You raised an interesting point that China may try to make a distinction between the rich Southeast and other poorer areas in the country. Practically, it may be a good idea. Remember the snowstorms during the Lunar New Year in 2008? Lots of migrant workers were unable to go home, and there were riots in many major train stations in Canton. Most of the workers working in Foxconn are not from Shenzhen, and it is good if the current jobs there can be moved to other areas where the workers are originally from. Unlike the so-called Asian Tigers, China is large enough to keep very different types of business at the same time. If this strategy works, the success in the past can be reproduced for another ten years, or even more.

Then, how should the legal framework be designed to accommodate so many different things at the same time? A suggestion can be made that while the wages are raised in Shenzhen, in other places the wages may remain at the pre-suicides level. People there might happily take it, since it means earning the same amount of money but being able to go back home every day. However, is this fair? Chinese leaders in the past (i.e. when the reformations just started) liked to say that the strategy was to make part of the people become richer, and then the rich would pull the poor compatriots up. However, twenty years have passed, and the gap in wealth has only broadened. Keeping the current Foxconn-style factory, wherever it is, means continuation of exploitation of those workers.

Therefore, a general transformation that improves the working conditions but keeps the jobs is still necessary. And I think it is possible. Compared with other populous countries like India, China has an advantage: its population is better-educated. In fact, the strike in the Honda factory might not have happened 20 years ago. A better education means that the workers know how to struggle for their rights better. It provides China with a chance to move forward: a workforce with a better quality can do something other than the merely repetitive jobs.

Of course, transformation always accompanies risk. There is no guaranty that a departure from the current practice will do more good than harm in the long run, not to mention the apparent short term loss of those foreign companies pursuing cheaper workers.

-- WenweiLai - 03 Jul 2010

Thank you for offering so much information about the horrendous labor practices behind the admittedly fabulous iPhone. I will definitely boycott as the awesome price of $199 does not apply to existing AT&T customers with more than a year left on their contracts. I wonder how is it so easy to overlook a corporation's psychotic indifference to their employees' quality of life. Maybe racism? Because it's not simply that these people are in factories too far away for us to care. When thr Columbia Spectator reported on how the owners of Saigon Grill and Ollie's abused their delivery staff (paid them $2/hour, stole their tips, threatened them), the two restaurants declined in popularity only briefly, even though all their regular customers have seen and interacted with the poor employees. Maybe such indifference in favor convenience (food, magic phones) is an evolutionary trait?

You raise a wonderful point about the need for constant vigilance on poor labor practices and the equivocal results of reform. Just like at times there seems to be nostalgia in the US for the American manufacturing jobs that have departed for unionless countries with citizens with fewer options outside of $5/hour canning factories (for example, Empire Falls by Richard Russo is all about a dying factory town in Maine). In this case the country might be enacting laws more progressive than what the people are ready for, simply because many would rather have factory jobs than not. Also, the actual effectiveness of so-called reforms in China are always suspicious because who knows if anyone will actually enforce minimum wage and hours requirements in towns utterly dependent on such factories. The relatively new labor laws are more likely another method of making doing business in China increasing difficult for foreign companies producing products native companies have learned to make. Hopefully, reforms will not result in extreme unemployment as in Taiwan - how many other easily accessible, densely populated countries are left after all, especially in East Asia? Though, a loss to the increasing wealthy city of Shenzhen (lots of new technology and software companies, rapid raise in real estate prices) of some Foxconn plants due to Shenzhen's being economically secure enough to demand hire minimum wages will be a gain to the poorer, smaller coastal town of Yantai, with more lenient labor laws, I assume since almost no major industry besides tourism after the beaches finally were cleaned up and fisheries closed. (chinadaily.net/business/2010-06/13/content_9974878.htm)

PS: Foxconn is trying to prevent suicides by installing safety nets around factory and dormitory buildings. I expect knifes and ropes and belts will be soon confiscated from cafeterias and dorm rooms as well.

http://www.chinaadaily.com.cn/china/2010-05/27/content_9897080.htm

-- CeciliaWang - 29 Jun 2010

It’s been a month, and there has not been any more suicide news after Foxconn raised salaries twice in several days. Therefore, it is time to think about the influence of the series of events on the current mode of production in China.

The pressure for salary increase has been in place for a while. In 2008, China’s new labor law became effective, increasing the costs of business owners greatly. This can be seen as the Chinese government’s desire to force foreign companies to provide better welfare. In fact, the two companies involved in the recent labor incidents in China- Foxconn (Taiwan) and Honda (Japan) - are both foreign companies. I don’t believe these are the only two companies in China having labor issues; some local manufacturers like BYD are even worse in terms of worker welfare. However, incidents at Honda and Foxconn were intensively reported by the state-owned media in China. It is hard not to think that there must be something behind manipulating the public opinion. It can also be seen from the fact that after Honda and Foxconn raised salary respectively, the Chinese government immediately issued statements complimenting the moves.

Nevertheless, up to now there has been no sign that China wants to abandon the mode that has been so successful in the past ten years. For them, a raise of 30% (Foxconn’s first salary increase) is just about right. However, since Foxconn announced that it will raise the wages for another 100% by October, there has been discussion as to whether it is too much for China. Up to now, the prevailing view among commentators is that the salary in Schenzen (and maybe other cities) will go upward generally, and it will cut back on China’s edge as a cheap workforce provider.

This can be seen as the success of the workers, at least in the short term. However, will a general increase in salary and a better working condition (which means higher cost for manufacturers) happen while all other things remain the same and no one loses his or her job? Reportedly Foxconn is relocating part of its production back to Taiwan or to Vietnam, where automated facilities will replace human-intensive production lines. It still remains to be seen if other foreign manufacturers will follow suit.

Therefore, it is way too early to for the workers to claim ultimate victory. If things in China develop in the same way as Taiwan had 20 years ago, increase in wages precedes relocation, which will be followed by a steep rise in unemployment rate. Of course, it is not the only possible result, but no one knows now how the Chinese government is going to tackle the problem. This is a hard problem that happens everywhere in the world- Detroit, Taipei, now Shenzhen, and possibly in the future Hanoi.

Of course, it does not mean we should allow sweatshops to continue existing. Since bottom-up revolts from the workers will only lead to the decision to get rid of them, some regulation or control from upstream is absolutely necessary. That’s the reason why I think the protests in Apple stores are highly justified. Even the Chinese government may not solve the problem since the Vietnamese people will welcome Foxconn just as much. Only when pushed by Apple, Dell, and HP will Foxconn change its current practice.

-- WenweiLai - 28 Jun 2010

Update!

Please do not buy an iPhone or related equipment for the month of June.

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