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Levi Strauss' stance on continued sourcing and possible direct investment in manufacturing and marketing ventures in China will be evaluated through a carefully set up reasoning process. This process will involve everything from stating the direct problems to my final recommendation on where I feel that the company should stand on this issue.

The problems that exist within the Chinese market are based on Levi Strauss' company philosophy, which is based on service to the worker, the consumer, and the customer. Any violation of this ethics code would ruin the companies name and their brand image. Strauss' founder was a strong believer in the practice of ethical behavior to workers, people, and the environment in which they worked. The company has started many scholarship funds and donated large amounts of money to causes that they felt would improve the world and in turn improve their image. This tradition has carried on and has even grown. Strauss' has a continued interest in making sure that the welfare of the employees of the companies that it contracted and their own were being treated fairly.

Levi Strauss has been dealing with the Chinese market since 186 but in a very small way. In 11 they wanted to become more integrated in the Chinese market, but decided not to based on the fact that, the Chinese labor force was being treated so unfairly by its country and their employers. The main policy that would be violated by this expansion is the one-child-per-family policy. This policy encouraged Chinese workers to stop having children after the first one and required them to register their preferred form of birth control and even in some instances encourage abortions.

The principles that we need to consider in this matter are the code of ethics of the company and their ethical principles including integrity, compassion, respect for others, and fairness. The code of ethics explicitly states, "A respect for our employees, suppliers, customers, consumers and stakeholders, a commitment to conduct which is not only legal, but fair, and morally correct in a fundamental sense, and avoidance of not only real, but the appearance of conflict of interest." If Strauss were to implement business in China they would have to evaluate how the treatment of workers would conflict with these statements.

The ethical principle of integrity, could be violated in this issue because of their ethical stance that have been stated above, integration in China would be a direct violation of this. Compassion, states, "We will always act in ways that are consistent with our commitment to social responsibility." Just like with integrity implementing business in China would violate this statement. Respect for other and fairness can also be lumped in with the previous two because it is unfair to the workers in China to be treated this way and it is unfair for them to treat them in this fashion.

The stakeholders involved in this case are workers that would be directly involved, the investors, and the consumer. The main claim that the workers have is being treated fairly. Do these workers have the right to be treated fairly and is it Levi Strauss' business to ensure this where a government and a structure is already in place? The investors and the consumers have a similar claim in this case. The main claim would be monetary. If the company does not move to China then it would cause the prices of the jeans to be higher then they could be with plants in China. The higher costs for the same products could cause otherwise loyal buyers to go else where for their jeans. This would cause a domino effect that could cause current workers to be laid off and the price of the stock to fall and cause the investors to lose money.

The main options that Strauss has are to either engage in China or withdraw from there. China has a chance to be a great economic opportunity for companies at this time. The economy was growing in this area at rate close to ten percent per year and the retail sales rising at a rate of fifty percent per year. Also, the potential market in China was about one billion people. China is the largest supplier of textiles and apparel to the United States. All of these facts combined could prove to make implementation to be very profitable for the company, but implementation would also support the Chinese government and what it stood for. If plants were to be constructed in China then they would be supporting those practices and go against what they stand for. On the other hand if they did go into this community they could attempt to change some of the Chinese practices and treat the employees with the dignity and respect that they deserve in being human. If they go into this market they should expect some consequences such as tarnished brand image because they went against what they stood for.

If they withdraw from this market then are standing up for what they believe in but could have other consequences such as increased prices and losses of jobs in other markets. The moving of production to other Asian markets would cause the costs to rise anywhere from four to ten percent depending on where they move. Also, the loss of employment opportunities in the Asian market would also decline. This could be positive for the company and brand image and keep sales high to compensate for the raised prices.

My recommendation for this situation would be to stay away from the Chinese market. I feel that this would be better for the company because brand image is a strong part of their company. Going against this would tarnish their reputation and could cause more damage then the gained costs that would be incurred. The only thing that I feel could be possible is marketing on China. If it is possible to export goods to this market and still sell them at a profit then that would be acceptable because they are not directly employing the people or sponsoring the government.

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