Sport-shoe industry

About 30 years ago, there were major changes in the North American and the European shoe industry. The workers started to demand higher wages and better working conditions. They put pressure on the companies by exercising collective bargaining powers, such as going on strike and demonstrating. Since the companies did not want to pay higher wages to their factory workers they moved their factories to countries with a much less advanced economy and with less societal equality. Therefore most of the shoemakers moved their production to Asian countries such as South Korea and Taiwan. It worked for a while and the companies could continue to produce their shoes at a very low cost, but it did not last forever. The problem occurred again. The factory workers in South Korea and Taiwan started to demand higher salaries and better working conditions. This they did like the workers in Europe and North America had done, by forming labor unions and demonstrating. The sport-shoe industry responded by once again moving their production sites.This time the companies relocated to countries with laws against demonstrating and with prohibition against forming of labor unions. The majority of production was moved to China. The gap between the production cost, which was low due to the low labor cost, and the prices for which the shoes could be sold in Europe and North America allowed the sport-shoe companies to do enormous profits.

History repeated itself a third time and the Chinese factory workers started to demand better salaries and working conditions.. Instead of solving the core problem the sport-shoe industry swept it under the rug by negotiating with the Chinese government to make sure that the country continued to have laws prohibiting demonstrations and the forming of labor unions. This, the Chinese government agreed to.

Before the western companies came to China the sport-shoe industry mainly consisted of state-owned companies and therefore all the profit went into the domestic economy. When the western companies came into China and built their factories in the country, the employment provided by the foreign sport-shoe producers put the Chinese ones out of business.

Today, China is the biggest producer of sport shoes in the world. Over one third is made in the country and it is not a coincident. The conditions in China are ideal for a cheep production. There is a high number of unemployed, low salaries and laws which are beneficial if you want to exploit low-cost labor.