iPod made in sweatshops?
Thursday, June 29th, 2006Debate on the Internet kicked up this week on whether Apple iPods are being manufactured under “Dickensian” sweatshop conditions in the People’s Republic of China. Human rights and corporate ethics watchers cried foul about low wages and bad living conditions. Foxconn (the China subcontractor) and Apple have been playing defense saying it abided by labor guidelines. What is the truth? Well it lies somewhere in between.
But more interesting is that the best balanced on-the-ground investigative journalism on this was done by PRC reporters and is being actively discussed in the open on Tianya.cn. ESWN has an English translation of the original Chinese piece which is titled, “Foxconn workers: As little as 340 yuan a month and 700 persons living in one house. NetEase Technology Report.”
For folks used to China’s so-called “totalitarianism,” this may come as a surprise, but it’s not unusual – investigative journalism in China happens a lot more often than you would think.
After the press conference was over, this reporter declined the offer of a ride provided by Foxconn to the train station and went instead to speak to ordinary workers in the technology park.
In fact the above headline is a bit sensational – while the reporter did find sketchy and smelly living conditions and low wages, they did not find a dorm with 700 people – a claim made by a worker who was interviewed. Nevertheless, the article has a whole lot more useful reporting than the speculation and second-hand churn in AppleInsider and Ars, both of which I respect.
The bottom line – there are violations in working hours, the pay is slightly under the minimum; some workers moved out of dorms to their own apartments, but they get healthcare and free lunch. Given the chance of working longer hours, the workers would actually want to do so as long as they are paid.
“When I joined Foxconn in 2004, those were good days for the first two years.” When Little Zhang thought about the overtime work, his spirit was lifted. “At one time, my highest monthly wage was 1,600 yuan.” “In those days, I could work three hours of overtime per day. With two more days on the weekend, the wages rose up.” Little Zhang counted with his fingers. “Saturday and Sunday are for double pay, at 6.70 yuan per hour. On both days, we worked 11 hours, so that we made more than 100 yuan.” In Little Zhang’s view, that is a very good wage. When the writer asked whether continuously working like that for one or two months would be physically impossible to cope with, he impatiently rubbed his thumb and index finger together and said, “Who cares as long as the money is there!”
In a commentary on the Apple conundrum, BusinessWeek reporter Arik Hesseldahl has suggested Apple go ahead and open its own factory in China, and raise the standards, like Motorola and Plantronics have done. It is not a bad idea for companies to do this – take fate into their own hands and create a core in China for the long term. For certain technology products this is possible. However, it’s hard for Apple to go this route.
Their entire existence is in finding contract manufacturers that they can switch out very quickly to meet demands of their lifestyle marketing designs and innovations done in California. (Buy a new iPod or MacBook, and you’ll see that heralded on the packaging.) It’s why they can lead the industry with iMac flavors, iPods, MacBooks, etc. The recent shift of the Mac line from PowerPC to Intel Core Duo processors would have been much more painful with company capital sunk into product line manufacturing. Instead, Apple finds companies like Alpha-Top and Flextronics in Taiwan to do the job using the economies of scale advantages they have in mass producing laptops and other consumer electronics.
But Apple has typically enjoyed from 30-50% margins on their products. That’s much higher than other industry norms. Stepping up working conditions at Foxconn to comply with Chinese labor laws (which are already very modest) can be accommodated by that cushion. Shareholders will be happy, Steve Jobs can sleep better, and Chinese workers will be happier. Win-win-win?





