Chinese Students and Workers Confront Global Capitalism at Foxconn

by Paul Garver

Photo by Steve Jurvetson/Wikimedia/Creative Common

If the cotton mills of Manchester exemplied 19th century capitalism and the River Rouge Ford plant symbolized capital’s 20th century stage, its early 21st century embodiment is Foxconn. In its thirty giant  factory complexes  1.2 million young Chinese workers assemble over 50% of all the electronics products consumed over the globe. Armies of young men and women perform monotonous repetitive assembly work under quasi-military discipline for at least 60 hours a week for minimal pay and virtually no social benefits.

Foxconn, controlled by Taiwanese billionaire Terry Gou, is China’s largest exporter and 60th largest global corporation with annual revenues of $79 billion (2010). Its largest corporate customer is Apple, but every other major global electronics company also contracts Foxconn for most of their final assembly tasks. Sophisticated components and parts are manufactured in Korea, Japan, Europe and the USA, shipped to China for final assembly, and then re-exported for sale mainly to more affluent consumers in the Triad (North America, Europe and Japan). About 1% of the cost of your iPhone, iPad or other advanced electronic device goes to pay the wages of the Chinese workers who assemble them, while another 1% goes to Foxconn executives and shareholders.

Foxconn is a linchpin of the most leading edge and most profitable sectors of global capital. Although its own operating profit margins are razor thin, shaved by the constant cost-squeezing of Apple and other corporate customers, Foxconn has made itself indispensable to global capital by fully utilizing its strategic position in China.

But Goliath has feet of clay. Students and scholars from Mainland China and Hong Kong have been struggling to assist Foxconn workers improve their conditions. And they are beginning to win some astonishing victories.  We can help them extend and consolidate those victories.

History

Foxconn aggressively made use of China’s first export-processing “free trade” zone in Shenzhen, where it constructed two massive factory/dormitory complexes with half a million workers, 99% of whom were “internal migrants” from other provinces. They worked and lived under such alienating and repressive conditions that in 2010 a score of Foxconn workers despairingly hurled themselves off the roofs of their high-rise dormitories in Shenzhen, briefly becoming a cause célèbre in the Chinese and international press. Foxconn installed nets around the dormitories and hired psychiatric social workers, but did not modify the excessively long hours of mind-numbing repetitive labor, or ease up on its humiliating and militarized disciplinary regime.

Foxconn did have to modestly increase its basic wage rate in Shenzhen when municipal authorities raised the minimum wage to cope with soaring living costs in Chinese coastal cities. This accelerated Foxconn’s planned relocation of new production facilities. Foxconn found eager suitors in the political authorities in Sichuan province. In record time in 2010-11, local authorities enlarged roads and airports, arranged tax breaks, and facilitated the construction of massive new factory/housing complexes in Chengdu and Chongqing to assemble Apple’s newest lines of iPhones and iPads. Now workers from inland rural villages in interior provinces are recruited at lower wages closer to home. Municipal authorities, including technical school principals, became recruiting agents to supply Foxconn with hundreds of thousands of assembly workers, “student interns” and newly graduated industrial engineers at little or nocost to the company. Within a few months in 2011, new iPad and iPhone models were flooding off the new assembly lines in Chengdu and Chongqing at fantastic rates, helping to make Apple the most profitable global corporation.

Yet Foxconn and Apple were not able to entirely escape public scrutiny. A small cluster of Chinese academics and students from both the mainland and Hong Kong have worked with pluck and determination to improve conditions for Foxconn and other Chinese workers. In the summer of 2010 over 60 students and scholars conducted field studies at 12 Foxconn factories throughout China, carrying out in-depth interviews and questionnaires with nearly 2000 workers. 14 of them worked on Foxconn assembly lines for several weeks to observe first hand. Smaller field studies were conducted again in 2011 and 2012 to ascertain if Foxconn was making any changes in response to the increased public scrutiny. The small Hong-Kong based NGO , SACOM (Students & Scholars against Corporate Misbehavior) has been the leading force organizing pressure against Foxconn and Apple as part of its campaign to improve conditions for Chinese workers in the electronics industry.

In 2011 SACOM published a public warning that Foxconn workers had reported a buildup of explosive aluminum dust in the iPod case polishing workshop at the new Chengdu factory. Foxconn ignored the report, and two weeks later a powerful explosion killed and maimed many workers. Foxconn claimed that it had ameliorated the problem, but two months later another explosion caused by aluminum dust occurred at another Foxconn factory.

Throughout 2011 and early 2012 SACOM continued to issue thorough well-informed exposes of excessive working hours, abusive treatment of student interns. harsh militaristic disciplinary measures and unhealthy and unsafe working conditions at Foxconn facilities, particularly those producing for Apple, New York Times reporters Charles Duhigg and David Barboza relied heavily on these reports for an excellent series of articles on Apple’s production supply chain in January 2012.

The improbable catalyst for this information to reach a broader American public was a one-man stage show by actor Mike Daisey, entitled “The Agony and the Ecstasy of Steve Jobs” and its much listened-to broadcast on Public Radio International‘s This American Life in January 2012. Although Daisey’s imaginative re-creation of the Foxconn story contained improbable reportorial elements, This American Life erred in presenting the re-creation as literal fact, and subsequently had to retract the show in March 2012. But Apple co-founder Steve Wozniak had attended and praised the stage show, and by January 2012 Apple had already decided to reduce the risk of bad publicity by joining the Fair Labor Association (FLA) and requesting it to conduct an audit of Foxconn factories that would be made public

Although Apple had conducted audits of its suppliers for several years, it had neither released information to the public nor intervened in any consistent way to remedy the violations of its own Supplier code that they uncovered. Making the results of the audits public does make a crucial difference, since the two FLA reports to date on three Foxconn factories with 170,000 workers substantially confirm the veracity of the reports compiled by SACOM and the team of Chinese students and researchers. From now on the reports can be used to help SACOM verify whether the changes promised by Foxconn are actually being made.

Student Interns: a Tentative Victory

SACOM had zeroed in on the particularly egregious treatment of “student interns” as an abuse that demanded immediate correction.

In 2010 and 2011 nearly 100,000 “student interns” between 16 and 18 years old supplied to Foxconn by vocational schools were required to work for Foxconn regardless of their major field of study. They were assigned to work at various mind-numbing repetitive tasks by computer (to break up groups of schoolmates). Although they receive a minimum wage (and no benefits at all since they are not covered by labor law), the student interns actually paid for the privilege of being exploited by paying school tuition and exorbitant placement fees.

Because of this insistence by an “external stakeholder” ( FLA’s coy acknowledgment of SACOM’s role), Foxconn’s policy and practices on student interns were addressed in detail in the first two audits. The pragmatic result was that Foxconn hired few new student interns in the summer of 2012 and reportedly stopped assigning them overtime, thus dispensing with a significant source of uniquely disposable and low-cost labor.

Health and Safety: Some Technical Fixes, Remediation Recommended

Most of the specific factory verification reports relate to safety. Some specific health and safety problems have been corrected and the company promises to improve monitoring practices. However the verification status report correctly insists that only functioning health and safety committees with genuinely elected representation of line operators can address ongoing ergonomic issues. It is interesting to note in this section that factory managers repeatedly pointed out that prior Apple audits had not mentioned the need to correct these violations.

Harsh Discipline and Militaristic Management

One practice Foxconn promises to eliminate is the practice of singling out workers who have been disciplined by posting their names on bulletin boards. There are various recommendations about creating a clearer way to deal with worker grievances, which currently have only the most byzantine channels for resolution. What might seem to us to be the customary deferral to a union grievance procedure is not currently available, since the “union” is controlled by management, and assisting workers with individual problems is not viewed as part of the trade union responsibility even by higher level union officials.

Worker resistance at Foxconn is sporadic and usually individual. Many workers quit in the middle of the month (and hence receive no pay at all for hours worked). Occasionally a spontaneously organized slowdown may cause the removal of a particularly abusive line supervisor. At the beginning of 2012, in a grisly echo of the tragic suicides of 2010, one group of 200 Foxconn workers gathered on a roof in Wuhan to threaten mass suicide. They won a few concessions, but 45 of them were fired as a consequence.

Hours of Work and Overtime

The audit confirms SACOM’s reports that workers work at least 60 hours a week, more at peak periods, and often do not receive even one day off a week. Time spent at work meetings or being lectured while standing at the work station is not compensated. Overtime is compensated only in 30 minute increments – hence a worker who works 29 minutes overtime is not compensated at all, and one who works 59 minutes is paid only for thirty.

Foxconn is committed to reducing the work week to 60 hours, which would comply with Apple’s lax Supplier Code, but not with Chinese law, which limits overtime to 36 hours a month. Foxconn promises to try to observe China’s law on overtime work by July 2013. The problem for Foxconn is that cutting the workweek to 49 hours would require hiring thousands of additional workers and building more dormitories. While Foxconn theoretically accepts the FLA’s promise that workers less stressed by overlong hours will be more productive and easier to retain, it is not confident that Apple and its other corporate customers will pay higher costs for assembly to compensate Foxconn. Therefore the Foxconn CEO has begun to publicly speculate about robotizing some of the production lines or outsourcing more work to countries like Vietnam with less stringent laws.

On the other hand, many migrant workers in Shenzhen also fear that a reduction in overtime hours without a major hourly wage increase will lead to an unacceptable loss in total pay. Since many of them expect to work hard simply to earn money in Shenzhen to take “home” and do not expect to establish a family life in an area where they lack social benefits and political rights, they may not highly prize winning free time away from work.

Unions and Collective Bargaining

The audit reports confirm that most Foxconn workers regard unions as useless and irrelevant, and are generally unaware whether or not a union exists at all. In all cases where a “union” does exist, all the members of the union committee (save two “worker representatives” selected by management) are themselves managers or supervisors, and the union chairperson is normally the company’s director of human resources. FLA recommends only gradual change that would permit some workers to be elected to union committees by 2014 (curiously recommending that this be done in the presence of observers from the union-averse Apple!).

Since workers are not represented through the “union,” problems like the relation between pay and overtime work that would normally be addressed through collective bargaining seem insoluble. This would seem to offer an opening for involvement of institutional trade union structures. In the aftermath of the successful strike at the CHAM Honda transmissions plant in 2010,Kong Xionghong, vice chair of the Guangdong provincial union federation, did support the workers in bargaining a major wage increase, and followed by supervising an election for new local union representatives. Sympathetic outside observers such as myself acclaim each small step taken towards reforming the Chinese trade union bureaucracy, but as yet there is little indication that Chinese trade union structures are able or willing to take any constructive role on behalf of Foxconn workers.

In the absence of real unions, Apple could choose to have SACOM and other pro-worker NGO’s access to Foxconn factories to train workers in labor rights. Hewlett-Packard did agree to such workshops at two of its suppliers’ factories in China three years ago with some positive results.

NGOs like SACOM are committed to a long-range strategy of building workers’ own self organization rather than merely providing external support to their struggles. In an extraordinary document of 23 March 2012 entitled “Give Apple workers a voice in their future,” SACOM joined with other international NGOs and the ITUC (the umbrella organization of global labor unions) and the International Metalworkers’ Federation (IMF – the global union alliance that includes electronics workers) to point out that independent trade unionism and collective bargaining trump external audits and corporate goodwill in ensuring labor rights.

As useful as Mike Daisey’s presentations or FLA audits may be, they are based on an inadequate understanding of the dynamics of global capital. At Foxconn and Apple we are not dealing with isolated Dickensian “sweatshops,” but with a global production system at the core of contemporary capitalism, Apple cannot credibly threaten to dump Foxconn as a supplier, nor are Apple or the other global electronics corporations likely to stop demanding the lowest prices from their suppliers. This constant downward pressure on costs implies the continuation of inadequate wages and working conditions for Foxconn and other electronics assembly workers.
What Can We Do?
In  a meeting with the San Francisco Labour Council. Chen Weiguang,  chairman of the Guangzhou Municipal Federation of Trade Unions. proposed that American workers support reforms at Foxconn by demanding that Apple pay a higher price to Foxconn for assembling its products. If in fact American and European consumers could be organized to demand that Apple and other global electronics giants agree to pay more to Foxconn and other suppliers so that their  assembly workers can be better paid without excessive overtime work, this would be help facilitate the process of collective bargaining and union reform in China.

We  need new creative and militant tactics to forge bonds of solidarity between workers and consuners on the global level. Imagine that organized consumers of electronic devices in North America, Europe and Japan could force Apple to reallocate $5 of the purchase price of an iPad or iPhone from its swollen corporate profits to compensating those who assemble them in Chinese factories. For those workers it could mean the difference between despair and hope for the future. It might even help rebalance the global economy by raising mass internal purchasing power within China to reduce China’s addiction to exports. Or are we too addicted ourselves to cheap new electronic gadgets (not unlike the “Opium Wars” that enslaved China to the West for many decades?) to reclaim a moral vision of human solidarity?

How do we create an organized movement of solidarity that links workers with global citizens to demand structural transformation of global capitalism? We need to combine the vision of a 21st century Marx and the passion and bravery of the students and scholars who are organizing in the crucible of contemporary global capital.  For an impressive start of such a synthesis, consult the articles listed below by Pun Ngai and her colleagues in Hong Kong and by American scholar-activist Eli Friedman in the bibliography below.

Bibliography
Pun Ngai and Jenny Chan, “Global Capital, the State, and Chinese Workers: the Foxconn Experience,” MODERN CHINA, 38(4) 383-410, 2012 SAGE Publications

Pun Ngai and Lu Huilin, “The Foxconn Production Model and the New Era of Student Workers,” Industrial Democracy in China, China Social Studies Press, Shanghai and Guangzhou, China, 2011

Charles Duhigg and David Barboza, “In China, Human Costs are Built Into an iPad,” New York Times, January 25, 2012

Eli Friedman, “China in Revolt”, Jacobin Issue 7-8 (2012) , http://jacobinmag.com/2012/08/china-in-revolt/

Fair Labor Association, Foxconn Status Verification Report, August 21, 2012. www.fairlabor.org/report/foxconn-remediation-verification

SACOM, “FLA Audit Shows Some Policy Changes at Foxconn but Few Improvements for Workers,” August 24, 2012, www.sacom.hk

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6 Responses

  1. [...] SACOM, “FLA Audit Shows Some Policy Changes at Foxconn but Few Improvements for Workers,” August 24, 2012, http://www.sacom.hk September 1, 2012 by paulgarver http://talkingunion.wordpress.com/2012/09/01/chinese-students-and-workers-confront-global-capitalism… [...]

  2. Very interesting summary and analysis of the Foxconn situation and the broader context. Thanks for sharing.

  3. Paul Garver is fully supporting the international labor and trade union campaigns targeting global capital, notably Apple. Thank you so much for your solidarity support!

    Appendix: Participants of the Foxconn Research Team, 2010-2012

    1. China University of Political Science and Law
    2. Cornell University
    3. Guangzhou University
    4. Jinan University
    5. London University
    6. Nanjing Agricultural University
    7. Nanjing Normal University
    8. Nanjing University
    9. National Sun Yat-Sen University
    10. National Taiwan University
    11. National Tsinghua University
    12. Peking University
    13. Peking University of Science and Technology
    14. Renmin University
    15. Shanghai University
    16. Shih Hsin University
    17. South China Agricultural University
    18. Sun Yat-Sen University
    19. The Chinese University of Hong Kong
    20. The Hong Kong Polytechnic University
    21. Tsinghua University
    22. Tunghai University

  4. [...] background, see my recent article , where I had prematurely announced a tentative victory on reforming the abuse of student interns in [...]

  5. [...] background, see my recent article , where I had prematurely announced a tentative victory on reforming the abuse of student interns in [...]

  6. [...] being rushed into production.  Talking Union has also recently posted a background article on how Chinese workers and students are confronting global capitalism at Foxconn, the major link in Apple’s global supply [...]

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