By Adina Matisoff
August 2008

Today, factories in countries you may only know from geography class make the majority of products you buy, from clothing to electronics. Their manufacturing practices may result in the jeans everyone wants, but they can also contribute to environmental problems or human rights violations. What role do your own shopping habits play in contributing to, and potentially solving, global problems like these?

"The Hidden Cost of Cashmere" was produced by Zane, a high school student from Chicago. This youth-produced video may change the way you shop!

International companies sell their products worldwide, but many manufacture their goods in developing countries. In these countries, production costs, like land the factory is built on, electricity for the factory lights, and wages paid to workers are lower than in the United States and other developed countries. Also, governments in developing countries often give international companies incentives, such as lower taxes and fewer regulations, to persuade them to set up factories.

China is the largest manufacturer in the world. Its government has been offering incentives to international businesses to encourage economic development since the 1980s, and the cost of Chinese labor and materials is low. In 2006, the United States bought the most Chinese goods, followed by Japan and Hong Kong.

But the benefits for companies and the Chinese economy are often accompanied with land degradation, pollution, and poor labor practices. The production of raw materials for manufacturing, such as cashmere, wood, and agricultural crops, contribute to accelerated desertification and erosion in areas where the land cannot support heavy usage. Over-grazed grasslands in China’s Northwest have turned one-third of the country’s land to desert. From there, huge dust storms can carry pollutants across the country to Beijing and even the west coast of the United States. In more fertile areas, eroded land is susceptible to flooding, which has destroyed parts of China.

Air and water pollution from coal-burning factories has helped China become home to 16 of the 20 most polluted cities in the world. Pollution-related health problems cause thousands of Chinese people to become sick or die each year. Economic damage has been high in recent years as well, costing China’s economy at least $64 billion each year in clean-up and other expenses.

In addition to causing environmental problems, some factories violate labor rights to cut costs. They hire children who are often paid less than adults for the same work. Or they may deny their employees social security benefits or overtime pay.

So all the environmental and social degradation caused by manufacturing is the fault of China’s factories, right? Well, factories would not be able to operate in these ways if they had more oversight from the Chinese government. Local authorities are supposed to enforce regulations by issuing fines or closing the factory for infractions. However, officials are often under pressure from authorities higher up as well as local populations to bring businesses and jobs into their regions.

Do rural populations shoulder some of the responsibility? Studies show that the poorest areas of China also have the worst environmental problems. They cut down too many trees in the forest, have too many grazing goats, or grow more crops than the land can nurture. But rural workers often do not have information about environmental consequences. In very poor areas people struggle to have enough to eat if they do not keep production high.

Are international companies to blame then? There is no international standard for environmental and labor practices in overseas factories that companies can follow. Sometimes companies create their own standards, like Reebok’s Compliance Performance Resolution, or use independent monitors like AccountAbility’s AA1000 or the International Organization for Standardization. Monitoring can be difficult though because the factories are not always open about their production practices and sometimes are not able to implement improvements. Companies may keep manufacturing in poorly regulated countries because they are under pressure from investors to be profitable and compete with companies that make similar products.

Could you be responsible too? Consumers play a big part through supply and demand. Whether it is designer handbags or plastic pens, consumers from the United States and other large markets keep demand for products made in developing countries high.

Cleaning up the messes caused by manufacturing practices and preventing future problems means getting everybody responsible involved and committed to solving the problem. Governments in developing countries can better establish and enforce environmental and labor standards. Factories can abide by the set rules. International companies can be more involved with monitoring factory conditions and insist on better standards. Local governments can educate rural people about over-cultivating and over-grazing. They can work to bring back local ecosystems through programs like paying subsidies to grow certain crops. In Gansu Province the government pays farmers to grow alfalfa on desiccated land because the plants have nutrients that regenerate soil.

Consumers can stay informed about where and how products are made, and choose not to buy products that result from questionable manufacturing practices. The Internet is a great place to learn about how companies manufacture their products and join campaigns that put pressure on international companies to improve the way they do business. With this kind of teamwork and shared responsibility, we can all feel good about the products we buy.

Author: Adina Matisoff