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No need for guilt when buying China’s gadgets

19 Mar

The controversy over working conditions in China continued to deepen this past weekend with the revelation that Mike Daisey fabricated some of the accusations he lobbed at manufacturer Foxconn, one of the biggest suppliers for Apple and other gadget companies.

This American Life, a long-running and well-respected radio program, on Thursday retracted an episode that used material from Daisey’s off-Broadway show, The Agony and Ecstasy of Steve Jobs. Pundits are now piling on to criticize the program and other media outlets that spread Daisey’s stories – the worst of which included claims that Foxconn was illegally employing children – without bothering to check their veracity.

That’s definitely a concerning issue, but equally worrisome is something said by a New York Times reporter in a follow-up interview on TAL. Charles Duhigg, one of the reporters who worked on the newspaper’s iEconomy series in January, was asked if people should feel bad for buying iPads, iPhones and other gadgets, given that they’re made under tough working conditions.

Duhigg said he was just a reporter and it wasn’t his job to tell people how to feel, but then pretty much did exactly that:

Do you feel comfortable knowing that iPhones and iPads and, and other products could be manufactured in less harsh conditions, but that these harsh conditions perpetuate because of an economy that you are… supporting with your dollars. … You’re not only the direct beneficiary; you are actually one of the reasons why it exists. If you made different choices, if you demanded different conditions, if you demanded that other people enjoy the same work protections that you yourself enjoy, then, then those conditions would be different overseas.

In a nutshell, Duhigg suggested that in rejecting harsh working conditions domestically, the United States had exported them to other countries. Which is kind of bull.

How people should feel about their gadgets is in fact counter-intuitive to this line of thinking. When the bigger picture is taken into account, it’s perfectly fine to actually feel good for buying an iPad, Xbox or other Chinese-made gizmo.

Consider the following. Thirty years ago, only 16% of China’s rather sizable population lived above the poverty line. By 2005, the country had experienced a total reversal, with only 16% below (here’s a graph that pretty much tells the story). Things have improved even more in the past five years, with more than half a billion people globally escaping poverty. Most of them were in China.

How this happened is well known: manufacturing. Industry and construction are responsible for nearly half of China’s gross domestic product, with almost 20% of the world’s good made in the country. This has driven double-digit economic growth for three decades.

Put all of that together and the result is obvious – without China building all that stuff, it wouldn’t have experienced such a prolonged economic miracle and hundreds of millions of people would certainly still be in total poverty.

So when thinking of whether to feel guilty about an iPad or iPhone because it was made in tough conditions, it’s also important to consider the alternative – that if factory workers in China didn’t have their hard jobs, the facts suggest they’d be starving and dying.

Are working conditions in Chinese factories harsh by Western standards? Yes, but as I wrote a few weeks ago, that’s not something to feel guilty about. Such conditions are the unfortunate but necessary growing pains all countries must go through as they modernize. It’s important to push governments and companies for further improvements, but it’s not helpful to try and make people feel bad for what they buy when those purchases are in fact doing a world of good.

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13 Comments

Posted by on March 19, 2012 in apple, china

 

13 responses to “No need for guilt when buying China’s gadgets

  1. Chris C.

    March 19, 2012 at 1:30 am

    Bravo, Pete, I’ve been saying pretty much the same thing for years. Like in the Star Trek episode “A Piece of the Action”, technology and economic transfers are such that eventually less developed nations rejoin the more developed ones and may eventually demand a piece of OUR action ;)… And that it is in fact quite normal, has happened before, will happen again.

    Thanks for the refreshing heads up, nice to hear after following that Mike Daisey interview on VPR yesterday.

    PS there is something wrong with the posting system – It keeps telling me I should login (but I can’t), I had to create a new email address just for porting this.

     
  2. Parallax Abstraction

    March 19, 2012 at 10:28 am

    So basically what you’re saying is that because the people could be a lot worse off if they weren’t building the west’s electronic toys, it’s OK that these horrid conditions exist? Cripes Peter, I hardly even know what to say. I like how you cherry picked elements of Duhigg’s statements as well in order to make a point but there’s more to what he said than that. Many of the companies that employ these types of suppliers (and stuff the Apple hater schlock, I fully admit lots of other companies do it too) can easily afford to ensure that they are paid better and that the suppliers have the profit margins necessary to ensure employee safety. Duhigg also talks about how Apple could actually build everything in the US for potentially not that much more money than they’re spending now. They just choose not to.

    One of the reasons there have been so many problems at Apple plants (including two dust explosions that Apple themselves said was because of poor ventilation) is because every year, Apple tells their suppliers what the margin will be and every subsequent year, they come back and say “Now it’s going to be this much less, figure it out.” They don’t have their suppliers the financial means to properly setup the plants in many cases. Now, one can argue that the suppliers could band together and say “We can’t work with this little margin” but Apple is sitting on $100B in cash and the highest per-unit profit margins in the high-tech industry, there’s no reason why they couldn’t heaven forfend, pay a little bit more to their suppliers and make a little bit less!

    The simple fact is that if the conditions are not acceptable for workers in this country, saying “it’s different” because it’s in China is a convenient excuse to avoid having to demand change from the companies you buy your toys from. Change that in order to realise may require you to stop buying stuff you like. These are rich companies, they can afford to do better, we just simply have to get off our asses and demand it. But possibly giving up the new shiny to do so is something North American culture is not good at. I have a lot of respect for you Peter but posts like this infuriate me because they show how easily our culture will turn a blind eye and go “Well it’s not THAT bad!” when demanding positive change means we might have to sacrifice something ourselves.

    I don’t have a solution to this problem and as someone who works on IT, I’m faced every day with having to buy a lot of products that are made in China and were manufactured under conditions I don’t know about. I’m trying to seriously look into ways to better understand where a lot of equipment is sourced from and change both my employer’s and my own buying habits to support places that treat people better. Apple’s certainly not the only offender (and they’re probably far from the worst too) but no other company on Earth has a great pulpit from which to fight for change, change which by the way they can afford with the cash in their couch cushions. If you wouldn’t want your family members working in the conditions that exist in China now, there’s nothing wrong with continuing to buy products there but you don’t get to claim the moral high ground at the same time.

     
    • Parallax Abstraction

      March 19, 2012 at 10:40 am

      Despite my stern tone in that last comment, I would also like to thank Peter for writing this article because it’s given me inspiration for a post for my own blog. And it’s not just going to be repeating what I said above in an even more verbose matter but tossing out the idea of a potential alternative means to pursue the issue. Thanks for that dude. :)

       
    • petenowak2000

      March 19, 2012 at 11:31 am

      I wouldn’t say it’s cherry picking. Duhigg did a good job of playing it neutral during most of the interview, but his real feelings came out during the comments I used above. The position he’s coming from, and that his reporting is coming from, is pretty clear after that.

      The margin issue you bring up is interesting, but it’s not as simple as Apple carving off a little more for its suppliers. In the first instance, even if Apple (or whoever) increased the margins they paid suppliers, is there any guarantee the supplier would then use the extra money to improve conditions? Having lived and worked in China, I’d be willing to bet “no.” Taking shortcuts is part of the corporate culture for many businesses there (some architects there once told me construction workers often mixed anti-freeze into concrete to make it dry faster, which then made it more brittle, so eventually you’d have crumbling buildings). Why would a company like Foxconn spend that extra dough on more spacious dormitories for workers when people are already lining up in droves just to work there? That doesn’t make a lot of logical sense.

      You’ve actually touched on the solution – the real way to improve is for companies to learn how to say “no.” If the margins that Apple offers a supplier are too low, the supplier should simply refuse it. Somebody else will take it and perhaps they won’t do a very good job, in which case Apple might go back to the better-quality supplier with a higher margin offer. That’s how business works. Sure, there is a certain prestige to be gained by saying you’re an Apple supplier, but every company has to weigh whether this value outweighs the other costs, which can be that nobody wants to work there (which is certainly not the case for Foxconn), a bad reputation or whatever. China still has many obstacles to overcome before it has a properly functioning market, but there’s little doubt it has made incredible progress over the past 30 years. It’ll continue to make progress, regardless of any righteous indignation from Western consumers.

       
      • Parallax Abstraction

        March 19, 2012 at 11:46 am

        You lived and worked in China? Was that a journalism job or something else?

        The reason I bring up the margin issue is very simple: These suppliers live to please Apple. I can’t remember if Duhigg or someone else said this but in the Chinese manufacturing world, having an Apple contract is a badge you wear proudly. If Apple gives them more money and says “Spend this much to make your factories safe, we’re going to check regularly.”, who wouldn’t step up and do it? They don’t want to piss Apple off and as has been demonstrated, they will do whatever they have to in order to make money with what their given while also appeasing Apple’s demands. Apple (and indeed a number of other electronics companies) can truly just adopt the approach of “We’ll pocket a little bit less but hold these guys to the fire to make sure they do right.” It’s a really simple solution when you think about it and I only hold up Apple as the prime example because they’re so wealthy, there’s no reason they can’t and shouldn’t fix this.

        The problem with the argument of suppliers standing up to Apple is like you said, if Foxconn said “We can’t do this safely for that margin.”, Apple would simply go down the street. It’s not a question of whether or not a given supplier does a good job as you put it. iPads are very well made and they come out of the problem Foxconn factories. Treating your workers like crap clearly doesn’t always translate into a poorly made product so simply letting the free market sort this out isn’t a viable solution. Heck, the current Chinese manufacturing framework is a prime example of free markets at work (despite the irony of it being in a communist country) and that’s where all these problems are coming from.

        I don’t think manufacturing in China is inherently a bad thing, nor do I think companies should stop doing it. But the problems that are being revealed (even if they are through lying egomanics like Mike Daisey) are not hard to solve and in such a wealthy industry that largely profits off of wealthy customers (let’s face it, the iPad was not economically designed for the poor), there just isn’t a good reason for this stuff to be happening. The tech companies like Apple are the ones who have the control, not Foxconn and the like and they can afford to do better. And it’s not hard for us as consumers to demand it, it’s just that we as a people have been conditioned to believe that not having our iPad 3 on launch day is some kind of hardship.

         
  3. petenowak2000

    March 19, 2012 at 12:03 pm

    Yup, I freelanced out of Guangzhou, mostly business and travel stories. Saw a lot of the country that way. It’s an amazing place.

     
  4. Ben Klass

    March 19, 2012 at 1:45 pm

    Parallax, the situation you’re describing is known as Monopsony. (http://en.wikipedia.org/wiki/Monopsony)

    That’s the reason companies like Foxconn can’t just “learn to say ‘no’” as Peter suggests – because without Apple they would go out of business.

    Apple dictates the terms of Foxconn’s existence, and hence the terms of its workers’ conditions as well.

    Why do you think America and Canada are now characterized as “knowledge” or “service-based” economies? It’s precisely because we’ve outsourced manufacturing to countries who provide cheap labor – something Peter casually and thoughtlessly dismisses as “kind of bull”.

    Peter suggests that there are two alternatives: continue to ignore and thereby tacitly condone “harsh working conditions” (an understatement if I’ve ever heard one), or set these workers loose to face starvation and death. How about a third alternative? How about people demand that Apple use its power as a monopsony to create better working conditions for the people that produce the devices many of us simply take for granted?

    What Peter really says when claiming that there’s “No need for guilt when buying China’s gadgets” is that there’s no need to think about it. Meanwhile, an entire class of human beings are slaving away for pennies a day so that we here in North America can play Bejeweled while riding the subway on the way home from cushy salaried jobs.

     
    • petenowak2000

      March 19, 2012 at 3:01 pm

      Except in this case there is no monopsony. Apple is far from Foxconn’s only client and it’s highly unlikely the company would bankrupt without them.

       
  5. Ben Klass

    March 19, 2012 at 4:01 pm

    As Foxconn’s biggest customer, it would be hard to argue that Apple does not wield considerable influence over its Chinese manufacturer.

    (http://www.telegraph.co.uk/technology/apple/9093251/Apple-workers-in-China-get-25-per-cent-pay-rise.html)

    As the article above demonstrates, it is possible (and has indeed been the case) that Foxconn’s fear of losing its biggest customer will lead to concessions being made to workers. However, this type of action should not be confused with altruism; it is nothing more than strategic positioning to ensure future revenue streams. It should also not be attributed directly to Apple’s agency, as Foxconn’s fears and subsequent strategic action were driven not just by overt threats on the part of Apple but by a centripetal movement by the media, analysts, the public, etc.

    Just like “Kony 2012″, the issues surrounding TAL, Daisey, Apple and Foxconn can too easily fall victim to oversimplification. Journalistic efforts to clarify the facts are necessary so that debate can be informed and actions taken progressive. Yes, pointing out that $1.25/day is not the same in China as it is here is important; however, leaping from this observation to the conclusion our demand for the products of these factories has no bearing on their operation and that we therefore need not concern ourselves with the conditions in Chinese factories is highly sophistical.

     
    • petenowak2000

      March 19, 2012 at 5:55 pm

      How do you know Apple is Foxconn’s biggest customer?

       
  6. petenowak2000

    March 19, 2012 at 7:41 pm

    Wouldn’t it be funny, though, if Foxconn actually gets more of its revenue from an HP or Dell, though? (And it hasn’t been proven that it doesn’t). That would really change this whole conversation.

     
 
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