Whitewash or role model? Apple's iPod report

From plastic TV set knobs to iPods; the Chinese labor advantage.

Published August 21, 2006 9:30PM (EDT)

Foxconn, the Taiwanese contract manufacturing colossus that has recently received some notoriety over labor conditions at its iPod Nano assembly plant in China, started out making plastic knobs for television sets in 1974. Three decades later, in 2005, the company recorded revenues of $27 billion, making it by far the No. 1 contract manufacturer on the globe. And while some of its more well known competitors, including Flextronics and Solectron, are watching annual revenues and market share decline, Foxconn is growing at a phenomenal rate. 2005 revenues were 62 percent greater than those of 2004!

From plastic TV set knobs to iPod Nanos, the trajectory is extraordinary. A new white paper released by the market intelligence firm iSuppli strives to explain how it all happened. A number of interesting factors are listed, but the primary reason is pretty straightforward. Über-efficient exploitation of Chinese labor. According to iSuppli, Foxconn was among the very first contract manufacturers in Taiwan to start moving its operations to China on a large scale. In 2002, according to China's Ministry of Commerce, Foxconn became China's largest exporter. No other company, says iSuppli, can compete with Foxconn's price structure.

Foxconn's symbolic status as the epitome of the so-called China price makes its role in the Apple foofaraw all the more intriguing. The affair first came to light in June when the U.K.'s Mail on Sunday released a report that blasted labor conditions at Foxconn's 200,000-worker assembly plant in Longhua, China. Apple promptly promised to investigate the situation, and on Aug. 17 published an open letter on its Web site reporting the results of its audit.

The gist: "We found the supplier to be in compliance in the majority of the areas audited. However, we did find violations to our Code of Conduct, as well as other areas for improvement that we are working with the supplier to address."

Some dormitories were overcrowded, some workers had been treated in a manner Apple found harsh, and the pay structure was overly complicated. (Ironically, although Apple found that some employees had worked more hours per week than stipulated in Apple's code of conduct, the No. 1 complaint of the workers interviewed by Apple was a lack of overtime oppotunities during off-peak manufacturing periods.) The report is remarkable for its apparent forthrightness, and jibes pretty closely with a first-person account supplied by a Salon reader a few months ago.

This intersection between a company -- Apple -- that is understandably concerned with protecting itself from any assaults on the coolness of its brand, and a company -- Foxconn -- that is the arch-embodiment of globalization's inexorable search for cost efficiencies is fascinating. Even if one dismisses the whole report and investigation as an unmitigated whitewash, there are still clear inklings of a model to aspire to. Regular audits, the constant threat of negative media coverage, transparency for the world to see through.

A civilized nation would require that all the corporations doing business under its aegis would adhere to codes of conduct that respect workers as much as Apple's purports to do. But in the absence of that, the best that we can do is just keep pointing fingers.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

MORE FROM Andrew Leonard

Related Topics ------------------------------------------

Apple Globalization How The World Works