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Maybe We Should Stop Blaming Apple for the Woes of Chinese Factory Workers

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As the world’s largest company, Apple (AAPL) has become, much like Wall Street banks, a symbol of the kind of corporate gigantism that Occupy Wall Street protestors and their sympathizers rail against.
Among the myriad controversies the Cupertino-based company has faced this year, none has caused as much consternation or created as much media coverage as allegations that it had commmited labor abuses in China.
The site of the media storm is, of course, the Foxconn factory in Shenzhen, which, though it also assembles products for Amazon (AMZN), Sony (SNE), Dell (DELL), Microsoft (MSFT) and Hewlett-Packard (HPQ), has become synonymous with Apple.

Harsh working conditions at the Foxconn factory were exposed in a searing This American Life episode led by monologist Mike Daisey, although it turned out that Daisey had made up pretty much everything he claimed to have witnessed in Shnzhen.
Even so, there’s no doubt that working conditions at Foxconn are tough – 32 workers threatened to kill themselves in 2010 over harsh working conditions, and earlier in January, another 150 did so again because of a severance pay dispute.
The negative publicity Apple has received because of Foxconn even prompted CEO Time Cook to pay a visit to a Foxconn factory in Zhengzhou, China that makes its iconic iPhones.
To be clear, Apple is hardly the first mega-corporation to be accused of running factories with low wages and dangerous work conditions. Nike (NKE), Gap (GAP), Walmart (WMT) and McDonald’s (MCD), for example, were all criticized by Naomi Klein in her bestselling book, No Logo, for their labor practices like the creation of sweatshops in the Americas and Asia.
While many of us may feel guilty about buying a product that we think contributes to the suffering of Chinese workers, should we really be? And should companies like Apple be blamed? Perhaps not, says Leslie T. Chang of New Yorker.

The simple narrative equating American demand and Chinese suffering is appealing, especially at a time when many Americans feel guilty about their impact on the world. It’s also inaccurate and disrespectful. We must be peculiarly self-obsessed to imagine we have the power to drive tens of millions of people on the other side of the world to migrate and suffer in terrible ways. China produces goods for markets all over the world, including for its own consumers, thanks to low costs, a large and educated workforce, and a flexible manufacturing system that responds rapidly to market demands. To imagine that we have willed this universe into being is simply solipsistic. It is also demeaning to the workers. We are not at the center of this story—we are minor players in theirs. By focusing on ourselves and our gadgets, we have reduced the human beings at the other end to invisibility, as tiny and interchangeable as the parts of a mobile phone.

Chang’s overall point thus is that by taking a stance that says, “We need to do something to help those poor, exploited workers," we are neglecting the fact that the workers in China are human beings with agency, who “are not forced into factories because of our insatiable desire for iPods." Adding, "They choose to leave their farming villages for the city in order to earn money, to learn new skills, to improve themselves, and to see the world.”
In a review of Klein’s No Logo on the 10th anniversary of its release, Andrew Potter of Reason magazine noted that such was the impact of the book that these days, companies like Whole Foods (WFM) and Starbucks (SBUX) pride themselves on authenticity, that “from eco- to organic, fair trade to locally sourced, sweatshop safe to dolphin friendly, sales pitches that 10 years ago would have reeked of patchouli oil and set the red baiters on full alert are now thoroughly mainstream.” And so it is the case with Apple. After the public outcry over Foxconn, the company, known for its progressive image, swiftly took steps to address concerns by publishing its supplier responsibility report that outlined its zero-tolerance policy towards underage labor. That’s the power of the consumer today – we have the ability to get corporations to become socially responsible.

But while workplace safety and child labor are genuine issues we should take issue with, low wages are not. Of course, in many ways, the criticism of Apple for poor working conditions at Foxconn is part of a greater overall critique of globalization and how that perpetuates income inequalities on a worldwide scale.
But, clearly, in China, it has proven to be a success since millions of people have been lifted out of poverty thanks to foreign companies like Apple setting up manufacturing plants there.
The fact is that capital will not be invested in a country unless there it can generate a meaningful return. If China can offer a source of cheaper labor to a corporation, and give it a competitive advantage in the market, then that corporation is going to invest its capital there and build factories. Sure, workers will be earning low wages, but it will still be higher than what they had previously, and they can use the wages to attain better goods and services or education. Now, as more and more companies come into China hoping to exploit China’s competitive advantage of cheap labor, the demand for Chinese workers goes up, which thus drives wages up. Obviously, this process of development does not happen overnight, but we already see this occurring.
Sure, the workers at Foxconn are getting paid peanuts, but it’s all relative. “Very few of them would want to return to the way things used to be,” as Chang writes. Workplace safety and human rights violations are matters for concern, but wages, ultimately, are a function of supply and demand (and bargaining power, if you adopt a more Marxist viewpoint).
POSITION:  No positions in stocks mentioned.