15 Aug Behind Apple’s success
Apple’s products have been considered revolutionary in many aspects: technology, telecommunication, user experience, and business strategy. The firm’s strong brand name is well embraced globally as iPads and iPhones are used in every corner in the US, Europe and China. Together with its popularity, Apple’s financial success is phenomenal. In fact, until recently little was known about the flip side of Apple’s huge triumph. In order to generate such profits, the company has engaged in questionable labor practices. Many Apple’s factories located in China have been reported to ignore safety procedures and push their workers to intolerable conditions to produce as fast as possible. In May 2011, an explosion in a factory in Chengdu, southwest China, which killed four workers and injured 18 others, rang a high alarm to Apple’s stakeholders around the world.
Why does Apple take such business practices given that it is an idolized American consumer brand?
Apparently one incentive to outsource its manufacturing to China is the low cost of labor. A worker with college degree earning $22 a day, including overtime, is the typical type of labor that Apple can utilize in China. In addition, this cheap labor market also has a huge supply. For example, Chengdu, the city where the explosion took place, is one of 12 million people and rapidly becoming a key manufacturing hub worldwide. From a cultural perspective, human rights as well as labor conditions receive much less attention in China compared to the US. In this case, the lack of action and pressure of human right activist groups, if any, played part of problems.
One important stakeholder of Apple’s is its suppliers, who are contracted by Apple to operate the manufacturing factories. As these questionable labor practices are enforced, are they the suppliers’ responsibilities? Foxconn, a major supplier for Apple in Shenzhen, China, even went through a workers’ riot allegedly set off by a dispute over paychecks. In its statement, Foxconn disputed its workers’ accounts of below-standard working conditions. It added that the working conditions are anything but harsh and that its employees enjoyed a very good safety record and job rotation and promotion opportunities. Nonetheless, when Business for Social Responsibility (BSR) along with a division of the World Bank and other CSR groups initiated a project to test the working conditions at Foxconn, the company did not seem to be open in its cooperation. For example, it required the project participants to sign non-disclosure agreements about what they observed in the factories. A year afterwards, a Foxconn employee fell or jumped from an apartment building and within two years, 18 other cases attempted suicides.