iEmpire: Apple's Sordid Business Practices Are Even Worse Than You Think

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Wages of Misery

The justification for soup-to-nuts state funding of corporations is they provide jobs and a rising standard of living. That’s not the case with Foxconn. The high turnover –  less than 5 percent of Shenzhen’s workforce has five years or more seniority – and consistent worker accounts of being misled about wages as recruits and shorted on earned overtime pay once in the factory point to how Foxconn squeezes workers for profit. That, in turn, is the result of Apple’s strategy of squeezing suppliers. One executive who’s worked with Apple told the  New York Times, “The only way you make money working for Apple is figuring out how to do things more efficiently or cheaper. … And then they’ll come back the next year, and force a 10 percent price cut.” While Apple’s profit margin tops a rarified 30 percent,  Foxconn ekes out a puny 1.5 percent. (Though don’t cry for owner Terry Gou, who has to make do with  $5.7 billion.) In the case of an iPad, labor costs in China amount to  2 percent of the final retail cost.

Despite headlining one article, “In China, Human Costs Are Built Into an iPad,” the Times highlighted environmental hazards and overtime, glossing over wages, working conditions and abusive supervision. (Even then the Times barely scratched the surface of how Foxconn and other Apple subcontractors have trashed the environment and poisoned workers as documented in  these studies.)

SACOM found that after the spate of suicides in 2010 compelled Foxconn to raise wages (which weren’t really raises because housing and food subsidies were cut), the pay of frontline workers ranged from 50 to 61 percent of the minimum living wage depending on the city. To make a sufficient wage, workers must take on overtime shifts. But if they decline even one overtime shift they get iced out for the entire month. One student worker in Chengdu summed up the dilemma, “If there is no overtime at all, I will only receive the basic salary. Hence, I have no choice.”

This is backed up by  an eye-opening paper published in 2010 by Pun and Chang, titled, “Suicide as Protest for the New Generation of Chinese Migrant Workers: Foxconn, Global Capital, and the State.” The two academics found that for migrant workers in Shenzhen their average pay, even with overtime, was 47 percent of what city residents earned, and amounted to only two-thirds of the living wage calculated by SACOM.

Military-Style Management

To meet production goals Foxconn relies on “ military-style management … on the shop floor.” Workers say “military training” starts during the recruitment phase, such as being forced to stand in the sun for hours with no water. In Chengdu,  some workers claimed that for up to one month before work began they had to line up in formation and “stand still as a soldier for hours.” Even the  China Daily reported that the state-controlled Shenzhen Federation of Trade Unions said Foxconn has a “quasi-military management system.” According to  scholars as well as business publications, Taiwanese managers in China refer to their management style as militaristic.  

The workers believe the goal is “ to indoctrinate the idea of absolute obedience.” This reflects Foxconn founder  Terry Gou’s principles that a leader must be “a dictator for the common good,” and “a harsh environment is a good thing.”  One SACOM report stated, “New workers are always reminded by the management that they should obey all the instructions of the superiors without question.” Another apparent goal is to train the workers to stand all day.  One female worker in Shenzhen said, “We have to stand all day long. Even worse, we have to stand like a soldier. I am totally exhausted after non-stop work.”