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IKEA Child Labor

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Stephy FANG

on 18 November 2013

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Transcript of IKEA Child Labor

IKEA Child Labor
Introduction of IKEA
Case Overview
Case Analysis
Cases Comparison
Practitioners' Takeaways
Inspiring Questions
Case Analysis
Case Comparison
Practitioners' Takeaways
Inspiring Question
Good Crisis Management
Good Crisis Management
Quick Response:
Recognized media's role in raising awareness of child labor issue
Not in full control of the problem
Apologized for their ignorance without denying facts
Immediate Actions for Problem Solving:
Legal team to seek for professional advice
Amended supply contracts
Continuous Actions to Deal with the Problem:
Monitored child larbor practices at suppliers
Study trip to South Asia
Met relevant parties
Random visits to factories
Frequent consultation with experts
Showed full sincerity
Put public interests as the priority
Good Relationship Management
Two-way symmetrical model
International Labor Organization
Save the Children (Sweden)
Rugmark Foundation
Carpet export organizations
Local NGOs
Match and Enhance Corporate Value
"To create a better everyday life for the many people"
Marianne Barner, the business area manager for carpets:
"The company should do something that would make a difference in the lives of the children I had seen."
"Ensure you always do what is in the best interests on the child labor."
Did not sign up with Rugmark
Still stay in the India market
Understandable & reasonable decisions in terms of PR
Avoid dishonest issues
Take account of local people's live
Sustainability: IKEA Foundation
focused solely on architecture and interior design
became active in addressing the root causes of child labour and promoting child rights and education
included improving children’s opportunities, helping them ultimately take control of their own future
Effective Communication
Facebook page
News report
Committed Euro 60 million; will reach 16 million children by 2017
IKEA dealt well with the most relevant stakeholders!
August 29
McDonald's: would consider axing the supplier's contract
A Geneva-based firm, SGS, checked the factory but found no evidence of child labor
Investigation team sent to Shenzhen 'to ensure the allegations are untrue'
Hong Kong Christian Industrial Committee: visits announced in advance
No response from Simon Marketing and City Toys
August 30
Headquarters in US took over the inquiry
Investigation team returned
Pre-arranged visit last year admitted by SGS
HKCIC feared young employees penalized by City Toys
August 31
US consulate in Hong Kong decided to get involved as City Toys products exported to US
September 9
Termination of contract with City Toys announced by McDonald's US headquarters
Refused to admit suppliers' using child labor in Shenzhen
HKCIC: hundreds of workers dismissed upon investigation, some others locked in warehouses and washrooms
August 27
SCMP: McDonald's using child labor in Shenzhen for its "Happy Meal"
400 children, 14-15 years old, 1.5 RMB/hr
Fake ID card
McDonald's: No reason to suspect
August 28
Estimated 20% in total workers
City Toys director Mr. Lau slammed the door and told security guards to block the gate and prevent protesters
McDonald's Scandal of Using Child Labor in China
Good Practices
Responding quickly
Sending a team for investigation
Taking the issue seriously
"No reason to suspect"
"The allegations are untrue"
Sent out a team to Shenzhen for investigation
Termination of contract with City Toys
Bad Relationship Management
Special interest
Unsatisfactory Solution
Simon Marketing
All visits and investigations were announced in advance
Opened a store in Oslo, Norway

Its first store outside of Sweden

Started global expansion
Ranked 42nd on the list of 'The Best Global Brands'
World’s largest furniture retailer

Owned and operated 332 stores in 38 countries
August, 2013
Earned an Annual Revenue of 27.9 billion euro
Founded by Ingvar Kamprad, in Sweden

Ready-to-assemble furniture, appliances, and home accessories

Opened its first store in Almhult, Sweden
Case Overview
Child Labor Issue
In 1994, Pakistan

A Swedish TV documentary showed that children worked at weaving looms

The carpet supplier of IKEA, which was the only high-profile name on the list

Action Taken
Apologized for their ignorance, acknowledged the powerlessness of the issue

Sent a legal team to Geneva, sought advice from ILO (International Labor Organization)

Adjusted their contracts with suppliers

Appointed a third-party agent to monitor child labor practices at its suppliers in Pakistan and India
Further Actions
Issue in India
The biggest supplier for carpets and rugs

In 1991, around 60~115 million child labors in India

Various industries, around 200,000 were in the carpet industry

Bonded & unbonded child labors
Traveled to India, Nepal, and Pakistan

Met with many stakeholders: suppliers, unions, politicians, activists, NGOs, carpet export organizations, etc.

Learned of the information of Rugmark Foundation

Frequently met with the Swedish Save the Children's experts
A New Crisis
A German documentary showed child labor at Rangan Exports, a major supplier of IKEA

Aimed directly at IKEA and its supplier
How to deal with child labor issue in India
McDonald's as Comparison
Quick Response
What can Government PR do to rise the awareness of Child Labor issue in China?
Pleasure Tech Holdings (HK)
McDonald's (HK)
City Toys (HK)
Simon Marketing (HK)
Factory (SZ)
Sincerity & Consistency
Relationship Management
Continuous Actions
Full transcript