The Nightline special on Foxconn and Apple was an interesting look inside the world of electronics manufacturing in China. It's interesting to me to see how the issue has exploded of late, as it seems to come and go as various issues crop up. I'm not sure what the catalyst was this time, but here we all are looking at it.
It's a weird thing for most Americans, I expect. Despite the very real issues with things like too much overtime and underage workers, most reports say that Foxconn's factories really are among the best in China. I've likened factories with dormitories to the phenomenon of company towns in America. It's not a perfect analogy, but having company towns is a phase that this country went through during its industrial development. They weren't great for workers, but they're better than subsistence farming. The same goes for Foxconn in China.
It's not that dissimilar from the sweatshop scandals that plagued Nike in the '90s. The Nightline piece had someone bring that up, though the reference was about a different point. A number of economists have argued that sweatshops are a good thing in comparison to subsistence farming, which does make them a net positive. That's certainly not to say that industrial development should get to the sweatshop stage and stop. The existence of sweatshops and cramped factories could overall be a good thing for a country, provided things continue to progress from there.
The point about Nike from the show was that the industry leader will take the most heat for industry-wide problems. I'm sure that's a factor in Apple getting most of the negative publicity for Foxconn's abuses when plenty of electronics firms use its factories for assembling devices. Apple is also fantastically profitable, far more than the rest of the companies that have contracts with Foxconn. It has the best capacity to do something good for the workers there.
At one point, a Foxconn executive says he'd gladly double the pay of the workers on the lines assembling Apple products if the company asked for it. Using Horace Dediu's numbers, the iPhone has a 55% profit margin on an average selling price of $650. He estimates that the labor cost for each phone is somewhere between $12.50 to $30. If labor costs doubled (corresponding to a doubling of worker pay), the profit margin on each device would fall to somewhere in the 50% to 53% range. That's still an incredible margin, even for a company with typically high margins on all its products as Apple tends to have.
So while it's not completely fair for Apple to catch a lot of the heat for the issue of labor in Asia, I'm OK with it. Apple responded to getting singled out by Greenpeace by taking real actions to make its products better (or less bad, really) for the environment. Now, few companies talk about their green initiatives as much as Apple does. It's been a good thing.
Apple now seems to be doing something about the labor issue. It has publicly released factory audit results in the past couple of years and now has released a report detailing all of its suppliers. Last month, it became the first tech company to join the Fair Labor Association, and it has funded the biggest audit ever of Foxconn (currently underway).
If Apple is able to get real change for the better in Foxconn, it's even better than its green initiatives in one way. The latter only affect Apple products, but if Foxconn gets better, that affects people who make many other firms' products too. I'd like to see those other firms step up in the way Apple has, but we'll see if they do in the coming months. Pressure from multinationals that make things in China is the only way things are going to keep progressing there, as no real organized labor movement is allowed by law there.
It's not ideal if the only forward progress is due to American companies pushing the Chinese companies while themselves being pushed by media scrutiny and popular outcry, but it's at least some forward progress.
No comments:
Post a Comment