Apple's Chinese Democracy: Foxconn Gets The iTreatment

In a small but very significant way Apple is trying to change China. It's a step perhaps no one else could make, and it's rather complicated. Let's break it down.

As part of a joint agreement with Foxconn, Apple's keystone supplier responsible for making the iPhone and iPad and other devices, the tech giant is going to hire tens of thousands more workers, restrict illegal overtime, bump safety procedures, improve worker living conditions, and make other tweaks. Reuters says it's a "landmark development for the way Western companies do business in China," which gives you a flavor of the scale and importance of this news.

The moves come after a fairly damning report from the Fair Labor Association, an independant body that Apple voluntarily invited to make an audit of worker conditions in its various Chinese suppliers. This was in response to numerous claims that illegal practices like underage employees and unpaid overtime were common, and after a long period where Foxconn's alleged suicide problem was in the headlines. Of course some of the accusations were exaggerated (ably demonstrated by the recent scandal involving actor Mike Daisey and his falsified accounts of seeing some of this illegality) and others taken out of context--with the suicide rate among Foxconn's 1.2 million employees actually being lower than the Chinese average. But the FLA did nevertheless uncover many unfortunate instances of worker maltreatment.

And that's what Apple and Foxconn are trying to redress.

That will please many Apple critics, and its the culmination of a sequence of changes that Apple and Foxconn have been making in reaction to global condemnation. For example, employee wages have risen dramatically over the last several years and Foxconn's monthly salary for its Shenzen workers is, Reuters notes, 1,800 yuan ($290) which is much more than the minimum of 1,400--and overtime pay comes on top of this.

But this is where things get complicated. It's noted that Foxconn's working conditions are already better than many similar factories in China that make goods for the Chinese themselves, and for consumers around the planet. Apple's moves are likely to bias this situation even more--and although they're made with the very best intentions, it is still an asymmetric act because of course Apple can't change every factory in China. It may set a precedent that others follow, perhaps even at the urging of Chinese workers themselves...but it won't happen immediately.

The moves at Foxconn will effectively push up the price of manufacturing, which Apple can easily absorb due to its enormous profit margin, but which other manufacturers may not tolerate. Companies like Amazon could indeed choose to take their business elsewhere, to firms which don't have the same ethical urge as Apple and Foxconn do. Which, if you think about it, will actually result in more workers suffering unfair conditions.

Plus, as some Apple critics overlook, the cost of living in China really is lower than in the U.S., so that roughly $300 goes much further than you may think it does--it's actually a living wage (for context the minimum wage in Portugal is around €485 a month--$646). By boosting this figure still higher Apple could push other workers in the same industry, and perhaps others, to protest for higher wages for themselves. And we know that the Chinese authorities aren't overly fond of social unrest.

Which makes us wonder if Tim Cook's visit to China, which included a meeting with the Vice Premier, wasn't so that Cook could work things out with Foxconn's executives and smooth any political worries in the government. After all, Apple is injecting billions of dollars of investment into China--thanks to the way Tim Cook's strategy of paying in advance to secure manufacturing facilites works--and all the money it pays its manufacturer partners does end up boosting the Chinese economy. Which, ultimately, helps bring China into the 21st century.

And this is where Apple's might comes into play. Apple is heading toward being the world's first trillion-dollar company. Where it spends its money could transform entire economies, and perhaps that's why the Chinese government is involved, perhaps agreeing to Apple's plans in order to ensure Apple keeps spending its money there instead of pursuing plans elsewhere, such as its recent investment in Brazil.

Apple is likely making these moves because Tim Cook genuinely cares about making a difference (he's already instigated a charity donation matching program for Apple employees, for example) and because, let's face it, Apple would benefit from the positive PR. Firms which also have their mass-market consumer goods made in China and even in Foxconn, like Dell, for example, haven't made these sort of moves to improve the lives of Chinese workers. And Google's stance on China, while standing against the government's stranglehold on social freedoms, hasn't done much to actually change China.

And thus perhaps, among the various facets of this news, there's something historic going on. Perhaps Apple's incentive will actually change China, even if only a tiny bit. That would proabably soothe your troubled brow as you peruse the implications of this news. Particularly if you are reading it on your iPad.

[Image: Flickr user M.I.C Gadget]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

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