Thursday, August 31, 2006

An Audacious Electronics Contractor in China

I was shocked to hear that an electronics contractor that makes Apple’s iPod in China has sued a Chinese financial daily for telling the truth about its alleged abuse of workers.

FoxConn, a Taiwanese outsourcing contractor that makes parts and equipment for major electronic brands, including Apple, apparently got caught with its pants down when it’s laborers were forced to work excessive overtime hours. Instead of taking corrective action, as it is obligated to do under Apple’s code of conduct, the company when to court in the city of Shenzhen in southern China and sued the China Business News for defamation, demanding $3.8 million in damages, according to Reuters.

FoxConn, a subsidiary of Hon Hai Precision Industry, is shooting itself in the foot by taking this action. As US public awareness rises about rampant labor abuse in electronic factories in China, smart contractors should be cleaning up their act to become more attractive suppliers. Their customers, giant multinationals like Apple, HP and Dell, are slowly getting serious about corporate social responsibility – and protecting their reputations as nice guys who run a clean and humane operation.

This is a human rights issue. The uncountable droves of young Chinese peasant women who pour into the Pearl River Delta are happy to get coveted jobs in the prestigious electronics industry. They don’t know any better when factory owners force them to work marathon shifts, far longer than the national labor law allows. I’ve interviewed girls who say they work up to 18 hours at a stretch on the assembly line when their factories get behind on production schedules.

It’s abusive and illegal, and any American company who doesn’t make its best efforts at rooting out this abuse in their supply chain should be taken to task. Apple reportedly took well-meaning steps to address the problem at FoxConn earlier this month, which makes it even more of an outrage that the Taiwanese contractor is trying to kill the messenger in court.

Labor abuses are widely known and reviled in textile and sports shoe sweatshops around the globe, but it’s only recently that a few courageous non-profit advocacy groups in Hong Kong and in southern China have shined a light at the situation in electronics factories. It’s long been a taboo subject to probe because of the Teflon coated reputations and economic influence of brand makers, who don’t really make much of anything themselves anymore. But the dirty little secret is that they’ve all been outsourcing their manufacturing to the lowest bidders among these contractors – some of which are based in Silicon Valley.

The human rights violation has been invisible behind the walls of the “clean rooms” in these impressively shiny, spotless factories. The girls often live two-to-bunk inside the plant compound, taking turns working 12-hour shifts while their bunkmates sleep, six and seven days a week. Once they’ve been around long enough to realize something’s terribly wrong, they find they can’t do much about it. Complaining risks the cancellation of their labor contract and sends them back to their impoverish villages. Getting together to form a committee or God forbid a labor union is impossible. Only China’s official labor union has the right to organize factory workers, and it’s an organ of the ruling Communist Party, which promotes capitalism but quashes the right to assembly to keep an iron grip on political power.

I don’t know all the details of the FoxConn case, but I know the context. I’ve talked to factory managers who make contorted arguments that the excessive overtime shifts are perfectly legal because local labor offices have given them official dispensation to waive the protections mandated in the national labor law. Their clients, the big brand makers, can in turn say that their overseas labor practices are in line with local law. Only their corporate codes of contact, which are not standardized and next to impossible to enforce, set boundaries for labor practices.
Apple should now do what’s known in business jargon as “best practices.” It should take transparent steps to resolve the problem at FoxConn. Its code of conduct compliance team should disclose the details of the case and submit a report to an organization like Business for Social Responsibility, which can used the case study to educate other companies on the right thing to do. That will help level the playing field and equitably spread the costs of safeguarding human rights in China across the electronics industry. And maybe it can make a dent in the systemic corruption that fosters abuses by the people who make the computers and other electronic tools we buy.



Blogger ChinaLawBlog said...

I think this lawsuit was flat out silly and will cost FoxConn (and Apple) more in PR blowback than they could ever hope to gain from it.

11:21 AM  

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