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Why Apple Is an Arbiter of Right & Wrong

“Uneasy lies the head that wears a crown.”

In the tech industry, {complink 379|Apple Inc.} is the anointed king, and there is a lot of reason for unease: namely, Apple's relationship with EMS provider {complink 2125|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.

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11 comments on “Why Apple Is an Arbiter of Right & Wrong

  1. mhikl
    January 30, 2012

     

    I agree that Apple has responsibility in encouraging, and better yet, persuading fair practice from its suppliers. However, what if progress is slow? With its huge cash hoard, maybe Apple will diversify away from suppliers who are not compliant by building its own factories.

    But what about Dell and the rest? Just because others may not demand agreements from their suppliers as Apple has chosen to do, do they have automatic walking rights from responsibility? I think not.

    Apple seems to at least be trying to do the right thing. Tim Cook is a different personality from Steve Jobs and I suspect we will see a difference in Apple's approach to these and other concerns as he sets his mark on this interesting company.

    What would be interesting is if Apple set out to blaze trails in China by opening its own factories and setting new labour relation rules and still made huge profits. Didn't Ford do such with his shortened work week and much higher pay all of which helped transform business attitudes in the states?

  2. Barbara Jorgensen
    January 30, 2012

    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.

  3. Nemos
    January 30, 2012

    “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.

  4. nalaro
    January 30, 2012

    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.

  5. Barbara Jorgensen
    January 30, 2012

    @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 😉

  6. Taimoor Zubar
    January 30, 2012

    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.

  7. Mr. Roques
    January 30, 2012

    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?

  8. prabhakar_deosthali
    January 31, 2012

    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.

     

    So it is all relative!

     

     

  9. Cryptoman
    January 31, 2012

    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?

  10. Barbara Jorgensen
    January 31, 2012

    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.”

  11. chipmonk
    February 1, 2012

    You all are missing the point.

    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.

    The cats out of the bag !

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