in its Foxconn, China Plant
Interestingly, it takes five days and 325 sets of hands to make a single iPad (Topolsky, p. 1). These hands belong to most Chinese workers who are being paid about $1.78 an hour and labor 12-hour days? (Topolsky, p. 1). Apple, a global leader on smart phones and other computer devices, has been seriously criticized for its production practices for several years. This paper makes the case of Apple’s outsourcing in China unfair, illegal, and unethical even if it is the general system and practice in the country.
In exploring this viewpoint, this author shall zero in on the Apple’s third party supplier in China - Foxconn Technology Group - Apple’s largest supplier. The eye of the criticisms was glued on Foxconn in 2010. It foretold of heavy workloads, occupational hazards like toxic exposure to hazardous materials, the recruitment of under-age workers, “involuntary labor,” and the falsification of records (Manjoo, p. 1). Up until now, controversies involving Apple’s malpractices hound its global reputation for being a sweat shop. As said, Apple often chooses profits over people, when working conditions are compared against the bottom line (p. 1). Allegedly, Foxconn let their worker live in dorms on their campus, where small rooms are being fit for six to eight workers (p. 1). Shockingly, these squeezed-in Chinese workers also need to pay for this poor dorm rooms for about $17.50 a month (p. 2). Apple’s factory in China speaks of human toil, unsustainable manufacturing methods, dull and repetitive work, dangerous and low paying work, among others.
According to Didovych (p. 4), Foxconn operates in over 40 research and development centers and manufacturing facilities in Asia, Europe, Russia, and the Americas. It is the largest global contractor of electronics manufacturer, taking in more than 50% of global electronics’ manufacturing and service industry income. Its non consolidated revenues in 2012 was NT$360.944 billion (US$12.38 billion USD) (Digitimes, p. 1). Foxconn reasoned that the strong shipments of consumer electronics and communications products fueled their remarkable growths in monthly revenue (p. 1). However, it remains as one of the larger companies, even larger than some of the companies for which it manufactures products like Microsoft and Nokia (p. 2). The same report also reveals that Apple’s earnings have also increased by 52% in 2010 compared to 2009 figures. However, the company’s ethical performance has been rated poorly (Didovych, p. 4).
*Figures are not consolidated Source: Digitimes, January 2013
The low wages given by Apple to its Foxconn workers is illegal and unethical considering the price of Apple products and what its suppliers’ workers outside of the U.S. are receiving. To concretize, Apple makes a significant amount of profit on the sale of its products (Didovych, p. 5). To cite, its Apple’s newest iPhone costs a minimum of $200 with a wireless company contract. It is very convenient for Apple to disengage the Foxconn subcontractor if it is an ethical company yet it continues to do business with Foxconn. The bottom line is that it is able profit from this relationship and be devoid of any loss.
Their labor practices are not also fair because those who are indeed producing the Apple products, by hand, are not receiving fair compensation for the work they do. Apple enjoys a large profit margin on the products which are produced at the Foxconn factory. Logically, the workers at this factory who contribute to Apple’s huge profits must be well compensated. Even if Foxconn, as a third party supplier, charges Apple high fees but does not redound it to their workers, then, Apple should stand up for those workers and alter the rules of their contract.
If Apple produces its iPhones in the U.S., it would have to pay much a higher price for production. While the logic of outsourcing is actually finding the cheapest prices of good labor, it remains unfair that workers are treated with no respect for their hard work just because they come from a country where labor is really very cheap.
Richard Karlgaard provided few arguments in defense of the relationship between Apple and Foxconn in his WSJ article “In Defense of Apple’s China Plants” (Didovych, p. 8). The author theorized that critics just have to present a new reason to criticize Apple after the death of Steve Jobs. This is because Apple’s fast-growth in profits and technological innovations is unstoppable. The author surmised that as Steve Jobs created the company, its innovations could not (and would not) have suited everyone’s life. However, this argument is not convincing because the labor issue with Foxconn has been there even when Steve Jobs was still alive. Since this is a very important human right issue, it shall not fade away even when the Apple patriarch is gone. It also persists since Apple is not totally addressing the said issues, i.e. paying their workers well, providing them with proper working conditions, etc.
Apple’s defense for retaining its third party relationship with Foxconn is that “Foxconn’s cost efficiencies and scalability cannot be matched by another third party supplier elsewhere in the world. Apple’s CEO, Mr. Cook, showed that among Foxconn’s 700,000 workers dedicated to manufacturing Apple products are 30,000 trained engineers. Such masses of engineers are simply not available in the U.S. for one big company like Apple to hire” (p. 9).
However, these are not valid reasons to continue to work with an unethical third party supplier like Foxconn. Apple should consider all other labor suppliers around the world when outsourcing labor in other countries. This is not an excuse for outsourcing in China. If Apple would invest in its local American workers instead of running for cheap labor to China, it would also help their own country solve its high unemployment rate and depressing economic conditions. Also, even when their salaries are increased, it is not guaranteed that the workers at Foxconn are treated well. Compared to the handsome prices of the Apple devices which are charged to their customers, the prices of labor accrued to the Apple workers do not balance out.
Apple is not setting a good model for how global companies should behave. It is not enforcing a fair treatment so that the rest of the industries and businesses around the world would follow. The greater questions behind this situation is if Americans would be willing to pay more for an iPhone if it means more wages and better treatment of their workers (Topolsky, p. 1).
Apple’s decision to retain Foxconn is also illegal if Foxconn does not comply with Chinese (or any other host countries) overtime limit laws. It is also illegal if it does not conform to Apple’s Supplier Code of Conduct. The mere fact that their partnership continue to exist is that they thrive on the same unethical principle which forces workers to extended working hours than they should be working, based on the international standards of labor laws and policies. Workers must be able to rest and take a day off when they have to against any enforcement to stay at work (p. 1). Workers are not machines and cannot be treated as such but Apple does not seem to respect this.
It also follows that Apple makes smart decisions and rapidly grow as it thinks about of what is profitable for the company more than the social costs of these profits, such as the poor working conditions for its workers. It does not mind the high social costs of their bringing their products into the market, so to speak. However, in terms of maturity in commercialist ventures, the American culture is more proactive in regulatory compliance. The U.S. employers follow strong and regularly enforced workplace legislation such as non-discrimination and Health and Safety. However, the Chinese culture is more prone to non compliance as it begrudges labor or work (Kim & Rowley, p. 4).
Apple should and must revolutionize electronics manufacturing since it is the right thing to do. It is also a mandate for being one of the global leaders in the industry. However, in terms of corporate branding and image, Apple should address this issue since the said problem presses on its global image. If Apple ignores this problem, the specter of sweatshop is going to affect its brand. While there is no concrete evidence to show that Apple’s Foxconn factory is any worse than those of its competitors, i.e. Samsung, Nokia, etc., no other global company takes advantage of China’s cheap labor than Apple. If it continues to deliver spectacular profits, then, it is imperative that its manufacturing processes are scrutinized for various reasons.
More so, Apple is in a very good position to change how the world’s electronic devices are being produced and sold. By itself, it can reduce earnings over the short run in exchange for a long-term development in its manufacturing plants’ conditions. Apple has almost $100 billion in liquidity and it has often used its holdings on strategic investments which pay off over time. Apple’s brand image is the center of its global success. Millions of global consumers are convinced that that no other technological company is more intelligent than Apple in terms of giving the world user friendly products. If this perception continues to be hounded by reports from Apple’s dark labor conditions, many of its loyal customers might justly consider if their iPhones are really worth the price, socially and morally.
However, the move towards a more ethical and fair labor practice should be reasonable. Despite its size, Apple is in constrained by the global manufacturing realities just like any other product manufacturer or exporter. It has to be understood that Apple needs to continue to outsource its products or processes since its home country cannot accommodate all of its manufacturing requirements. Hence, it is unthinkable for Apple to fly out of its Chinese manufacturing plants in order for it to become a just and ethical global producer of iPhones. China is inherently more competitive in terms of ample sources of workers, suppliers and enough flexibility in the manufacturing processes to fulfill the global company’s mass scale and speed requirements (p. 2). As mentioned before, Apple’s old estimate shows that it would take about nine months to recruit the 8,700 industrial engineers in their home country as compared to recruiting these engineers in China. (It would just take about 15 days.) (p. 2).
At the same while, it is also clear that Apple could do far better than sit around its labor issues and malpractices. Annually since 2007, it has conducted in-depth audits of its contractors’ facilities, and annually, it has collected various violations of its own standards. It evidently shows that Apple does not do anything to correct its violations and this is what is very unethical on its part. As one former Times executive ruled, “Non-compliance is tolerated, as long as the suppliers promise to try harder next time” (p. 2). If Apple is serious about its commitment to fair labor practice, their core violations would disappear.
What seems very unethical in this instance is that Apple continues its business dealings with Foxconn even when the latter is alleged to be violating the rights of their workers. Given that Apple fans and the general public assume that Apple is imperfect and will have some issues with its suppliers, both internally and overseas. Inherently, this cannot justify the huge maltreatment of the Foxconn workers. Ignoring an unethical situation in the name of commercialism and gains only promotes this inhuman treatment of workers.
Another best option is that Apple seriously considers investing in robotic factories. However, this entails another ethical consideration – if it is good to replace human workers with machines. To illustrate, even when Chinese workers are publicized to be “maltreated or violated” against global human rights standards, the work being provided by global companies such as Apple continue to make life better for them in their home country. This goes to show how pushing for more innovations in the manufacturing practices might even hurt the workers even more.
Apple’s relationship with Foxconn is simple ethical even if it is very profitable for both. Being so, Apple must reassess its strategies in dealing with external suppliers and it must come up with more proactive solutions and new plans which primarily solve the labor issues. If Foxconn does not improve the way it treats its workers and if Apple remains its ties with Foxconn, this issue will become more controversial as it catch the ire and solid attention of the global media. At this time and age, global consumers are even more conscious about ethical and sustainable work processes. They really observe how companies operate and how they act socially. Every time any labor issue is hurled against Apple, its name and brand also goes down the drain. It is harder to cover from media. Eventually, their wise consumers might realize that while they pay too much for their iPhones and iPads, they are not paying goodness to those who dedicate much of their working time to deliver these devices to them. It shall affect the way they patronize Apple. Hence, if Apple and Foxconn do not make important reforms, then, Apple’s decision might not further sustain development as it might start losing its valuable customers due to the questionable labor conditions under which its products are manufactured.
Didovych, Maryana. Ethics Behind Apple and Foxconn Relationship . The College of Westchester. Tehsis. Accessed on on February 24, 2014 < http://kc2odn.com/Maryana-apple.pdf>.
Digitimes Website. “Foxconn December Revenues Hit Monthly Record.” Accessed on February 24, 2014 < http://www.digitimes.com/news/a20130110VL203.html>.
Kim, N. & Rowley, C. “The Changing Face of Korean Women in Management” in C. Rowley & Y. Paik (eds) The Changing Face of Korean Management. London: Routledge. 2009.
Manjoo, Farhad. Apple In China: The iPhone Maker Should Ditch Its Troubling Labor Practices And Reinvent Gadget Manufacturing. February 1, 2012. Accessed on February 24, 2014 <http://www.huffingtonpost.com/2012/02/01/apple-china-foxconn_n_1246693.html>.
Topolsky, Joshua. Apple’s Big Chance to “act different” on labor. The Washingotn Post. Accessed on February 24, 2014 <http://www.washingtonpost.com/business/economy/apples-big-chance-to-act-different-on-labor/2012/02/22/gIQA7v5HUR_story.html>.