"Uneasy lies the head that wears a crown."
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.