By Perry Wu
Technology made in China has a bad reputation overseas because it is often believed to be of poor quality. And foreign factories operating in China also are held in low esteem because they are believed to be exploiting lowly Chinese workers. A breaking story from a British newspaper about Apple Computer's (AAPL) factories in China does nothing to diminish either of these prejudices.

Britain's Mail on Sunday newspaper last week said that workers in Chinese factories that produce the popular iPod are poorly paid and not allowed access to outsiders. The paper also says the factories are not directly owned by Apple, but are instead run by Foxconn. Either way, the paper suggests, and I agree, that Apple is ultimately responsible for what happens at the factories that manufacture its goods.

Macworld UK says of the original Mail on Sunday article (which is not published online, but you wouldn't know that based on the large amount of people chatting about it on the Web):

"The report claims Longhua's workers live in dormitories that house 100 people, and that visitors from the outside world are not permitted. Workers toil for 15-hours a day to make the iconic music player, the report claims. They earn 27 [British pounds] per month. The report reveals that the iPod nano is made in a five-storey factory that is secured by police officers. Another factory in Suzhou, Shanghai, makes iPod shuffles. The workers are housed outside the plant, and earn 54 [British pounds] per month - but they must pay for their accommodation and food, "which takes up half their salaries", the report observes."

In response to the article, Apple says it, "does not tolerate any violations of its supplier code of conduct which are posted online."

I'm no fan of big corporations bullying workers. But I am also no friend to shoddy, sensationalist journalism. This article smacks of hyperbolic journalism in an almost "laowai/nongmin jin cheng" sort of way.

Workers live in dormitories? Good for them. I've worked in the offices of Chinese companies that also give white-collar workers dormitories–and they provide showers.

Visitors are not permitted into the factory? Since when were you able to tiptoe around the vats of beer at Anheuser-Busch's brewery in Williamsburg, Virginia? Or when was the last time you showed up at Microsoft's compound unannounced in Redmond and expected the royal treatment?

And the workers toil in "a five-storey factory that is secured by police officers"? Is that to keep the workers inside or the hoi polloi outside? Maybe they are police officers, but chances are good the journalist made a common "laowai" mistake and assumed that the "bao'an", or rent-a-cop security officers, were instead "jingcha", or official police.

27 British pounds per month is the price of a few pints for you and your friends in an English pub, right? However if the workers did not have to pay for the dormitory, that is a decent, albeit low, wage. The journalist should instead wonder why the buying parity of Chinese and Britons is so lopsided and ask Apple to reduce its high-priced iPod devices. Put this in perspective: a decent 512mb MP3 player in China costs US$35, while the same sort of device in the United States can cost US$110. Yet a McDonald's Big Mac in China costs about US$1.50 while the same dead cow sandwich costs US$2.50. I'm no Myron Scholes, but the differences in the ratios shows you that you can not make a valid argument between China and Britain based on the buying power of British money in Britain.

Corporate social responsibility is important to any company operating in China. But the same type of ethics extend to newspapers who wish to antagonize for no other reason than to attract eyeballs. It should be the newspaper's job to promote good fact-finding and sources. One of the journalist's sources for the article was a security guard outside the factory who said mostly women worked at the company because, "they are more honest than male workers". Thank goodness we had such an authoritative figure to let us know about the machinations at the factory.

If I sound like an apologist for Apple, let me tell you that I never bought into their iPod fad and I think they will always be a we-had-a-large-market-share-in-the-eighties company. And if I sound like an apologist for China, let me tell you that there's nothing better than waking each morning and looking at my American passport.

But what I do not like is ignorance, and poorly researched sensationalist articles do nothing to make the world a better place. If Apple does terrorize its workers, give us better reasons to believe. And if they don't, the journalist should be fired and the paper should apologize to the security guard for interrupting his nap time.

About the author:
This article originally appeared on ChinaTechNews.com. Perry Wu is a writer and correspondent for ChinaTechNews.com and can be reached here at the site. Perry Wu does not hold any positions, long or short, on any of the Chinese or American company securities mentioned in this article.

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4 Responses to “Hyperbolic Apple iPod Factory Woes”

1. By Paul Wall – June 26th, 2006 at 10:24 am

   Fair enough, the article was sensationalist. One question: would you allow your 16 year old daughter to work at Foxconn? If so, end of story. If not, then you're a hypocrite. Keep massaging your American passport.

2. By Puzzled – June 26th, 2006 at 5:11 pm

   don't understand why ChinaCSR enlisted this article in it's newsletter. Talk about ignorance, the author simply showed not only his/her ignorance but arrogance as well. it's called viewpoint, but there's no point in the article at all. i only plain complains which help no one.

3. By Low – June 27th, 2006 at 7:35 pm

   I think the article is valid, wage comparisons are misleading due to exchange rates and cost of living issue, but the figure quoted is about half the normal factory wages in the area around Foxconn.
   Dormitories are fine - better than them needing to find their own accomodation - since almost all workers are migrants from other provinces. How many per building is irrelevant -how many per room is the issue.
   Overtime - I've experienced workers leaving because they were not given enough overtime ! The migrate to Shenzhen etc. to earn - and will work whenever the opportunity is there. Limiting OT is important for health - but suggesting OT is forced on workers is almost a reversal of reality !
   Compliance needs very clear thinking and the full facts on the ground to judge - from overseas it is too imagine exploitation that is not there.

4. By C. Mil – October 5th, 2006 at 1:32 am

   Where and what other factories build iPods? Do different factories build different models / versions or sizes?

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