Apple’s supply chain

China is Apple’s second biggest market overall after the United States. The expansion of the company’s presence in China isn’t able to keep up with the rapid increase in demand from the burgeoning middle class across the region. Yet, the company’s exceptional growth in the far east has been overshadowed by labour rights issues, a number of suicides at its main supplier, Foxconn, and growing criticism from human rights lobby groups. Many people have been asking, what is the human cost of Apple products?

Suicide nets at Foxconn Longhua Shenzen

Tim Cook, Apple’s CEO, recently took to the assembly lines of Foxconn, its main supplier in China, in an effort to allay the increasing torrent of criticism the company is facing over poor working conditions in its supply chain’s operations. Apple recently called in the independent Fair Labor Association (FLA) to observe their Chinese manufacturer’s adherence to their own code of conduct, which aims to stamp out excessive working hours, remove discriminatory policies and prevent child labour.

Will this make any difference? Any improvement in Foxconn’s working conditions is going to increase the cost to its customers. These customers include Apple, IBM, Nintendo, Microsoft, and the list goes on… Foxconn have already asserted they will cap the working week of its employees at 49h, but this means capacity will have to be built somewhere else to cover the fall from the present 60+h per week. Someone will have to absorb this cost.

Once the storm passes, back to BAU. When this criticism passes and the publicity maelstrom calms, it is unlikely that we will see any real change in business practices at Foxconn. The issue is an economic one, and changes will not take place over night. Cheap and hard working labour is one of the reasons we are seeing such growth in China. The only way we will see real change on this issue is if the press continues to publish stories, and senior execs at the large multinationals continue to feel pressure from all sides.

The phrase goes, “what is out of sight, is out of mind”, and as long as the end customers of these multinational companies keep buying the product and don’t engage with these issues, we are unlikely to see any real headway made.

Corporate responsibility is being taught more and more in business schools across the world. Combine this with how much more connected we are with others across the world through the internet, we are becoming increasingly more socially aware. As we’ve recently seen from the effects of the Kony video, we are quick to feel the plight of individuals we may have never even thought about before. Does this means that our generation is more globally sensitive and therefore, likely to be more socially responsible when we sit in positions of responsibility?