Richard Brubaker

Implications of Yum and McDonald's Foreign Labor Policy

Crossprofit.

All fair points, and well laid out.

Both Yum and McDonald's have been "cleared", and it only makes the point all the more clear. It is a matter of public perception, and in the case of McDonald's this recent controversy resulted in union talks being moved up.

As you state, both governments are playing a role in this and it is unfortunate. Recently, the U.S. side has been on the offensive and the Chinese side has taken a few reactionary jabs. I think the ball is in the court of the U.S., and it is time that the U.S. begins addressing the issues before them (internally and externally)..

With regard to the role that Corporate America has, I think that there are a number of things they can do to reduce the tensions, but few will do so. Few will give up cost savings, few will open their books, and few will go public and criticize poor policies.

I wouldn't expect that any more than I would expect a politician to stand up and say that it would be more effective to lean on big box retail than on the RMB in trimming the trade gap.

Rich
allroadsleadtochina.co...

Implications of Yum and McDonald's Foreign Labor Policy

Saul & Crossprofit,

I am not following the 1/3 of U.S. wages angle on this as Guangzhou is clear about their level of minimum wage for part time and for college students. It is not based on a monthly wage, but an hourly, and the reports are that all three chains were below the minimum hourly wage.

With that being said, I have read that the law had just been passed the day before this story broke, and so IF that is the case, then someone was just gunning to get the chains unionized.

Either way, my point is more related to the perception of whether or not they broke the laws and what the potentials were following that. (Crossprofit - the poll was a sina.com based poll asking Chinese readers (1) if they thought these chains were wrong in paying so little.. and (2) if the chains should be published.

Again, in my eyes it is NOT a matter of whether or not they were paying more, less, or at the minimum level. It is about the fact that of 52k people who took the time to vote, it was very clear that the brands were not being favored.

This time nothing happened, and there doesn't appear to be any backlash, however at some point it will be happen and it is time for foreign companies to get right.

Implications of Yum and McDonald's Foreign Labor Policy

Dan,

In response you your comment, we found not only a Chinese version of the original article, we also found the original source <strong>Sina Poll here</strong>.

I have also update my original posting on <strong>All Roads</strong>.

Implications of Yum and McDonald's Foreign Labor Policy

Saul,

What I think we are going to find (and the final word is not in yet), is that MCD and YUM violated the laws of China. However, for the context of this discussion, put all that aside and focus on the fact that 94% of 46,739 people believe that they were wrong.

For me, it is not about whether or not they were wrong, and more over whether or not MCD student employees live in the best dormitories in town. The important issue is the effect a student led China-wide boycott could have on a company's stock price, be it MCD, YUM, or any one of the reported 90,000 firms in China.

there have been a number of cases recently that have sparked controversy, and in the case of P&amp;G their Shanghai office was ransacked; in the case of Dell, a single student created such on online uproar that the computer company had to publicly acknowledge their error and replace not a single laptop but hundreds; and at some point, these forces could come together against a firm who is seen to exploit one group or another.

Again, paying your student employees in China a third of the minimum wage may not be illegal in the U.S. , but at some point it will become an issue for U.S. investors.

Implications of Yum and McDonald's Foreign Labor Policy

Dan, As I posted on All Roads it appears that the article was edited after I posted this, and I will work on finding the original source to the WSJ article tomorrow.

If you google 47,839 respondents you will find that there are two hits for WSJ, and both of them link to the article you are currently seeing.

So, until tomorrow.