My solution to this problem is similar to Brandi’s solution. I think that you need to look around for good suppliers. They are definitely out there, but they will most likely cost more than the really cheap labor that can be found. So in the end, I guess you are still throwing extra money at a problem, but you are doing it in a smart way.

I have hired and fired employees (probably not nearly as many as you, Dr. Carr) and I agree that giving a bad employee more money will not improve their performance and giving a good employee more money will not make them a superior employee. I do believe, however, that trying to hire employees below the going rate will not get you a superior employee. You will end up hiring and firing a bunch of bad employees. Paying a high salary definitely does not guarantee you a great employee, but I do believe that it increase the odds that you will find one. It is also important, to give raises to good employees or you may turn them into bad employees be effectively paying them less every year.

There are ethical and hard-working people everywhere just like there are unethical and lazy ones. I think you will be hard pressed to get a person or a company with a great reputation to work for you at bottom of the barrel prices.

Chinese have gotten themselves in a similar situation in the current years. They are the factory of the world now and produce goods at a cheap rate, but the demand is great and managers need to cut corners here and there to actually keep up. Part of it is their quality control issues, and other times, it’s just the attitude of the workers. They do their minimum and aren’t compensated for the extra work they put in.

From an economics standpoint, these managers and employees are unmotivated because of poor compensation. Why not award them the base amount (ie. $1000, in this example), and a significant bonus up to $2000 for better quality or higher yield?

Chinese people are just hired hands, agents of those who pay them. We must require American companies to follow stringent regulations even when they do business in China.

Passing blame to Chinese labor while might offload short term liability for a foreign corporation, the ultimate victims will always be American consumers.

I truly believe that the ethical issue we discuss here cannot be solved by money, like other ethical issues. No one can control others’ behavior, not even provide better incentives.

The ethical issue here is more about the standard and norm of the culture than the incentive. There are many Chinese suppliers or manufacturers cutting corners and making “fake” products, not only a few. On top of reducing production cost, it seems that it is their normal way of doing things.
I remember seeing the pictures from the post titled,‘The’ Way vs. ‘A’ Way (Japan v China dept) under the December 4th post. The pictures show that the Japanese focus on “The” way of doing things, fulfilling all the proper standards and procedures. In contrast, the Chinese focus on finding “A” way to get things done, not caring about how to accomplish it.

I don’t have a solid solution for the ethical issue in this discussion. It is either starts from better education for the younger generations or posting heavier penalty for the suppliers.
However, I do have suggestions for the quality control. Like what Chris said, the U.S. companies can send representatives to China to assess their factories more regularly, not until something big happened.

Like the US, Japan imports a lot of goods from China. It has less trouble or recall, why? It is because the Japanese set very high standard of their product, and they have close supervision for the manufacturers in China. They would demand a rework if there is something wrong in the process, not until the product is done. I believe the US companies can improve the quality control assessment, ceasing the problem when it first appeared, rather than recalling them when they are already on the shelf.

After checking higher prices off the list, we must then determine how to get the suppliers (and everyone else in the supply chain) to act ethically. Let me first state that I think the buyers do share part of the blame for suppliers who are exploiting workers, polluting the environment, or making bad products. A reasonable investigation should be made before contracting with a supplier, to ensure that blatant problems are not occurring. There are instances where the supplier hides their “unethical” behavior well enough that the buyer cannot be expected to have discovered it. But the majority of problems are probably known and just brushed off in an effort to improve the bottom line (no judgment here, that is the goal of management in the best interest of the shareholders).

Another issue we must look at also is by what standards is the behavior “unethical”? Is it because the workers are paid far less than in the United States or a plant produces more pollution than normally allowed? Some of the workers are thankful for even the small amount they are paid because of the utter poverty they have been taken out of (look back to 1978 when the annual income dropped below three dollars per person per year, and the practice of yi zi er shi). I am not condoning these low wages, but the history is an element we must consider if trying to improve the situation further.

My proposal?
Urge consumers to boycott companies who use shady suppliers as a means to force the companies to do more research.
OR
Let these countries continue their economic development in the hope that conditions will improve as they have over the past 30 years.

It seems that until companies make it a priority to make their entire supply chain up to our current “ethical” standards, this is a process that will continue, whether it remains in China or moves to countries like Brazil and others.

I think if you want an ethical supplier, it would be best to go look for one. Try a new supplier and see if they stay true to their word, if they don’t leave them. There is a lot more suppliers than buyers, so buyers have the power. I think the only proper motivation for change would be to leave unethical suppliers to show that you are not willing to do business with those that act in such a manner. This will send a stronger message than giving them a tip in the form of more money.