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The Foxconn Suicides: Why Apple Won’t Get Bruised

Submitted by on June 1, 2010 One Comment

apple in flamesWhile tragic, the suicides of the young Chinese workers at Foxconn are also inconsequential.  I say this not to be callous, however it should noted that outside of the Chinese and the broader technology blogospheres/Twitterverse, this is a non-story.    The painful truth is that the overwhelming majority of consumers simply do not care how their desired products are made.   They care deeply about price and features among other factors, but rarely, if ever, take labor conditions into account when evaluating their purchases.  This is true for the food picked in California’s fields by illegal Latino labor, or the undershirts we purchase that are assembled in Saipan and, yes, the MacBook Pro I am using right now to write this blog entry.

Outside of liberal elites along America’s coasts and certain slivers of the blogosphere, there is so little concern about this issue that it is hard to overstate.  Yes, there are surveys out there that say xx% of consumers would avoid purchasing a product made by sweat shop labor, however that same person then turns to Wal Mart or Target to buy those very products.   Those surveys should not be trusted to reflect popular opinion, as it is far more effective to study consumers’ actions rather than their intentions.

walmart_logo_expoWal-Mart is the largest company in the world and became so by lowering BOTH production and operating costs.   Those same coastal elites in the “No Sweat” movement rarely, if ever, shop at Wal-Mart.  If they did  and talked with consumers, they would discover that price is everything.   For better or worse, Wal-Mart’s shoppers are as passionate about the brand as Apple’s customers about their favorite company.

There is no regard for how the prices are so low, just that they are affordable.  No amount of sweat shop awareness campaigns will substantively change this.

Corporate Social Responsibility is a sham. There, I said it.  You don’t hear that kind of bluntness very often, so it’s time someone just put it out there.  CSR was the feel-good trend of the early 2000s when companies promoted the idea that they could “do well by doing good.”  For most companies, though, CSR is an extension of the companies marketing and public relations efforts, disconnected from bottom-line decision making.  Talk with most CSR representatives in Asia about the difficulties of their job and you will hear a consistent response as to how they struggle to build allies with the home office who focuses exclusively on the bottom line.  The CSR team’s purpose is to be there when instances like what happened at Foxconn occur and the CEO can point to the “ongoing efforts the company makes to ensure worker health and safety.”   The real truth though comes when you meet with Chinese manufacturers and hear their stories about dealing with the likes of Target, Wal Mart and McDonalds among others.  First, the foreign company’s buyers are relentless in their drive to lower costs, squeezing the manufacturer on price.  The battles over just a few pennies per item can be brutal.   Since brands cannot raise prices with consumers back home, one of their main sources of profit comes from lower production costs and that means pressuring manufacturers.  What’s amusing though, is that once the deal is signed, the brands then send in their CSR teams to the factory to ensure they are compliant with the company’s labor practices.  These two objectives are entirely contradictory.

It is impossible to force manufacturers to lower their wholesale prices to the point where they barely make a profit and then require that same manufacturer to comply with labor standards that require significant operational costs.  So when a decision is to be made as to which side prevails: buyers or CSR, the CSR team loses. They always do.


nike-logoThe most revealing evidence that these issues are, well, non-issues comes from Nike.  The world’s largest shoemaker is inaccurately labelled as “enemy number one” by many labor rights activists who confuse the Nike of the 2000s with the Nike of the 1980s and 1990s.  Twenty and thirty years ago, Nike was brazen in its public disregard of the labor rights campaigners.  Chairman and founder Phil Knight was so unapologetically callous about his disregard for the plight of the people who worked the assembly lines for his products that it is credited with lighting the spark for the entire “No Sweat” movement.    Activists on colleges across the United States lobbied their school’s sports teams and they did an incredible job raising awareness about the company’s dismal human rights record.  The campaign generated a lot of headlines, received a lot of attention and did absolutely NOTHING to Nike’s bottom line.  In 2004 meeting in Hong Kong, I asked the head of Nike’s CSR program in Asia what impact the controversy had on Nike’s sales and her answer stunned me.  Nike’s sals grew remarkably in that period, she explained, and the labor issue was never considered to be a financial issue for the company.  Here’s why: the young consumers who spent $100 on a pair of Nike shoes were not the same people who advocated a boycott of the company’s for its Chinese/Malaysian and Indonesian labor compliance policies.

The “No Sweat” advocates were never Nike consumers in the first place so their hostility did not carry over to the company’s bottom line. Fundamentally, the same is true with Apple.

Given the passion that Apple’s consumers have for its products, a consumer’s decision not to purchase that iPhone, iPad or MacBook is likely to be very complex and not based on any single factor.  I contend that if someone avoids purchasing an iPhone because of the Foxconn suicides, s/he was unlikely to purchase that phone anyway for lots of other unrelated reasons.

Finally, the decision to single out any one product or brand for labor rights violations while ignorantly consuming countless other products made under the same or even worse conditions is the height of indulgent hypocrisy.  Simply put, it is impossible to live in the developed world and avoid products made under less-than-ideal labor conditions.  To criticize Apple without acknowledging the clothes we wear, food we eat and products we use are ALL made under the same conditions is just blind ignorance.  No doubt some will retort that it is possible to avoid this contradiction by growing your own food and endlessly researching product sourcing.  While it may be possible, that level of effort is isolated to a fringe margin of the global consumer economy.

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