A Follow-Up to My Earlier Post: “Dear Apple…”

I think we can now sound a note of cautious optimism in the wake of Apple’s announcement that it had asked the Fair Labor Association to inspect its factories in China. (Read Apple’s press release.) Apple’s actions come in the wake of substantial press coverage and public outcry over the working conditions of factory employees.

I also think we can assume that it was this public and media pressure and the FLA’s inspections that were responsible for even more important and potentially far-reaching changes.

Foxconn, a major high-tech supplier to companies like Apple, “made news by agreeing to raise worker wages up to 25 percent, and cutting down on excessive overtime,” according to the radio program, Marketplace.

This is clearly good news for Chinese factory workers (who will benefit from better working conditions) as well as for US manufacturing (which will benefit from fairer labor practices overseas and a more level playing field). And if you value greater ethics in business, as I do, you can also argue that this is good news for consumers, and even for Apple itself.

But the story is far from over, as Marketplace explained in its interview with Anna Han, a China trade expert. Here’s a section of that interview:

Marketplace: What do you think [the Foxconn announcement] means for other Chinese manufacturers? Will they follow suit, will it affect them?

Han: No, I don’t believe they will, unless the media exposes more of these types of practices. And it really does take the purchasers of the products, such as Apple, to require that the suppliers actually comply with fair wage and labor practices.

Marketplace: Bottom line: How is this going to affect the American consumer?

Han: Well theoretically, if the wages are increased at Foxconn, I assume some of that will be passed on to Apple and in turn passed on to the consumers. It is also possible, obviously, for Apple to hold the line on the prices of the products that it sells, and simply absorb the costs in terms of increased manufacturing costs.

Han’s statement about costs being passed on to consumers aligns with the point I was making in my earlier post on Apple, and I was encouraged to hear her say it. As she suggests, there’s more work to be done, and as consumers we should expect to both drive these changes and participate in them (through somewhat higher prices at the cash register).

Postscript. March 29, 2012. Reported by the Wall Street Journal:

“The first outside audit of Apple’s supply chain found excessive working hours and health and safety issues at its largest manufacturer, piling more pressure on the technology giant to end workers’ rights violations in China.

“The investigation of manufacturer Hon Hai Precision Industry, which is known as Foxconn, was conducted by the Fair Labor Association, a group Apple joined in January. It was based, in part, on surveys of 35,500 workers building products like iPods and iPhones at three Foxconn facilities in Shenzhen and Chengdu.”

More information here:

http://online.wsj.com/article/SB10001424052702303404704577311943943416560.html