Already Under Pressure, Ivanka Trump's Brand Faces A New Challenge

When a Bangladeshi factory building collapsed in 2013, killing more than 1,100 people, big-name retailers from Europe and North America suddenly found themselves facing a crisis that threatened their carefully tended public images.

It was a problem not unlike that faced by Ivanka Trump this week, when a trio of activists disappeared while investigating working conditions at a Chinese factory where her company manufactures shoes.

Both incidents underscore the fact that in a global economy, problems that companies create in far-off places have a tendency to find their way back home.

The activists who disappeared worked for China Labor Watch, a nongovernmental organization that has been monitoring labor conditions in the country for years. Hua Haifeng was arrested by the Chinese government; no word has been received about the fate of the others, but the head of the organization says he assumes they also are being held by security officials.

Trump's brand is only one of the retailers that sell products made in the plant, but her unique position as the daughter of the U.S. president has raised questions about the motivations of Chinese officials.

The disappearances also add to the pressure on Trump's brand, which has been subject to a lengthy consumer boycott. Several major retailers, including Nordstrom, have dropped her products from their shelves.

Embarrassing revelations about working conditions in factories in the developing world are nothing new, retail consultant Jan Rogers Kniffen notes. Nike, Apple and Walmart have endured shocking headlines about long hours, dangerous environments and abusive situations at their factories in the developing world.

But, Kniffen adds, "we've ... never had anybody who was that high-profile and that close to an extraordinarily controversial figure trying to build a brand."

Such scandals have usually blown over pretty quickly, with no discernible impact on the company's sales, Kniffen says. Consumers may not love the idea of sweatshop conditions, but they love cheap products.

But consumer behavior could be changing, in part because social media creates a platform to publicize the worst abuses, says Allen Adamson, founder of BrandSimple Consulting.

"There's a growing and large group of consumers that want to vote with their pocketbook or their wallet, and if the company is not behaving in a way that they consider fair or right, they're very quick to switch their purchase behavior," he says.

Not everybody shares that view, Adamson notes, "but it's a growing group — particularly younger, millennial consumers, people who are very passionate about the issues."

Scott Nova, executive director of the Worker Rights Consortium, says there is no question that scandals over workplace conditions matter to companies.

"The brands certainly believe that it can damage the company's image. That's why they have elaborate social responsibility programs designed to insulate them from reputational damage related to the working conditions in the factories they use," Nova says.

"Unfortunately, brands and retailers have been much better at the public relations aspect of this issue — creating the impression that they're making an effort to address labor rights issues in their supply chain, thus burnishing their own reputation, but making very little in the way of practical changes in wages and conditions in the factories," he says.

After the Bangladeshi disaster, many European retailers signed onto an accord on factory and building safety. Major American companies formed a separate agreement that worker safety advocates criticized as less effective.

Still, the fact that retailers felt compelled to do something in the wake of the tragedy underscores how much is at stake for Ivanka Trump, he says.

"With Ivanka Trump's brand, as with any brand, when consumers hear reports that the products are made in factories with abusive conditions, that hurts the brand," Nova says. "If consumers are reading credible reports that investigators [who are] simply trying to find out what kinds of conditions exist in those factories are being persecuted by the Chinese authorities, that has to hurt the brand."

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