Loose threads in Uniqlo's response to factory PR crisis

Ever since the tragic collapse of the eight-story Rana Plaza factory in Savar, Bangladesh in April 2013, which caused over 1,100 deaths, the health and safety conditions of factories supplying garments and textiles to major retail fashion brands have become an extra touchy topic for consumers.

After the Rana Plaza collapse, Western brands such as H&M, Zara owner Inditex and Calvin Klein and Tommy Hilfiger owner PVH signed the Accord on Fire and Building Safety in Bangladesh in May 2013.

Owner of Uniqlo, Fast Retailing's signing of the Accord three months later in August 2013 drew some criticism.

Uniqlo found itself in hot water again last week after Hong Kong nonprofit organisation Students and Scholars Against Corporate Misbehaviour (SACOM) published a report on its investigations of two factories which supply garments and textiles to the brand.

The two factories named by the 11 January SACOM report are Luen Thai’s Dongguan Tomwell Garment Co, which manufactures Uniqlo clothing, and a Pacific Textiles factory in Panyu, which supplies textiles to garment factories including Dongguan Tomwell Garment Co.

SACOM's investigations were carried out with the support of Tokyo-based organisation Human Rights Now and mainland Chinese labour organisation Labour Action China.

The SACOM report said workers at the two factories work long hours for low basic wages in unsafe work environments.  It also said the factories have harsh management styles and punishment systems that include fines and there are no unions to represent workers.

Fast Retailing, which owns Uniqlo, published a written statement on 11 January, the same day the SACOM report was published, containing a brief response to the report.

It published a second written statement on 15 January detailing actions it has asked the two factories to take, with a promise to check, along with auditors and NGOs, whether improvements have indeed been put in place.

The 15 January Fast Retailing statement also described points of disagreement with the SACOM report with regard to conditions at the Pacific Textiles factory and announced a series of monitoring measures to be implemented over the next three months.

Has Uniqlo done enough to resolve the PR crisis created by the SACOM report?  What lessons can be learned from the way Uniqlo dealt with this crisis?

For Rachel Catanach, MD at FleishmanHillard Hong Kong, last week's Uniqlo factory PR crisis illustrates the increasing scrutiny faced by brands in all aspects of their supply chains.

She believes Uniqlo's response was quick and timely.

"In this instance, Uniqlo responded quickly to the allegations of labour abuse by Hong Kong-based Students and Scholars Against Corporate Misbehaviour (SACOM). The brand committed to working with the relevant parties to resolve the issues in a timely manner and providing an update in four weeks’ time on progress," Catanach said.

"Uniqlo’s commitment to putting things right and the speed with which they responded was seen as a positive move to address concerns and take responsibility for the situation."

However, the PR crisis might escalate if real progress is not made within the one month deadline set by Uniqlo itself.

"If real progress is not made in the next month, Uniqlo should not expect SACOM or consumers to be so forgiving again," Catanach added.

"Uniqlo should take this issue as a cue to review the regularity with which all parts of their supply chain are audited."

Lorna Lennon, managing director of boutique crisis consultancy Bailiwick, said Uniqlo seemed to be following sound crisis management procedures.

"Uniqlo swiftly delivered a statement to ensure consumers know this issue is a matter of concern for Fast Retailing. A few days later, Uniqlo issued a neutrally worded statement partially acknowledging issues following their investigation into the two factories incriminated whilst refuting others," Lennon said.

"This is good thinking as it defuses the issue and focuses on outlining an action plan. Cleverly, by demanding suppliers make changes, Fast Retailing deflected responsibility away from the brand and back onto the factory management teams."

Pacific Textiles, which owns the Panyu factory named in the SACOM report, published a written statement on 16 January on its website in response to the report.

However, the SACOM report said a worker from the ironing department in Luen Thai's Dongguan Tomwell Garment Co told SACOM investigators that Uniqlo representatives would appear on the shop floor every Tuesday and Thursday.

"Uniqlo had a faultless damage management strategy except for the worm in the apple: an employee revealed Uniqlo visited the factory twice a week in the SACOM report. This opens a can of worms for all to view," Lennon said.

The Uniqlo factory PR crisis also highlights the fact that consumers expect big brands to go beyond the law and be role models upholding best practices in their respective industries.

“Consumers are increasingly expecting big brands to go above and beyond the letter of the law in all aspects of their business operations," Catanach said.

"It has also become more critical for brands to look at innovative ways to make a tangible difference to their stakeholder communities by working in partnership with governments and NGOs to implement shared value initiatives."