ON BASHING APPLE'S CHINESE iPOD FACTORIES

HERE WE GO AGAIN

(Update:  There's been a response from Apple to this story...more here from ZDNet.  Also, I've added some thoughts on the marketing issues for Apple around this topic in response to reader Kareem Mayan's comments below).

Another day, another reason to bash Apple, following last week's multi-city Apple store protests.  Macworld UK is carrying a story quoting a Daily Mail article that "reveals" the tough working conditions at Chinese factories where various iPod models are made:

"Apple's iPods are made by mainly female workers who earn as little as £27 per month, according to a report in the Mail on Sunday yesterday. 

The report, 'iPod City', isn't available online. It offers photographs taken from inside the factories that make Apple music players, situated in China and owned by Foxconn...

The report claims Longhua's workers live in dormitories that house 100 people, and that visitors from the outside world are not permitted. Workers toil for 15-hours a day to make the iconic music player, the report claims. They earn £27 per month. The report reveals that the iPod nano is made in a five-storey factory (E3) that is secured by police officers.

Another factory in Suzhou, Shanghai, makes iPod shuffles. The workers are housed outside the plant, and earn £54 per month - but they must pay for their accommodation and food, "which takes up half their salaries", the report observes."

The article is already sparking posts on Techmeme critical of Apple's labor practices.  Some examples are in order.  Good Morning Silicon Valley observes:

"Apple is likely regretting its decision to outsource the manufacture of its iconic iPod media players to Tawainese subcontractor Foxconn, now that a report in this past weekend's Mail on Sunday has revealed the Dickensian conditions under which its employees work."

Boing Boing goes one better by labeling these factories "Apple's iPod Sweatshops" in the title of it's post:

"My guess is that this is no worse than the conditions in which Powerbooks, Thinkpads, Zens, Linksys routers, etc are manufactured, but Christ, this is depressing."

And CNN Money's blog, a financial news site no less, attempts to pull at it's reader's heart-strings with:

"The next time you toss a $99 iPod Shuffle into your Target shopping cart, consider this: The Chinese worker who assembled the music player would have to work for two months to afford one..." 

To which my reaction would be, "Wake up and smell the coffee, folks". 

Almost ANY product you've bought in a U.S. store over the past decade or so has been produced in conditions equal to or worse than those cited in the Daily Mail article.

And it's not just about Apple iPods, Nike shoes or any garment, designer or not, in our closets.

It's called Globalization and economic progress. 

While the work conditions are tough for those making these wonderful products for us in huge quantities, good quality and inexpensive prices, they'll likely be less tough for their children.  And their grand-children and great-grand children likely will be almost as spoiled us our children our today.

Our parents, grand-parents, and great grand-parents did no less  for most of us in the "developed" world.  It's just been too long ago for many of us to remember.

And what these sort of articles typically don't mention is that there generally is a lot of competition among applicants to get these "low-paying" jobs.  And the "low pay" is generally viewed as better than what these folks can typically make in the local economy.

And speaking of Charles Dicken's classic Oliver Twist, published in 1838, remember that it described horrible exploitation of child labor in the country well on it's way to becoming "GREAT" Britain.

It's been a necessary rung in any step-ladder to national success through history.

Not recognizing and understanding this broader context, while consuming these terrific Chinese products, AND criticizing the U.S. companies that bring them to us, is hypocritical at best. 

We need to keep this in mind whether we're shopping at the local Apple store, Walmart, Target, or The Gap.

And if it still bothers a sufficiently number of people's sense of rightness, it may make sense for Apple to charge a higher price for "Special Labor Edition" of their iPods and computers produced in factories where workers are paid "fairer" wages. 

"Fairtrade" branding and pricing of course is nothing new.  It's been done in marketing coffee for instance.

But that would be a marketing move for Apple, kind of like the U2 version of the iPod.  Moves of that type would strictly to address any PR backlash for Apple.  As Wired News observes:

"...for a company that has staked its image on progressive politics, Apple has set itself up as a potential lightning rod on global labor standards. Sweatshops came back to bite Nike after its customers rose up in arms; and Apple can expect a similar grilling from its upscale Volvo-driving fans in the months ahead..."

"All of this should put Apple on notice that doing business in China in anything less than an exemplary fashion is a recipe for a PR disaster."

Different pricing tiers of course would be fairer to Apple's mainstream customers worldwide, who just want great products at a good, low price, not to mention Apple shareholders like yours truly .

UPDATE 2:

Reader Mark Graban, who maintains Lean Blog, and commented on my post, has a post of his own on this topic that I thought worth addressing.

First, the title of his post itself is worth noting:  "My iPod was made in a Prison?"

Reasons he feels this way include:

• "Workers live in dormitories on the site, 100 to a room, arriving with a few possessions and a bucket to wash their clothes. The accommodation may be free, but it comes at a cost no one outside the plant is allowed to visit the workers.
• 'The job here is so-so,' Zang Lan says. 'We have to work too hard and I am always tired. It's like being in the army. They make us stand still for hours. If we move we are punished by being made to stand still for longer.
• 'We have to work overtime if we are told to and can only go back to the dormitories when our boss gives us permission,' says Zang Lan. '"

On his first point, workers living in dormitories is generally not inhumane.  Most workers in developing countries come from rural areas to urban ones for better job opportunities.  Typically they find living accommodations to very expensive on an individual basis.  Dormitories offer an affordable way to live for many, when available.

My father, who emigrated from India to the Middle East almost fifty years ago, started off as a goldsmith working at one of many jewelry factories.  Initially he found living in a dormitory was the only way he could save enough to eventually earn enough to bring his family over from India.  As a result, my mother and I were separated from my Dad for almost three years after I was born.

This is a typical story for most workers in developing countries whether they go abroad for work, or go to the cities in their own countries. 

It's not necessarily a bad thing.

On Mark's second point, I particularly wanted to comment on the worker's comment:  "It's like being in the Army". 

The thing to note is that most young people in China who wanted jobs in the Chinese economy of the 1980s and 1990s joined the  People's Liberation Army (PLA).

This entry from Wikipedia is sheds some light:

"During the 1980s and 1990s, the PLA became extensively involved in creating a business empire including companies in areas not normally associated with the military (i.e., travel and real estate). Much of the motivation for this was to supplement the PLA's normal budget, whose growth was restricted.

Chairman Mao's belief that people and groups should be self-sufficient also played a role in the PLA's varied business interests. In the early 1990s, the leadership of the Communist Party and the high command of the PLA became alarmed that these business transactions were in conflict with the PLA's military mission. The business interests of the PLA were eroding military discipline, and there were reports of corruption resulting from the PLA businesses.

As a result, the PLA was ordered to spin off its companies. Typically, the actual management of the companies did not change, but the officers involved were retired from active duty within the PLA and the companies were given private boards of retired PLA officers. Military units were compensated for the loss of profitable businesses with increased state funding."

The transformation of many Chinese companies from being part of the PLA to stand-alone entities is part of the evolution of the Chinese economy.

Workers in dormitories working long hours for low wages is not just restricted to China.  Much of the Middle East was built on the back of workers from many developing countries including India, Pakistan, Bangladesh, Egypt, the Philippines, Sri Lanka and many, many others.

And the forefathers of many Americans today left their families for long periods in the home countries while they made enough money working and living in dormitories in the U.S., to establish a financial foothold sufficient to bring over their families.

The current building boom in Dubai and other Gulf economies (see this terrific NY Times article on the boom for more), is also heavily dependent on hundreds of thousands of workers from the developing world who live for years away from their families under grueling conditions, and living in massive dormitories, in order to earn relatively "low" wages.

And that boom of course is being funded by the billions we in the west spend on fuel for our cars and our way of life.

But guess what, these wages are much better than they can earn in their own countries.  And it offers a way for them to better provide for their families, and perhaps earn a better life for their children.

I don't mean to press this point, but it's really, really important to remember whenever folks in the west feel "sorry" for workers in developing countries.

And again, to make this discussion just about Apple utterly misses the real Big Picture.

Comments

[China Law Blog]

Actually, I was surprised by the low wages Apple is paying because those wages are actually lower than I am used to see in Chinese manufacturing. There is actually a looming shortage of women to work for such wages and it would not surprise me if the wages go up, if they haven't already.

[kareem]

Respectfully, Michael--bullshit.

When Apple uses ppl like Ghandi and Ceasar Chavez to create its brand, there's no humane argument for treating workers like dirt, regardless of conditions in the manufacturing country.

Kareem

[noah]

In response to Kareem: Marketing is marketing, and nothing else. I can hardly take people seriously who make their purchasing decisions base on a sales sheet or marketing assets, and then feel they've had the wool pulled over their eyes and/or find the product’s 'image' in conflict with standard global business practices. Being a responsible consumer in a global economy means looking further than the marketing department's propaganda. Blame can hardly be placed on Apple's marketing team.

[Michael Parekh]

With all due respect back Kareem, I'm not sure Apple's "treating workers like dirt". They're sub-contractor Foxconn, in this instance, is likely providing competitive wages, working environment and other benefits. Otherwise, they wouldn't be in business.

As for Apple using Gandhi et al in their advertising (and not to CREATE their brand, as you state), I'd paraphrase the immortal words from the Godfather:
"It's not personal, it's just marketing".

As I mentioned, a good chunk of the developed world's consumer products are being manufactured in China.

If critics view all Chinese workers' condition as "being like dirt", then they're free to personally boycott all good made in China.

They're likely to have far less choice in products at much higher prices.

Just singling out Apple seems unfair and Quixotic.

[Michael Parekh]

SEVERAL TYPOS GOT THROUGH IN MY PREVIOUS COMMENT. HERE'S THE CORRECTED VERSION:

With all due respect back Kareem, I'm not sure Apple is "treating workers like dirt". Their sub-contractor Foxconn, in this instance, is likely providing competitive wages, working environment and other benefits. Otherwise, they wouldn't be in business.

As for Apple using Gandhi et al in their advertising (and not to CREATE their brand, as you state), I'd paraphrase the immortal words from the Godfather:
"It's not personal, it's just marketing".

As I mentioned, a good chunk of the developed world's consumer products are being manufactured in China.

If critics view all Chinese workers' conditions as "being like dirt", then they're free to personally boycott all good made in China.

They're likely to have far less choice in products at much higher prices.

Just singling out Apple seems unfair and Quixotic.

[kareem]

Noah, I disagree. If marketing exists in a vacuum, you run significant risk of backlash when other business practices don't align with what your marketing wonks espouse.

The best marketing is holistic, and consistent with the practices of other business units in a company.

It's easier than ever to gather and disseminate information, which means it's more likely that the skirt will be lifted up on companies' misaligned marketing and practices.

Opacity leaves a bad taste in customers' mouths; worse, using symbols like Ghandi and Chavez makes customers feel misled and stupid, which is never a good strategy.

[kareem]

Michael-

Their sub-contractor Foxconn, in this instance, is likely providing competitive wages, working environment and other benefits. Otherwise, they wouldn't be in business.

I don't buy the purely rational market argument. First, Evidence suggests that those workers are underpaid relative to market levels. Second, there is evidence to suggest that treating employees above market standards is more profitable for a business. I would argue that when ppl are underpaid and have shoddy work conditions, this is such a situation.

Agreed that it's ridiculous to pick on Apple. They've created a great brand with a loyal following, but it's inauthentic to have systems grossly misaligned like they seemingly have. BS is becoming increasingly less tolerable these days, and it behooves smart companies to pay attention to this trend.

Kareem

PS> Ghandi and Chavez were used to *help* create the Apple brand, not create it alone. But that's nitpicking and clearly not the thrust of my position. ;)

[Mark Graban]

"It's been a necessary rung in any step-ladder to national success through history."

Sure, conditions got better in the UK and US, but how will they improve in totalitarian China? People there aren't able to form unions. Some workers paradise, indeed.

[Michael Parekh]

Mark,

You're assuming the status quo remains constant.

That's not what the history of nations has shown us over time.

Thanks for participating in the discussion.

[Simon]

Both the US and UK went through similar working conditions. In fact all developed countries went through the same stages and were, in short, much, much worse.

Nor were unions necessarily the primary drivers that led to improvement of conditions where reformers outside any organised union. The lack of unions has never been a huge hindrance to the development of working conditions.