GAP is involved in child labour claims

So Last week it was Mattel…this week it's GAP. The persisting question remains: how do these companies manage to respond to such allegations and protect their brand image? Or is the situation different in GAP case, as the damage has already been done overseas? Do you think consumers really care about how their clothes are being manufactured? Or does price always plays the role of determinant factor in their buying decision? How big is the market segment of "Ethical" shoppers in comparison to "Price Sensitive" ones?

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NEW YORK (CNN) -- Calling allegations of child labor at an Indian factory contracted to make some of its apparel "deeply disturbing," the president of Gap North America says the company has fired the subcontractor responsible for the abuse and will not be selling the garments made there in its stores.

President Marka Hansen spoke to CNN Sunday after viewing video of children allegedly sewing Gap clothes at a New Delhi sweatshop. The story was first reported Sunday in Britain's Observer newspaper

"It's deeply, deeply disturbing to all of us," Hansen said. "I feel violated and I feel very upset and angry with our vendor and the subcontractor who made this very, very, very unwise decision."

Hansen blamed the alleged abuse on an unauthorized subcontractor for one of its Indian vendors and said the subcontractor's relationship with Gap had now been "terminated."

She said the garments allegedly produced by the children represented a small portion of a single order placed with the vendor, and that the garments would now not be sold in stores.

"We strictly prohibit the use of child labor," Hansen said in a statement. "Gap has a history of addressing challenges like this head-on, and our approach to this situation will be no exception.

"In 2006, Gap Inc. ceased business with 23 factories due to code violations. We have 90 people located around the world whose job is to ensure compliance with our Code of Vendor Conduct."

In its article, The Observer spoke to children as young as 10 who said they were working 16 hours a day for no pay. The paper described the workplace as a "derelict industrial unit" where the hallways were flowing with excrement from a flooded toilet.

A 12-year-old boy said he worked from dawn until 1 a.m. and was so tired he felt sick. But if any of the children cried, he said, they would be hit with a rubber pipe or punished with an oily cloth stuffed in their mouths.