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Apple's Foxconn Predicament


How do we square our desire for cheap products from Apple, Amazon or Dell, with the controversial working conditions at this massive Chinese factory?

One could argue that Foxconn --the Chinese factory that assembles Apple (AAPL) iPhones, iPods, and iPads, as well as the Microsoft (MSFT) Xbox 360, the Amazon (AMZN) Kindle, Motorola (MOT) cell phones, and components for Dell (DELL) computers -- is the best known of all Chinese manufacturers, which is saying a lot.

The Foxconn complex is virtually an entire economy unto itself, with just under a million employees. Half of that staff work at the company's complex in the industrial city of Shenzhen in southern China. The Foxconn factory there has a population roughly equivalent to that of Fresno, California.

Foxconn's Shenzhen plant has its own fire department, hospital, banks, shops, an Internet café, and one of the largest industrial kitchens in all of Asia. The Wall Street Journal points out that "even the plant's manhole covers are stamped 'Foxconn.'"

Foxconn is not satisfied with merely making the world's electronics, however, it wants to sell them, too. A program called "Ten Thousand Horses Galloping" (Joel Johnson of Wired magazine was "assured the name has more pizzazz in Chinese" by Foxconn PR) allows employees who have been with Foxconn for at least five years the opportunity to open their own retail electronics store back in their hometowns, with an assist from 90,000 yuan ($13,500) in seed money.

Wired's Johnson writes:

"Foxconn positions Ten Thousand Horses Galloping as a new direction for the company, one that allows it to shift into retail while tapping into the cream of the roughly million-strong workforce it has cultivated in China."

But despite the media's coverage of such optimistic programs at Foxconn, it's not the manhole covers or internet cafes and the expansion plans that capture the public's interest. Instead, when most conscientious Americans think of where their iPods or iPhones originated, we remember the spate of suicides at factory -- we recall the dark news stories about the long hours and monotonous work that drove so many Foxconn employees in a state of despair. It was these stories that first brought the name Foxconn to our attention.

In 2010, there were 14 suicides and 18 attempts at Foxconn's complex. In response, Foxconn raised salaries by one-third, from 900 yuan a month to 1,200 yuan, and set up an in-house counseling service -- complete with music therapy rooms.Buddhist monks who were brought in to cleanse the factory of evil spirits. Most famously the company put up nets around workers' dormitories, and created a somewhat dubious "no suicide" contract all employees were required to sign:

It reads:

1. If I encounter problems and difficulties after entering the company, I will ask for help from the "Employee Care Center"

2. I will not harm myself or others; I agree that, in order for the company to protect me and others, it can send me to a hospital should I exhibit abnormal physical or mental problems.

3. In the event of non-accidental injuries (including suicide, self mutilation, etc.), I agree that the company has acted properly in accordance with relevant laws and regulations, and will not sue the company.

While Foxconn created a frenzy of media coverage attempting to discern exactly what is causing the suicides -- brutal working conditions seems to be the most popular answer -- a bit of digging shows that there are other explanations completely unrelated to Foxconn that have gone largely unmentioned.

In an interview with Minyanville, Li Qiang, executive director of China Labor Watch, said there are many other factories where suicides occur.

Li noted that Yue Yuen Industrial Holdings, the largest branded athletic and casual shoemaker in the world, lost at least 10 employees to suicide over the past 10 years, with four occurring between July and October 2008.

Foxconn rival Huawei saw six employees kill themselves over the past three years.

"Many workers have psychological problems and a lot of stress," Li said. "The workers feel desperate; they cannot see a future for themselves, which makes them more likely to choose suicide."

This theory is borne out by a note left by 19-year-old factory worker Li Hai (no relation to Li Qiang), which stated that he had lost confidence in his future and that his expectations of what he could do at work and for his family far outweighed what could be achieved.

According to some, China's rapid transition from communism to quasi-capitalism has created changes some people are unequipped to handle.

"With the reforms, society has become more complicated," Dr. Huo Datong, the first psychoanalyst ever to practice in China, told the Straits Times in 2008. "Individualism has become more pronounced and psychological problems have become more and more serious."

Traditional family structures have broken down over the course of just one generation, as young people increasingly started to migrate from rural areas to far-away factories where they could earn more money.

"We see more patients in psychiatric hospitals who are there because the economic development has caused old family bonds to dissolve. People are more isolated from others," Huo said.

Zhang Chun, the director of a suicide prevention program in Nanjing, said, "Since the opening up, the rapid social changes and the clash between modern and traditional values have made many people lose their mental balance."

And Pun Ngai, an associate professor of sociology at Hong Kong's Polytechnic University, said, "The development of China as a world factory is a fundamental reason causing these suicidal cases."

The latest available figures from the World Health Organization peg China's suicide rate at 13 per 100,000 people (male) and 14.8 per 100,000 people (female).

A quick shift to capitalism can't shoulder all the blame for the rash of suicides in China though, as WHO statistics peg Cuba's suicide rate at 19.6 per 100,000 (male) and 4.9 (female).

Could the root of the suicide problem in China be due to the historical lack of access to psychiatric care?

The Chinese Medical Association says that, as of September 2009, China had 16,000 registered psychiatrists serving 1.3 billion residents -- fewer than 15 therapists for every million people.

If one were to include doctors, nurses, social workers, and psychologists, the total number of mental health practitioners comes to roughly 100,000 -- a bit of a comfort, until taking into account that clinical psychologists, psychiatric social workers, and occupational therapists do not receive any type of formal training.

Such a small number of qualified therapists is troubling in light of a study in the British medical journal The Lancet, which estimated that about 173 million Chinese -- 17.5% of the population -- have some form of mental disorder, and 158 million have never received professional help.

Psychiatrist Zheng Zhanpei from the Shanghai Mental Health Center said, "It's quite common to hear discriminatory remarks like 'insane' or 'lunatic' on TV or other media. Lots of people dare not seek medication because they have concerns that they might be labeled 'mad.' They just endure their mental illness until they explode."

The first national suicide prevention center wasn't established until 2003; however, it appears to be sadly understaffed, as only one in 10 callers get through on their first attempt.

So, is Foxconn itself creating suicidal tendencies? Is the answer (heinous working conditions) really as simple as we've been led to believe by the seemingly minute-by-minute reports and "analyses" foisted upon us?

More than likely not.

"We're treated pretty well here," said "Chen", a Foxconn worker who would only give her last name to reporters. "I think the suicides were caused by individual problems."

Then again, as Wired's Joel Johnson came to believe after his trip to Foxconn, where, he said, it was hard not to notice the nets, it's impossible for Westerners who buy Apple products or Kindles not to see how our own need to possess, our own obsession with gadgets and low prices, has created the Foxconn predicament.

"By many accounts, those unskilled laborers who get jobs at Foxconn are the luckiest," Johnson writes. "But eyes should absolutely remain on Foxconn, the eyes of media both foreign and domestic, of government inspectors and partner companies."

Nets outside the Foxconn factory.

Click here to return to "The Mythology of Apple" and our complete list of Apple stories.

Why is Apple so important to us? What's next for the iconic brand? Click here to continue reading from our series on the mythology of Apple. You'll also find a link to our video, "Is Apple a Religion?"

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