists continued to insist that for all the activity, the outcome from a worker's perspective was not good enough. To live our principles effectively, we've learned that high quality, low cost, on time, with respect for human rights and accountability for environmental footprint now demands engaged collaborative networks--brand, factory, workers, activists. Compliance is no longer a high standard, it's merely table stakes.

15+ years into doing business in China, I believe a responsible CEO can sign up to the challenges of the global supply chain without selling out principles or disappointing shareholders. Commerce or justice? I'll take both.

Read more of Jeff Swartz's blog For the Greener Good

JBS-casual-hatJeff Swartz is the third generation of the Swartz family to lead Timberland. His grandfather Nathan started the predecessor company to Timberland in 1952. Jeff's father Sidney and his uncle Herman launched the Timberland brand in the early 1970s. Jeff was promoted to President and CEO in 1998, after working in virtually every functional area of the company since 1986. Under Jeff's leadership, Timberland has grown rapidly.

Timberland today competes in countries around the world, designing, manufacturing and marketing footwear, apparel and accessories for men, women and children. Timberland has been listed on Business Ethics magazine's list of 100 Best Corporate Citizens and in 2002, Timberland received the Ron Brown Award, a Presidential award recognizing outstanding corporate leadership in social responsibility. Follow Jeff Swartz on Twitter @Timberland_Jeff

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1 Comments

  • Felix Szeto

    Hi Jeff,

    I've learned a lot from your article. Can you elaborate on Engaged Collaborative Networks? or an example of what a good model for it would be?

    Best Regards,
    Felix Szeto