In the tech industry, Apple Inc. (Nasdaq: AAPL) is the anointed king, and there is a lot of reason for unease: namely, Apple's relationship with EMS provider Foxconn Electronics Inc.
A recent, in-depth series of articles in the The New York Times has exposed the ugly truth that many in the tech industry have known for a long time: Labor practices in many parts of the world -- in this case, China -- are not up to par with the Western world. Yet, our biggest names in electronics, including Dell, Toshiba, HP, Motorola, Nokia, and Sony, continue to patronize manufacturing facilities overseas. And the debate is raging on in the pages of the The New York Times, The Wall Street Journal, and EBN.
Readers are divided on exactly what the role is of an OEM such as Apple. Should an OEM be held responsible for the practices of its partners? Or, as some suggest, does a contractual agreement -- you provide a service that I pay for -- distance the brand owner from responsibility?
Let me play devil's advocate for a minute and suggest that Apple bears no responsibility for the activities of its partners. The litmus test for this: Who is Apple beholden to? The government and workers of China, or the shareholders of Apple Inc.? The correct answer is, Apple's shareholders. And they are very happy with the company's performance. As of today, Apple's stock is still trading up. The fact is, Apple's bottom line has not been hurt by the NYT exposé, nor by reports of activities that have harmed other companies (but only briefly).
Remember when it was revealed that Nike used child labor and paid poverty-level wages? Or that Kathie Lee Gifford's brand of Wal-Mart products was made in sweatshops? There was publicity, scrambling, tears, outrage, and calls to action. Nike and Wal-Mart took a short-term hit but are still among the most successful businesses on the face of the Earth. When's the last time you denied your child Air Jordan sneakers or skipped the sale at Wal-Mart on moral grounds?
Let me draw another analogy: athletes as gods. Charles Barkley came out and said what I have believed for a long time: Barkley and people like him are athletes, not role models. Someone paid him to play basketball; we made him an icon. Barkley was not asked to become our moral compass or an example for our children -- he was paid to play ball. He met his obligations, end of story. It was a business relationship that worked for Barkley, for his team, and for the NBA.
Did Apple set out to become an icon, or did we make it one? There are compelling arguments on each side. Steve Jobs dispelled the old notion of CEOs, but many people forget that, though he wore a turtleneck, he was a serious taskmaster who demanded a lot from the people who worked for him. Some employees found the conditions intolerable. They left and found other employment. What allowed them to do that -- the policies of Apple, or the labor laws of the United States? (The answer is both, but US labor laws came first.)
But there is a reason Apple must be held responsible for its supply chain: It implicitly accepted the role when it began to audit the practices of its business partners. Apple has been reporting on its partners' policies and facilities since 2007, and outlined its efforts to improve conditions at Foxconn in 2011. It has since published a list of all of its suppliers (with no disclaimers). Apple has elected itself to be an agent of change, and that's why it should be held accountable. Not because it is the biggest tech company in the world; not because Steve Jobs was an icon; not because a business is a moral compass...
If the crown is weighing on Apple's head, it's because Apple accepted its coronation as king.
Its much more about Apple's two - faced hypocrisy with its US customers ( / groupies ) than about FoxConn ( Hon Hai of Taiwan ) mistreatment of its Chinese workers fresh off the rice paddies.
Apple has always marketed itself as different & superior to run of the mill US Corp.s that seem to be just one law away from reverting to practicing slavery.
Cannot have all those Zen Buddhist pretensions when it is financed by 100s of billions in the bank made by sweat - shop exploitation
It might have been acceptable when Apple was nearly bankrupt but not anymore.
Several readers made the excellent point reminding us that all this outrage is based on Western values. That is the kind of perspective that makes the EBN community so good. Just last week, I was discussing this fact with another editor. How can we, who have not faced the challenges of the average Chinese worker, relate to, and judge, the situation in China (or anywhere else, for that matter.) From the confines of my heated home, with the energy-efficent lights on; gas in my minivan; with my cell phone charged and food in the fridge, my biggest problem right now is getting somewhere on time. Thanks, readers, for keeping it "real."
I think you have a raised a good point there Prabhakar.
We are looking at this issue from the perspective of Western values where people have plenty to be able to worry about the human right breaches and the inhumane labour conditions in China. However, being faced with a choice between life and death, who has the luxury of worrying about human rights and all? Certainly, not the Chinese workers as you have pointed out. They just want to be able to bring home the bacon (maybe not even the bacon but just the bread. Even the idioms we use in the West cannot plainly express this tragic situation!).
I think the key reason of the attacks on Apple on this matter is not because people are deeply concerned about the well-being of the poor Chinese workers (of course there are some who are genuinely concerned but the majority is not). The real reason of this heated debate is to weaken Apple by hitting where it hurts. Putting Apple under the spotlight is the only possible way the crowned king can be brought down. If the crowned company was not Apple but say 'Kiwi', it would have been the subject of this attack, which is the gist of Barbara's post.
How else can you fight an industrial giant with $98 billion in cash in the pocket?
Those Chinese workers at Foxconn may be all be laughing at this debate ( if at all they get the chance to read these stories translated into Chinese).
There in factories like Foxconn they must be finding themselves lucky that they can eat something better than cockroaches and sankes and some shrubs from the jungle.
For many of these workers it may have been life changing job as earlier to this they may be living with a lot more hardships and worst living conditions.
I recollect here the example of thousands of Indian workers who migrated to gulf countries to make money. Their living conditions in those work locations were also far below par -- but much better than what they were living in their shanty home towns. And they were making a good money and feeding their ailing and old parents at home.
Well, it just exemplifies what the World is made of... Apple (and it's shareholders) continues to grow, Foxcom continues to make profit, are they keeping it to themselves? If they chose to keep it, and not pay enough... they should be blamed, is there a Ministry of Labor in China?
To be honest, I'd say there would only be handful of consumers who may actually protest for a long time considering the ethical violation. Some consumers might get inspired initially, but it's difficult to maintain your stand for a long time.
@Nemos: Well said! I think moral grounds are the best reason to vote with your pocketbook. But, like anything else, explaining the "why" to your child is the challenge. If you are consistent and have been steering your child toward socially-conscious decisions/purchases/practices, then you may stand a chance. But deciding now, because Apple is catching some flak? I wish I set the stage for something like that but the fact is, I did not. Really good point--and thanks for keeping us honest ;-)
The question is one of politics and origins. Companies influence rules and laws all the time, so I won't simply say that if a company acts within a law, stop crying about the company and start looking at the law. But in this case, it works out because China did not pander to the Walmart's and Foxconn's. The culture was there prior to the money to be made from it.
The ultimate end is that companies actually have a responsibility to do whatever they can under the law to make a buck because if the law allows it, it will happen. If not Foxconn for Apple, then BYD for HP or something.
As long as a company isn't/hasn't altered the politics, I can't see how anyone can use the politics to condemn a company. The politics of China are bad, not the companies.
"When's the last time you denied your child Air Jordan sneakers or skipped the sale at Wal-Mart on moral grounds?" ok I will try to rephrase your question Barbara . Is it the correct moment to deny your child expectation based on moral grounds ?
Maybe the time has come to think very very carefully what we are buying because with our action we are "rewarding" companies like Foxconn.
Dell has also alluded to--if not outright mentioned--Foxconn in its corporate social responsibility report. Like Apple, Dell audited for and found practices that were inconsistent with Dell's. It also took measures to correct them. If Apple and Dell together were to exert pressure on Foxconn--and in some respects, they are, by reporting these abuses publicly--things may change.
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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