The Ethics of Sourcing Overseas


Randy Cohen – The Ethicist – New York Times

The NY times ethicist column had a question about sourcing overseas:

To afford to start a new business, I must use low-cost foreign manufacturers, some of whom likely maintain unsafe working conditions. It is difficult to be certain from here. In the relevant country, many workers doing the tasks I'll require receive low wages and face serious health problems including chronic colds, fever , stomach disorders, chest pains and tuberculosis. Is it wrong to start my business in this way? — NAME WITHHELD, NEW YORK

To read Randy Cohen's answer, visit the NY Times site. Or, as a challenge, post a comment/answer here with your best succinct argument about the ethics involved or about Lean as an alternative. I believe this is an ethics issue, not just a dollars and cents issue.

Best / most articulate / most thoughtful comment here (as determined by me), will get a prize TBD.

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.


  1. “…I must use low-cost foreign manufacturers…”


    Why not do it the way the rest of have: rent a drafty building in a scary part of town (North Philly is a nice choice); stay up night after night repairing third hand machine tools bought and paid for using credit cards; constantly modify the product to fit the process in the interim and employ workers whose passion to do the right thing sometimes exceeds their ability to do so.

    The sturm and drang for the health and well being of the overseas worker is, to me, facetious, disingenuous and obscures the person’s underlying motivation to enjoy profits early in the process- the new American entitlement.

    I see this example more as a low reading on our barometer of social responsibility and less of a ‘lean’ issue. Perhaps, we should kaizen our very souls.

  2. Of course it is wrong. The “relevant country” is really irrelevant. Right is right and wrong is wrong. If your business model requires you to hurt people or perpetuate a system that hurts people you must seek a new model. There are alternatives and if you can not find them you have no right to go into business.

    Reardon–“…kaizen our very souls.” Wow. Wonderful. Thank you.

  3. Those of you with access to the Wall Street Journal may have seen today’s page 1 article:

    “Toxic Factories Take Toll On China’s Labor Force”

    To quote briefly:

    “Last year, at least 20 workers at a Panasonic Corp. cadmium-battery plant in Wuxi were found to have elevated levels of the toxin, and two were diagnosed as poisoned. In 2005, 1,000 workers at Huanyu Power Source Co., based in Xinxiang, Henan, were also found with cadmium exposure. Both Panasonic and Huanyu say they have taken care of the affected workers, providing health care and compensation exceeding the requirements of Chinese law.”

    […] “On their way to an interview with a Wall Street Journal reporter in August, Ms. Wang and several colleagues were pulled over by police and detained for nearly 13 hours in a Huizhou police station, according to several sources familiar with the incident. A person present at the Huizhou police station says the workers were told they would be charged with treason if they spoke to the media again. The Huizhou government says its police detained no battery workers.”

    So, as you can see, this is not just some esoteric issue related to one small entrepreneur. It makes one wonder that if today’s business model existed in 1940, whether companies would have loved the low-cost components coming from the Jewish slave labor at the concentration camps of Nazi Germany.

  4. You guys are really ignorant of the reality in countries like China and India. The poverty level is so bad that anyone giving a daily bread will be revered to the fullest. Please continue to support these economies through outsourcing for a little more while after which the poor in Venezuela and Peru will start to flourish. You can continue with your own wasteful consumption of resources.

  5. Thanks for your comment, President Chavez.

    Yes, the U.S. and our consumerist behaviors are at least partly to blame. The ethics of taking dangerous cadmium battery production from the U.S. to China is pretty sketchy. We’ll keep using the cheap batteries as long as the environmental mess is in someone else’s backyard (which isn’t true, since we’re importing food from China, food that might be grown on contaminated land… nice).

    Then, the China company gets investigated and they farm production off to other Chinese companies who are willing to skirt regulations that the Chinese government seems less likely to enforce than they are to cover up problems.

    I can’t believe we gave the Olympics to that mess of a dictatorship country. I can’t believe we’re all willing to turn a blind eye to the human suffering (I mean economic development) as long as we get cheap crap in China.

    That’s a whole other question for “The Ethicist.”

  6. Having lived, travelled, and worked extensively in both China and Taiwan, I can attest that there are valid points on both sides of this argument. The NY Times is notorious for posting “exploitation” articles about the wages in Chinese factories which, when converted into the local economy, represent more than a living wage.

    At the same time, documentaries like “A L’Ouest des Rails” – which portrays what happened to the Tie Xi district of Shenyang after the government pullback/WTO investment – portray the brutal reality of large parts of the Chinese manufacturing landscape. If French isn’t your thing, consider “China in the Red,” an older, slightly less in depth Frontline report covering a similar topic (although more focused on problems with the hukou system).

    So – living wage or abject poverty? Outsource or use lean to strengthen local industrial efforts?
    We repeatedly here that the United States is becoming a “knowledge economy,” a lie considering high tech venture capitalist firms penchant for overseas outsourcing, but its far more likely we live in what Robert Goodman termed a “Scavenger Economy” – the few truly generative members of society picked over like carrion by an increasingly bloated and unsustainable “service” sector.

    The implied argument here, that with the adoption of “lean techniques,” the advantages of overseas outsourcing can be reduced or reversed seems simplistic.
    Lean offers means of reducing cost and increasing profits, but requires a multi-year commitment to truly see its benefits. In an increasingly fast paced market, where globalization allows competition to enter at unheard of rates, can a firm reliance on slow, steady, productive improvements hold up against quick returns?

    Maybe with as much on hand cash as Toyota.


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