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Apple in China: Should we applaud instead of condemn?

Tom Kaneshige | Jan. 31, 2012
Apple publicly names its overseas suppliers. A New York Times article blasts working conditions there. CEO Tim Cook angrily rebukes the charges in an internal memo. Consumers call for a boycott of Apple products.

"Unfortunately, I don't think the China issue will make a huge impact" on Apple sales, says Andrew Eisner, director of community and content at Retrevo.com, a consumer electronics shopping site. "We've done surveys in the past about recycling and environmental friendliness, and the response wasn't too encouraging, either."

Shareholders of publicly traded companies like Apple also know this. Improvements cost money but don't lead to sales. That's why Apple likely won't make real changes to improve working conditions among its Chinese suppliers. Shareholders are the ultimate price watchers and lack a conscience. They are us.

Nike, Child Labor and Corporate Greed

Critics might argue that blaming the consumer detracts from the real tragedies taking place in overseas sweatshops. They will point to the public outrage of the late 1990s aimed at Nike. The apparel giant was employing 14-year-olds at its Indonesian factory, even though this was lawful under Indonesian labor laws. The bad publicity swayed CEO Phil Knight to raise the worker-age minimum to comply with U.S. laws.

The Nike case also had a lot to do with price point but in a different way. Nike could not use the tech industry's claims that cheap overseas labor is necessary to survive a pricing war. Nike shoes were being made overseas for a few dollars while retailing in the U.S. for over a hundred dollars. (Cue the aforementioned Wilde quote.)

Nike's margins were outrageous, making the company look greedy in the face of child labor.

At the time of the Nike debacle, global tech integrators told me that American companies operating in places like Indonesia and China should be celebrated, not vilified. It would be tragic for the people there if American companies pulled out their investments, they said. (These executives requested anonymity out of fear public backlash over Nike might turn toward them.)

The thinking goes that the only real way to improve labor conditions is the accumulation of capital. In other words, the reason 14-year-olds work in Indonesia lawfully is because they need to help put food on the table. That is, Indonesia's economic condition requires its people to work at a young age. As a country becomes more prosperous, working conditions and salaries will ultimately improve.

Foxconn: Best Places to Work in China?

This is true even in communist China, albeit change happens more slowly because of the political climate. Think I'm crazy? Just compare working conditions at Chinese manufacturing plants a decade ago with Foxconn in the New York Times article this month.

In the article and accompanying photos, Foxconn looks much nicer than depictions of Chinese factories of yesteryear. I attribute a big part of this improvement not only to Apple's extensive supplier code of conduct but to years of investment by American tech companies.

 

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