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As a manufacturer of athletic shoes whose image, indeed performance, is widely regarded as socially responsible, you find your costs increasing.
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Traditionally, your athletic shoes have been made in Indonesia and South Korea. Although the ease of doing in those countries has been improving, wage rates have also been increasing. The labor-cost differential between your present suppliers and a contractor who will get the shoes made in China now exceeds $1 per pair. Your next year are projected to be 10 million pairs, and your analysis suggests that this cost differential is not offset by any other tangible costs; you face only the political risk and potential damage to your commitment to social responsibility. Thus, this $1 per pair savings should improve your bottom line. There is no doubt that the Chinese government remains repressive and is a long way from a democracy.
What do you do and on what basis do you make your decision? Please remember to base your answer on your knowledge of Global Operations
