The recent handwringing over poor labor conditions and practices at Chinese factories that make electronics devices is hypocritical and misplaced. We are all guilty of owning products manufactured under conditions most us who live in the West would never accept.
The New York Times recently featured a series of exposé articles using Apple Inc. (Nasdaq: AAPL) and its biggest contract manufacturer, Foxconn Electronics Inc. , as examples of how Western OEMs benefit from labor conditions at Chinese factories that would be considered appalling in Europe and North America but that are readily accepted and defended by the companies' management as well as government officials in China. I discussed these on Friday in Does Apple Have a Foxconn Problem?
The reports are damning, but nothing here is new. We've all turned our collective eyes away from what we know is happening in Chinese manufacturing plants, since the products they churn out are made more cheaply, faster, and often better than at comparable Western facilities. China is the world's manufacturing center not just because of the lower labor costs -- so stop believing the hype -- but also because Chinese manufacturers can get away with practices nobody would accept in the West.
You still don't believe me? OK, please answer these questions: Would you sleep where you also work? Would you send your teenage children to work in a factory where they live in hostels (stuffed 10, 15, or more to an apartment)? Would you work at a plant where safety rules are regularly violated at the expense of your health? And would you work for a company that systematically practices forced overtime but denies it when cornered?
That's just the tip of the iceberg. The truth is that manufacturing companies in China squeeze their supply chains for higher and higher margins to boost profitability and satisfy the demands of companies like Apple.
Foxconn has a mega facility in Shenzhen that is bigger than many American cities and where it employs more than 400,000 workers. The company has at this site its own security, restaurants, movie theaters, swimming pool, fire stations, and other facilities found in any modern city. Yet, for all its wonders extolled by Steve Jobs, the late CEO of Apple, few of us would want to work at a facility like this. Here's what Jobs had to say once about the Foxconn plant, according to a report:
You go in this place and it's a factory but, my gosh, they've got restaurants and movie theatres and hospitals and swimming pools. For a factory, it's pretty nice.
I wonder, though, if Jobs himself would have taken a job here. He never had to. As a Westerner, Jobs lived under different standards rigorously enforced by regulators, monitored closely by human rights organizations and constantly scrutinized by lawyers. Any of the violations and numerous injuries reported in the press would have attracted a swarm of lawyers.
But not in China. That's partly why companies like Apple, Dell, Hewlett-Packard, Motorola Mobility, and Nokia make their products there. The workers at these plants have limited options. Many people point to the fact they wouldn't have a job at all or would be making a lot less, had Apple and its competitors not outsourced production to the likes of Foxconn.
That may be so, but that argument amounts to still a lot of BS. We who buy the products should have at the back of our minds the knowledge some of the devices manufactured by the electronics industry in China were produced under unsavory conditions. We should have this at the back of our minds when we buy Apple shares and celebrate the stock jumping another double-digit percentage point each time the company announces another record sales and profits.
Industry executives have known about these situations for a long time, and they are quite aware their bonuses depend on squeezing more gains out of the supply chain by outsourcing production to areas where the total cost of production is constantly being tamped down. That squeeze is at the expense of someone, and the claim that this is not the case -- by Jobs, his successor Timothy Cook, other electronics vendors, and the consuming Western buyer -- is hogwash.
They are not the only guilty ones. In fact, if guilt could be weighed and measured out by portion, I would suggest depositing the heaviest portion at the doorsteps of the Chinese government. It wanted economic growth, and that's what it's getting. But its citizens are paying an awful price with their health and personal freedom.
I was there about sevn years ago, and this was a somewhat newer factory, and the product was much more technical than those overpriced Nike shoes. Some of their products would be classified as "life critical", meaning that if the product failed people could die. But they also made other things in other buildings.
I would be the first to state that the employees were not having "a picnic in the park", but on the other hand the buildings were not crowded and there was plenty of air circulation. I am certain that they did earn all the money that they were paid.
Of course, it was one factory complex out of hundreds, so it might not have been typical. WE did not get to tour the dormatories, although they did point out that one building was the womens dormatory while the men's dormatory was on the other side of the roadway, about 50 feet away, in the same complex. It would have been interesting to see, but that part did not happen.
bskram, Different Strokes! I have been in China but haven't had the pleasure of working in a Chinese factory, not even one that could be a model of labor rights. But i know enough from what has been admitted by even Apple and human rights activists that these are not always the best.
William, your post begs the question. What exactly are you saying? I also spent time in this facility installing equipment and my conclusion is that the working conditions are horrendous. This facility is as bad or worse than what Nike was doing with sneakers and clothing. Back then everyone was up in arms about the slave labor, why is it you do not hear anyone calling for a ban on Apple products? Perhaps I just answered my own question?
William K. Thank you for the additional information. It's obvious change is occurring in China, perhaps not at the same pace some of us would like but these are still significant moves for a so-called Communist country.
These are early development stages for China and I doubt anyone (but the Chinese themselves) can stop the country from overtaking the United States to become the world's leading economy in the future. With that progression in the country's development also comes responsibility too, though. Responsibility to their own citizens and workers, other nations and companies they do business with.
William K: I also thank you for your first-hand report while working in China. I encourage all our readers to read your accounts (below) and continue to do as much research as possible. An educated consumer may be the best agent for change, if that is the direction consumers are headed. Frankly, I'm not sure about that.
When I worked in the factory it was because my company was installing equipment that had been purchased for use in the factory. WE were not product producing employees, with the result that our responsibilities were totally different than the factory employees. Also, our management was different. It also meant that we moved around a bit and were able to observe how the employees were working, without being challenged at all. THose dormitories not only save employees from the struggle of having to find an apartment in an area where that is a challenge, they also provide them with a great deal of security for their property while they are at work, and reduce the need for travel to and from work. Supporting a car or motorbike is not cheap, you know.
WE did not live in the dormatories or barracks, since we would have been challenged in communicating because we did not speak the local dialect.
So we did not "live the life of a laborer", but we certainly did get to see them working. IN that part of the world all shops are "sweat shops" because the temperature varied from about 31 degrees C up to about 37 degrees one day, for which there was an official government warning that it was going to be hot.
Of course the hourly employees in the factory did have to work quite a bit harder than the UAW employees in an American auto plant, but then, as an engineer, I also have to work much harder than those UAW employees in the auto plant, at least , harder than those in the areas that I have seen in the ten years that I have been servicing and installing equipment in auto plants.
When we were not working I was able to walk around the area and observe that the people did seem to be doing much more than just barely subsisting. So my conclusions are based on the facts that there are a lot of stores and shops selling a lot more than the bare nesessities, which indicates that the folks are doing a bit better than just getting by. The widespread proliferation of shops selling all sorts of fun stuff indicates to me that there are a lot of people who are doing much better than just getting by.
OF course, by some other standards they might not be doing so very well, since in all of my weeks in China I don't think that I saw any fat people, and certainly none of the really obese people that I se here in the USA. So perhaps by that standard they may not be doing so very well.
When I worked in the factory it was because my company was installing equipment that had been purchased for use in the factory. WE were not product producing employees, with the result that our responsibilities were totally different than the factory employees. Also, our management was different. It also meant that we moved around a bit and were able to observe how the employees were working, without being challenged at all. THose dormitories not only save employees from the struggle of having to find an apartment in an area where that is a challenge, they also provide them with a great deal of security for their property while they are at work, and reduce the need for travel to and from work. Supporting a car or motorbike is not cheap, you know.
WE did not live in the dormatories or barracks, since we would have been challenged in communicating because we did not speak the local dialect.
So we did not "live the life of a laborer", but we certainly did get to see them working. IN that part of the world all shops are "sweat shops" because the temperature varied from about 31 degrees C up to about 37 degrees one day, for which there was an official government warning that it was going to be hot.
Of course the hourly employees in the factory did have to work quite a bit harder than the UAW employees in an American auto plant, but then, as an engineer, I also have to work much harder than those UAW employees in the auto plant, at least , harder than those in the areas that I have seen in the ten years that I have been servicing and installing equipment in auto plants.
When we were not working I was able to walk around the area and observe that the people did seem to be doing much more than just barely subsisting. So my conclusions are based on the facts that there are a lot of stores and shops selling a lot more than the bare nesessities, which indicates that the folks are doing a bit better than just getting by. The widespread proliferation of shops selling all sorts of fun stuff indicates to me that there are a lot of people who are doing much better than just getting by.
OF course, by some other standards they might not be doing so very well, since in all of my weeks in China I don't think that I saw any fat people, and certainly none of the really obese people that I se here in the USA. So perhaps by that standard they may not be doing so very well.
William K., When you worked in a factory in China, did you also sleep in a hostel? And at your hostel, were there nets on the upper floor to ensure you didn't commit suicide?
I am interested in the accommodation you had. Also, don't forget to remind us how only "stupid" workers who can't follow instructions get hurt or how you stayed in China because you were making much more money than you would have made in your home country. You did stay in China, didn't you?
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.
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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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