2. WHAT IS ETHICS?
 How do you define ethics?
 Ethics is “the basic concepts and
fundamental principles of right
human conduct. It includes study
of universal values such as the
essential equality of all men and
women, human or natural rights,
obedience to the law of land,
concern for health and safety and,
increasingly, also for the natural
environment”
(BusinessDictionary.com).
 Ethics is hard to enforce because
it can be subject to individual
interpretations

3. VOCABULARY
 Ethical sourcing: means that the products are created in
safe working environments by employees who are
treated well, paid reasonable salaries, and work legal
hours. (Sanctus Mundo)
 Unethical sourcing: products are created in
environments that are not safe for the employees, where
they are possibly not paid or treated well, and work far
more than the legal hours.
 Sweat shop: “a shop or factory in which employees work
for long hours at low wages and under unhealthy
conditions” (Merriam Webster)
 Child labor: use of young workers in factories farms and
mines, employing them to the point of “virtual slavery”
(Korshunova)

4. ETHICS IN SOURCING AND WORKING WITH
VENDORS
 Consumers have voiced concerns over human
rights and the environmental impact that comes
with where their clothes are made
 Contradictory with demands for fast fashion (Just-
Style).
 Retailers need to make sure the manufacturers that
produce their products are ethical
 Safe, legal working conditions
 Friendly to the environment

5. SWEAT SHOPS
 U.S. Department of Labor:
sweatshop is a factory that
violates two or more labor laws
 Workers are subject to extreme
exploitation
 Could include absence of a
living wage/benefits
 Poor working conditions
 Verbal/physical abuse
 Could be so bad they do not
improve the economic condition
of their employees (Vegan
Peace Home).

6. SWEAT SHOPS CONTINUED
 In order to no longer be a sweat
shop
 Employees must
 be paid a minimum wage
 Keep a time card
 Be paid overtime
 Be paid on time
 Be allowed to organize an
independent union
 Often apparel factories are
sweat shops (Global Exchange)

7. CHILD LABOR
 Child Labor first became a problem in 18th century
Britain with the introduction of the factory system
 Grew from apprenticeships and family employment,
which became virtual slavery, “especially among
British orphans” (The Free Dictionary by Farfalex).
 Most European countries passed child labor laws
by 1940
 Child labor became a recognized U.S.
problem after the civil war

8. CHILD LABOR CONTINUED
 First Labor Standards Act was passed 1838
 Set a minimum age limit of 18 for hazardous occupations
 16 for employment during school hours for companies in
Interstate commerce
 14 for employment outside school hours in nonmanufacturing
companies
 In 1941 Congress passed this act
 International Labor Organization regulate the
employment of children
 In 2000, 2%-29% of children between the ages of 5 to
14 were a part of economic activity
 1999 the International Labor Organization banning any
form of child labor that endangers the morals, health
and safety of children
 Such as: slaver, forced labor, prostitution, criminal activity,
forced military recruitment (The Free Dictionary by Farfalex).

9. U.S. LAWS
 Sweatshops
 U.S. Department of Labor requires…
 Workers to be paid minimum wage
 Workers to keep a time card
 Workers to be paid overtime
 Workers to be paid on time
 The Union of Needletrades Industrial and Textile
Employees (UNITE) requires…
 that workers be allowed to their right to organize an
independent union (Global Exchange)

10. U.S. LAWS
 Child-Labor
 Exist to protect children from exposure to hazardous,
unsanitary, immoral conditions or overwork
 Primarily applies to business enterprises but some non
profit companies in certain states as well
 The law controlling child labor is the Fair Standards Act
of 1838
 Federal law provides the basic framework for the
employment of children
 Minimum requirements include age restrictions,
minimum wage provisions, hours of work provisions,
and the prohibition of certain occupations
 Each state also has its own child labor laws (The Free
Dictionary by Farfalex)

11. COMMON OUTSOURCING COUNTRIES
 Top most common outsourcing countries
 India
 China (Sourcing Line)

12. LAWS IN INDIA
 Workmen’s Compensation Act 1923
 Compensation will be provided to an
employee in the case of injury or to his
dependents in the case of his death
 Minimum Wages Act 1948
 provides minimum wage to all employees
in all establishments
 Payment of Wages Act 1936
 Regulates that time in which employees
must be paid
 No pay deductions unless specified by law
 Similar to U.S. with the minimum wage
laws, payment in a timely manner, and
compensation
 This does not mean sweatshops do not
exist in India (Embassy of India)

13. LAWS IN CHINA
 All employees must receive rests, holidays and
ethical working conditions
 Women and children not allowed to work
underground or in mines
 Employers have to pay 150% of wages for
overtime, 200% for working without breaks,
300% for working national holidays
 No national minimum wage
 Children under 14 not legally allowed to work
 New law stating the guarantee of their job if they
work for a company for more than 10 years, but
must be offered a contract, which they can
negotiate
 Under diminishing economy, employers paying
employees less
 Firing employees who complain
 Labor laws not evenly enforced (Andromeda)

14. APPLE
 In 2010, Apple’s audits found that 9 of its
suppliers in china had hired workers below
the legal working age of 16
 Other plants falsified audit materials
 Coached workers on how to respond to
questions from auditors
 137 workers were exposed to toxic chemical
n-hexane, causing adverse side effects
 A large number of suicides at Apple’s
Foxconn supplier
 Explosion that killed 3 workers and injured 15
caused by combustible dust trapped in vents
 (Barboza, 2011)
 (Apple Computer Support)

15. FOREVER 21
 Sweatshop located in downtown LA,
not only overseas
 Workers work 10-12 hour days for low
wages
 No overtime pay
 Unethical, dirty conditions (Fast
Fashion)
 Reputation for counterfeit goods

16. THE GAP
 Clothing being manufactured by
children as young as eight under
unethical conditions
 Sold by their parents to recruiters
in India and taken to factories
where they abused and forced to
work morning until after midnight
without pay
 Gap worked to clean up its image
by sending inspectors to India and
by not selling the clothes
produced by the children
 Gap has not severed ties with the
vendor in question (Ethical
Shopping, 2007)

17. HOW TO AVOID UNETHICAL SOURCING?
 Companies can avoid unethical sourcing by…
 Sending representatives regularly, often and
unannounced to check on conditions
 Do extensive research on vendors before agreeing to
work with them
 Check labor laws in sourcing country and make sure
vendors actually follow and enforce the laws
 Visit showrooms before agreeing to work with them

19. VOCABULARY
 Intellectual Property: the ownership of ideas and
control over the tangible or virtual representation of
those ideas
 Intellectual Property Law: protects Intellectual
property rights (IPR) of creators/owners by ensuring
exclusive use of these creations
 Copyright Law: Covers literary, musical, artistic works and
software
 Trademark Law: Covers words, pictures, logo or other
graphic symbol
 Patent Law: Grants monopoly for a limited period of time for
the used and development of inventions
 Trade Secret Law: Any formula, process, pattern, device or
idea that provides the owner a competitive advantage

20. VOCABULARY CONTINUED
 Trademark Infringement: taking advantage of the value of a brand by
applying a trademark to products without permission of the owner of the
brand
 Patent: the exclusive right granted by a government to an inventor to
manufacture, use, or sell an invention/idea/process for a certain number
of years.
 Counterfeit: something that a perpetrator forges, copies, or imitates
without having the right to do so with the purpose of defrauding
 Knockoffs: is an imitation, usually using lower-cost fabric and production
methods and sold at a lower price.
 Gray Market Goods: original goods (not knockoffs) sold by unauthorized
vendors
 Piracy: Act of selling and buying the counterfeit goods
 Illegal Transshipment: occurs when goods are shipped through a third
country or port to produce counterfeit documents that illegally change the
COO
 Inferior Goods: goods that have become in less demand as income
rises

21. HOW CAN YOU LEGALLY GET AWAY WITH IT?
• Licensing Agreements: The licensee pays the licensor a
royalty to use their company’s name, logo. Etc.
 You see this a lot with perfumes and sunglasses
 Knockoffs: knockoffs are imitations of products and
are not being passed off as the real products,
therefore they are not illegal

22. TRADEMARKS
 Trademarks are the symbols, taglines, etc. that you
associate with the company
 Trademark Infringement is the biggest violation of
intellectual property right

23. COUNTERFEIT GOODS
 Top 10 Seized Counterfeit Goods
10. Pharmaceuticals (3% of total goods seized)
9. Jewelry (4% of total goods seized)
8.Watches/Parts (4% of total goods seized)
7.Cigarettes (5% of total goods seized)
6.Computers/Hardware (5% of total goods seized)
5.Media (7% of total goods seized)
4.Handbags/Wallets/Backpacks (8% of total goods
seized)
3.Apparel (10% of total goods seized)
2. Consumer Electronics (18% of seized goods)
1. Footwear (24% of seized goods)
(Top 10, n.d)

25. TOP 5 COUNTERFEIT PORTS IN THE WORLD
5. Markets in Rome
4. The Old City in Shanghai
3. Santee Alley in Silicon Valley
2. Namdaemun Market in Seoul
1. Canal Street in New York
(JetSetTV, 2009)

26. CANAL
STREET
The Old
City
Namdaemun

27. WHY IS COUNTERFEITING A PROBLEM?
 Sweatshops
 Child Labor
 Economically damaging
 Funding of Terrorism
 Parts in the counterfeit goods
 http://www.youtube.com/watch?v=TQJckaa_Wm8

28. COUNTERFEITING TODAY
 In March 2012, Officials in New Jersey seized an estimated
$325 million worth of counterfeit goods. This is the biggest of
it’s kind by U.S. Department of Justice.
 Goods included Coach, Louis Vuitton and other handbags;
UGG boots, Nike sneakers, other shoes, and clothing.
 The plan to seize the goods and shut down the ring was a 2-3
year process.
 The smugglers were initially successful through the use of
false ID documents and stealing corporate identities.
 They covered up the UGG tags with fake brand names, and
would have one letter missing from a word to hide the
counterfeit goods.
(Bates, 2012)

29. KNOCK-OFFS
 The difference between a counterfeit and knockoff
is that counterfeits are passed off as the real
product and knock-offs are purely imitations.

30. KARDASHIAN KNOCK-OFFS
 The Kardashian Kollection at Sear’s recently got in
trouble with their handbag line that looked oddly
familiar to a few famous designers.
 They have already been delivered cease-and-desist
letters from Monica Botkier and it won’t be
surprising if they get a few more.
(Fenner,2011)

31. BALENCIAGA

32. CHLOE

33. YVES SAINT LAURENT

34. GUCCI VS. GUESS
 “Guess is being
accused of specifically
ripping off 4 designs
 1. Gucci’s Red and
Green Stripe
 2. The interlocking G
pattern
 3. The square G
 4. The Brand name’s
delicate script front”
(Krupnick, 2012)

35. HOW CAN YOU TELL?
 Retailer Knowledge
 Know your product and quality

36. THINGS TO LOOK FOR
 Look for spelling Errors on products and packaging
 Look to see whether there is a barcode or not
 Products from different manufacturers sold together
 No contact information on product

37. QUIZ QUESTIONS
 What is the name of the company who owned a
sweatshop in downtown LA?
 Name one way to avoid unethical sourcing.
 Which country has no national minimum wage?
 What is the main difference between a counterfeit
good and a knockoff?
 What is the number one counterfeit good sold?

38. REFERENCES
 Andromeda, R. (n.d.). eHow Money. Retrieved from Labor Laws in China:
http://www.ehow.com/list_7810908_labor-laws-china.html
 Apple Computer Support. (n.d.). Retrieved from Apple and Ethics: Consumer Response to Unethical
and Inhumane Factory Labor Practices in China: http://www.resourcesforlife.com/apple/ethics
 Barboza, D. (2011, May 24). The New York Times. Retrieved from Explosion at Apple Supplier Caused
by Dust, China Says: http://www.nytimes.com/2011/05/25/technology/25foxconn.html
 Bates, T. (2012, March 2). Millions of dollars in fake goods stopped at port, officials say.
Retrieved from http://www.app.com/article/20120302/NJNEWS10/303020100/Millions-dollars-
fake-goods-stopped-port-officials-say
 BusinessDictionary.com. (n.d.). Retrieved from Ethics:
http://www.businessdictionary.com/definition/ethics.html
 Embassy of India. (n.d.). Retrieved from Labor Laws: http://www.indianembassy.org/labor-laws.php
 Ethical Shopping. (2007, October 30). Retrieved from Gap Caught in Child Labor Scandal:
http://www.ethicalshopping.com/clothing-accessories/clothes/gap-caught-child-labor-scandal.html
 Fast Fashion. (n.d.). Retrieved from What is a Sweatshop?: http://fastfashion.weebly.com/unethical-
production.html
 Fenner, J. (2011, November 4). Kim Kardashian’s Purses Are Pretty Flagrant Designer
Knockoffs. Retrieved from http://www.styleite.com/media/kim-kardashians-knockoff-
handbags/#4
 Global Exchange. (n.d.). Retrieved from "Free Trade" and Sweatshops:
http://www.globalexchange.org/fairtrade/sweatfree/faq

39. REFERENCES CONTINUED
 JetSetCD. (2009, September 9). The Top Five Counterfeit Shopping Districts In The World.
Retrieved from
http://www.jaunted.com/story/2009/9/9/121143/4651/travel/The+Top+Five+Counterfeit+Shoppin
g+Districts+In+The+World
 Just-Style. (n.d.). Retrieved from The Ethics of Sourcing: http://www.just-style.com/hot-issues/the-
ethics-of-sourcing_id154.aspx
 Krupnick, E. (2012, April 5). Guess vs. Gucci trademark case heats up in court. Huffington Post.
Retrieved from http://www.huffingtonpost.com/2012/04/05/gucci-guess-trademark-
lawsuit_n_1405784.html#s824192&title=Guess
 Korshunova, E. N. (n.d.). The Free Dictionary by Farfalax. Retrieved from Child Labor:
http://encyclopedia2.thefreedictionary.com/Child+Labor
 Merriam Webster. (n.d.). Retrieved from Sweatshop: http://www.merriam-
webster.com/dictionary/sweatshop
 Sanctus Mundo. (n.d.). Retrieved from Ethical Sourcing: http://sanctusmundo.com/products/ethical-
sourcing
 Sourcing Line. (n.d.). Retrieved from Top Outsourcing Countries: http://www.sourcingline.com/top-
outsourcing-countries
 The Free Dictionary by Farfalex. (n.d.). Retrieved from Child Labor Laws: http://legal-
dictionary.thefreedictionary.com/Child+labor+laws+in+the+United+States
 Vegan Peace Home. (n.d.). Retrieved from Sweat Shops and Child Labor:
http://www.veganpeace.com/sweatshops/sweatshops_and_child_labor.htm