By Kathleen E. McLaughlin
The San Francisco Chronicle
Sunday 16 July 2006
China's young make them, America's youth buy them - Apple probes work conditions.
Most are migrants in their own country. Born poor in rural China, they have come to this manufacturing mecca to make the latest gadgets for the world - the iPods, cell phones and laptops that, of course, they can't afford.
This is the mega-factory complex of Foxconn Electronics, trade name of Taiwanese electronics giant Hon Hai Precision Industry Corp., which makes components and devices for Silicon Valley's - and the world's - top consumer electronics brands. Foxconn counts Apple, Cisco Systems, Dell, Hewlett-Packard, Intel, Nokia and Sony among its customers and collaborators. This plant in Longhua, an outlying suburb of Shenzhen, is the world's largest electronic-components work space, exporting $20.7 billion in products last year.
Recent charges that Foxconn workers making iPods here earn low wages and work crushingly long hours has spurred an investigation by Apple and stinging criticism from around the globe. Foxconn sets the wages and working conditions, but Apple and other brands that hire Foxconn exert major influence over its operations.
That the criticism fell squarely on Apple, a company that trumpets the lofty ideals of Gandhi and Bob Dylan, was not a surprise.
"Apple is selling a lifestyle aimed at youth," said Robin Munro, research director of China Labor Bulletin, a workers-rights group in Hong Kong. "It would not probably have attracted attention if the products had been axle grease or steel-punching machines."
Foxconn, a low-key industry giant, ranks in the middle among China-based electronics-makers for its wages and working conditions, according to labor organizations. Here in Guangdong province, low wages, long hours and crowded housing are common.
"It's quite normal to have these kinds of working conditions in China," said China Labor Bulletin's Patrick Poon.
Foxconn denied allegations made in two British newspapers that its workers earn $50 a month in "sweatshops" making Apple's iPods. Company officials said workers make at least the Shenzhen minimum wage, $72.50 per month, which increased this month by $15. The company did not respond to repeated requests for more specific information.
Incomes vary widely in China, where the communist government is scrambling to address growing social unrest caused in part by huge pay disparities. Farmers in central and western provinces earn on average $400 per year or less, while workers in large urban areas like Beijing and Shanghai typically make four times as much, according to government statistics.
A recruiting poster tacked to a utility pole near the factory's main gate tells the story in black and white. Foxconn, it says, seeks 16- to 21-year-olds to work in production for $72.50 to $80 per month, plus housing and meals, and hourly overtime. Most workers are under 25. Just a few miles away in Hong Kong, and in other richer nations, that's the target demographic for iPods and other consumer tech products with hefty price tags.
On a hot Saturday outside the factory as workers broke for lunch, several spoke about wages and factory conditions. Neither Foxconn nor Apple responded to requests to go inside the factory, which is fenced, guarded and off-limits, like most big production complexes.
About a dozen Foxconn factory workers interviewed said they earned $120 to $140 per month, about half of that from overtime. They included young women building Sony laptops, others making Nokia cell phones and one iPod assembler. Many were reluctant to speak and would not give their names for fear of repercussions.
Most workers are on the job more than 40 hours a week. Since these young men and women are not locals, the base salary does not justify coming all these miles to work. Most are here to toil and send money home to struggling families. They're not here for a social life.
An estimated 90 percent are part of China's massive, illegal migrant workforce. They leave inland, poorer farming provinces where work is scarce and head to coastal areas in the south where factories produce the world's consumer goods. Though China has promised to reform its rigid residence permit system, as of now only a few white-collar professionals can move easily from city-to-city for work. Everyone else can legally work only in their hometowns, where jobs are scarce. Central and local governments ignore this migration, which has resulted in a 120 million- to 150 million-strong workforce responsible for building much of the country's new wealth.
"They're not sharing proportionally in the benefits and profits in this huge globalization effort," Munro said. "They're just doing the work. The only reason they can survive in these cities is because all they do is work."
The migrants eat in factory canteens, sleep in factory dorms and in their few days off a month, "all they can do is walk around and look at the prosperity" they helped create, Munro said.
At Foxconn, even the housing benefit is in danger. Some 2,000 employees have already left the factory after learning they would be charged for their rooms starting this month, just as the minimum wages were set to increase, according to the Institute for Contemporary Observation, a migrant workers rights group.
Shenzhen, where the institute is located, is a city of migrants. Of its 12 million residents, fewer than 2 million hold a legal residence card. The rest are ineligible for health care, education or social security benefits from the government, even though they are the driving force of the economy.
At Foxconn, like most other factories, they come to work hard for a year or two, then return home or move to other factories. Overtime, sometimes 15 to 20 hours a week, which is more than is legally allowed, is the norm. There was some inconsistency among the workers interviewed as to whether overtime is voluntary or required.
One worker, a 19-year-old from Sichuan province, 700 miles west, smiled coyly and mopped sweat from his brow when asked if he sends home his $140-per-month wages. Not really, he said. He's spent a lot on having fun in his few nonworking hours. Fun means beer and cigarettes.
An iPod assembler, a 20-year-old with an easy grin, described factory housing, where hundreds of workers share common rooms, bunk-style, in large dorms. It's 96 degrees, and the dorm has no air-conditioning, said this worker, who earned about $130 last month for working as much as 12 hours a day. The factory floor is air-conditioned, however, so working a Saturday shift rather than resting in the hot dorm is an easy choice.
The latest iPods cost around 3,400 yuan in China, or $420, at least $20 more than in the United States, where the 60 GB iPod retails for $399. They're priced higher here because the brand appeals to the country's wealthiest young consumers.
The factory wages and work hours may be the norm, said Munro, but the situation nonetheless is unacceptable. The cost of living in southern China has skyrocketed 300 to 400 percent over the past 15 years, he said, while average worker wages have risen just 13 to 14 percent.
The all-work lifestyle is evident at Foxconn's mega-site. These workers aren't rushing off on Sundays to Happy Valley, the giant amusement park a few miles away, and they're not traveling the 20 miles to Hong Kong to go shopping. They're buying 10-cent ice-cream bars and iced water during their brief Saturday breaks, then trudging back to work.
The iPod issue intensified interest in China's labor conditions and, in particular, in how Western companies fail to hold suppliers to high standards, said Stephen Frost, a founder of the research group Corporate Social Responsibility in Asia.
"The bottom line is that it has drawn Apple into finally taking seriously its responsibility in Chinese supply chains," Frost said. "Apple is well behind the game on this."
Apple spokesman Steve Dowling said the company has begun a thorough audit of Foxconn's factories and will not tolerate subpar working conditions.
"Apple's supplier code of conduct sets the bar higher than accepted industry standards, and we take allegations of noncompliance very seriously," Dowling said in a written statement.
However, Frost said, Apple ought to follow the example of other US companies that have adopted training programs for factory managers and others in charge of operations where they contract for labor. The garment industry learned this lesson the hard way a decade ago when it faced similar allegations and consumer boycotts.
Estimates of Foxconn's Longhua workforce vary. Some groups say it has 200,000 laborers; Foxconn disputes the numbers, saying in a news conference last week that the whole company has fewer than 200,000 employees worldwide. Labor rights groups argue Foxconn is splitting hairs, arguing that the company has several subsidiaries and a total of more than 350,000 employees.
By any estimate, the factory complex is big, and the demand for electronics and laborers to build the products shows no sign of abating. Southern China is facing a major labor shortage - a need for an extra 1.5 million workers, by some estimates - because many are choosing to stay on the farm. Still, new recruits linger at Foxconn's factory gates.
"The fact that Chinese workers are willing to work for these kinds of wages doesn't make it right," Munro said. "Ultimately, it is the Western consumer who has to examine their role in this."
Liu Kaiming, founder of the Institute for Contemporary Observation, has an egalitarian view of how Apple can solve this problem. Apple should lower its prices and demand Foxconn raise wages. About half of China's migrant workers now have cell phones because prices dropped, he explained.
"Apple has so much money and American consumers pay so much, they should be concerned with their workers getting so little," Liu said. "If all the workers could afford to buy an iPod, then Apple would have even more profit."