Clifford Chance

When it's so broke, you can't fix it: The decision not to do business in highly corrupt countries

23 June 2014

The collapse on April 24, 2013, of the garment factory in the Rana Plaza complex in Dhaka, Bangladesh, resulted in the death of more than 1,120 workers. A few months later, Nike Inc. announced its decision to sever ties with its key garment suppliers in Bangladesh, "[i]n effect, conced[ing] that problems outsourcing production to the country couldn't be easily fixed." Transparency International described the challenge as "a global garment supply chain bedeviled by endemic corruption." But this problem is not unique to Bangladesh or the garment industry. There are countries and industries where corruption is so rampant and corporate compliance such a challenge that companies decide to exit the country or not enter it at all. So the question becomes, when does a company like Nike reach the point of knowing that "it's so broke it can't be fixed?"

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