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Apple, Foxconn, Shenzhen, $100 billion, and a request

March 04, 2012


I’m writing this post on an iMac.  I have an iPhone in my pocket.  My iPad is resting in its case on the desk in front of me.  My wife has a MacBook Air, an iPhone and an iPod Touch.  We also have an AppleTV (ca. 2006), an iPod Video (ca. 2005) and an iPod Shuffle (ca. 2006).  Fanboy? Not quite.  All Apple household? Definitely.

Anyone who has purchased an Apple product (or in our case 9) has read the five words that are prominently displayed on the packaging: “Designed by Apple in California”.

Apple’s marketing genius has just made you think about Cupertino.  You have also been distracted from the more obscure words on the bottom of the box: “Assembled in China”.  By identifying where the product was designed, we forget (or ignore) where the product was made.  Disagree?  Would you feel differently about your iPhone if the front of the box said: “Assembled by Foxconn in Shenzhen, China”?

Apple doesn’t want us to think about where (or how) its products are made, but Apple’s recent success with the iPhone and iPad have put both Foxconn and Shenzhen in the spotlight.  Although there are tens of thousands of news articles and blog posts on these subjects, I still feel compelled to add one more.

Foxconn Technology is located in Shenzhen.  Shenzhen is located in southern China.  Shenzhen has a population of 10,357,938, which is bigger than New York City by more than 2 million people.  Shenzhen is one of the fastest growing cities in the world.  In 1986, Shenzhen had a population of just 1 million.

Foxconn is the largest electronics manufacturer in the World and also one of China’s largest employers with 1.2 million Chinese employees.  This is the equivalent of hiring every person that resides in the nine largest counties in Nebraska – Douglas, Lancaster, Sarpy, Hall, Buffalo, Scotts Bluff, Dodge, Lincoln and Madison.

Recent news stories about Foxconn have highlighted the company’s unfair working conditions. These allegations include the hiring of 10 and 11 year-olds, paying employees roughly $2.00 an hour, requiring 18 hour shifts, providing dorm rooms that sleep 8, using n-hexane, a neurotoxin, to clean iPhone screens, and installing suicide nets to catch employees jumping out of Foxconn’s windows.

What caught my attention was the podcast of This American Life Episode 454 – Mr. Daisey and the Apple Factory.  This podcast motivated me to write this post.  I’ll go so far as to say that if you own an Apple phone, tablet or computer, then this podcast is a must listen (or a must read – here’s the Transcript).  I’ll assume that you will listen to the podcast so I won’t write in-depth about Foxconn’s labor practices.  You can also click on the links in this post or watch videos from The Daily Show with John Stewart, ABC’s Nightline, or a YouTube video entitled the Truth of the Apple iPad.

The criticisms of Apple and Foxconn have forced Apple into taking some positive steps forward.  Apple recently joined the Fair Labor Association and raised the wages of Foxconn workers between 16 and 25%.   Apple also created a supplier audit program resulting in yearly Supplier Responsibility Progress Reports. Additionally, Apple has made a recent marketing push in an attempt to change public perception.  The ad boasts “514,000 U.S. jobs created or supported by Apple”.  There’s that marketing genius again.  Notice how Apple creatively uses the word “supported” to boost its actual employment numbers.

Now that I know that the manufacturer of the iPad and iPhone engages in child labor and unfair working conditions, will we continue to buy their products?  I wish the answer was no, but in all honesty, we will probably not stop buying Apple products until we stop using computers and smartphones.  Here’s why: I believe Apple computers and smartphones are superior to their competition.  Plus, it would be difficult to find a company that does better.  Other companies that use Foxconn include Acer, (Kindle), Cisco, Dell, Gateway, Hewlett-Packard, Intel, Microsoft, Motorola, Nintendo (Wii), Nokia, Samsung, Sony (XBox 360), Sony Ericsson, Toshiba and Vizio.  The reality is that Foxconn assembles approximately 40 percent of the smartphones, computers and electronic gadgets that we use.  And even if you can avoid Foxconn, other manufacturers are likely no better.  Electronics manufacturers are often cited as having the worst labor practices of any industry.

I do however have a request.  Apple CEO, Tim Cook, is not listening to me but if he was, I’d ask him to take the same innovation and attention to detail that Apple uses on its products and create a supply chain like nothing anyone has seen.  Apple should be a leader in spreading living wages, fair working conditions, and sustainable business practices around the world.  If Apple steps out as a leader in this area, other companies will follow.

Apple has the financial ability to make drastic changes on a global scale.  The first thing Apple can do is rethink its profit margin.  According to some estimates, between 45% and 55% of the price of an iPad is profit.  To put that in perspective, if you buy a 32 GB iPad 2 for $729.00, $332 goes toward parts and labor and the remaining $397 is profit.  Why not reinvest some of those profits in your workforce?

Apple CEO Tim Cook has recently admitted that Apple has too much money.  With a reported $100 billion in the bank (yes, that’s a B), there has been discussion about Apple paying a stock dividend.  Apple should pass on the dividend.  First, it should reinvest in the people and economies that assemble its products. Second, it should innovate and implement a global electronics recycling program to alleviate the e-waste that it is contributing to our planet.

Just last week Apple became one of only 6 companies in the S&P 500 to have its stock value top $500 billion.  Each of the previous companies (Microsoft, Intel, Cisco, General Electric, and ExxonMobil) have since fallen from this pedestal.  Rest assured, Apple will also fall if it doesn’t change its practices and priorities.



2 Responses

  1. Angela says:

    What a great post! Very informative.

  2. Len says:

    I listened to that podcast a few weeks ago and echo your comments. At the end of the report they do a good job fact checking the story and discussing what you noted above, that you can’t really solve the problem but not buying Apple. As you noted, my hope is that companies like Apple use their marketing ability to increase my awareness as a consumer and give me choices to purchase as responsibly made products as possible. The podcast is definitely worth a listen.