Is Apple Inc. (Nasdaq: AAPL) building its roaring success on the back of poorly paid Chinese workers assembling the company's products in conditions that don't meet international labor standards?
This question has dogged Apple for some years, but a recent series of articles in The New York Times paints a powerful picture that casts the world's most valuable consumer electronics company in a highly unflattering light. The articlesdetail conditions at factories operated in China by Foxconn Electronics Inc. , the main contract manufacturer for Apple and many of the world's leading high-tech companies.
Supported with anecdotal evidence as well as reports from human rights organizations and interviews with unnamed current and former Apple executives, the articles essentially hold Apple indirectly responsible for some of the labor violations at Foxconn facilities. The violations include "involuntary labor, under-age workers, record falsifications, improper disposal of hazardous waste and over a hundred workers injured by toxic chemical exposures," according to the NYT.
Like many of its peers, Apple makes most of its products, including the Macintosh computers, iPhones, iPods, and iPads, in China, and therefore is open to criticisms. Some of the criticisms are valid. However, it's also clear that the company has taken steps in the last years to improve conditions at the facilities that make its products.
Despite its prior actions, though, the NYT articles clearly indicate Apple has a problem that won't go away easily. Let's not mince words: Foxconn makes Apple products in China because it can do so cheaply and faster than in Western plants. The contract manufacturer has endured many negative publications in recent years, including the suicide of some employees.
Foxconn has an image problem. So does Apple. The problem has been associated with Foxconn, while Apple has managed to avoid many of the negative implications. Until now. In a follow up blog, I will be focusing on how this is a bigger problem for the entire electronics industry.
I continue to marvel at the fact that Apple has not suffered from a negative consumer reaction to the reports regarding Foxconn. I think it is, in part, a testament to the zeal of Apple's customer base. Companies are boycotted all the time for big disasters (Exxon, BP) and small missteps ("What I meant to say was....") by management. Apple so far has been immune to the backlash. And you are right in saying this isn't just Apple's problem--Foxconn is a service provider to just about any electronics brand name on the planet.
Foxconn electronics is a contractor to Apple. It is not owned by Apple. Therefore, Apple cannot dictate how Foxconn runs its business. Apple uses Foxconn's services because it is of acceptable quality at an acceptable price and it is fast.
How Foxconn is able to provide this service is not Apple's concern. It may be unethical, unfair and may have labour violations. The body who needs to be concerned with such matters is the regulatory bodies in China controlled by the government. The Chinese government needs to care about its people first so that they are not exploited. If the government of a country does not care about the welfare of its citizens, how can a private company bringing business in be blamed for the unethical practices in that country? Objectively speaking, I think this is unfair.
The only reason Apple is under the spotlight is purely because it is commercially very successful and is huge. Also, it has strong competitors who spend day and night trying to push it out of the game. That is the reality of capitalism unfortunately. There are thousands of other smaller companies who are using the services of Chinese companies that have even worse working conditions and unethical practices but they are not in the radar as much as Apple is. Such companies never get criticised, do they? We never read about them, do we?
Of course, Foxconn should be audited and penalised in the heaviest possible way if it is guilty but such actions should be taken by the state. Trying to force Apple's business away from Foxconn so that the company has less business and therefore the level of exploitation automatically goes down, is the easiest and the most unfair approach in my opinion. Actually, this is not a solution, it is a short-term "workaround".
The Chinese government needs to care about its people first so that they are not exploited. If the government of a country does not care about the welfare of its citizens, how can a private company bringing business in be blamed for the unethical practices in that country? Objectively speaking, I think this is unfair.
Cryptoman--that's a good point and a good "reality check." In the US, we have come to view athletes, corporations and political leaders as some kind of moral compass for the masses. (Very bad idea, BTW.) The business reality is supply and demand and consumers can vote with their pocketbooks if they don't like a company's practices. I like the idea of corporations as agents of change, but your point about the China government is well made.
And the answer is yes with big letters. "Foxconn has an image problem. So does Apple." These two companies are linked and connected each other with tight bonds. As far Apple doesn't change its partner is kind of acceptance to what is going on inside the Foxconn. And of course, Apple is not the only one with relative behavior.
i think its about time apple takes steps to help fix the bad image written all over foxconn electronics because it may gradually affect apples image in general and if the problems continue, its only a matter of time before it drags apple as a whole into negative headlines
Yes exactly it will spread like a virus if no one bothers to clear the bad image which was there on the past. Evey possibility is there for Apple also to get hurt if it happens becasue Apple is kind of a part of it right now. True that customers wont forget easily on what happened in the past but atleast by clearing the present will take off some dirt from foxconn.
That is true, hm. We shouldn't forget that this issue is related to many companies. However, with Apple being a large company in this marketplace, they could set an example for other companies and have good headlines in the media.
@clairvoyant: Yes, that is very appropriate thing to do. Apple is quite innovative in this aspect and will find very suitable solution without loosing edge over other vendors.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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