FOXCONN: ITS FACTORIES, WORK CONDITIONS AND BUSINESS

FOXCONN

The main producer of Apple’s products as well as products for other well-known electronics makers is Hon Hai Precision Industry, a multinational electronics contract manufacturer which goes by the trade name Foxconn. Established in 1974 by the Taiwanese industrialist Terry Gou, and headquartered in Tucheng, New Taipei City, Taiwan, Foxconn is the world’s largest technology manufacturer and service provider. While the company is based in Taiwan, it is the largest private employer in mainland China and one of the largest employers in the world. Foxconn ranked 22nd on the 2021 Fortune Global 500 list. Terry Gou is the company founder and former chairman. The present chairman and president is Young Liu. [Source: Wikipedia]

Foxconn makes over 40 percent of the world’s electronics products — including for devices such brands as for Hewlett Packard, Sony, Dell, Nokia and others. The company's annual revenue reached US$180 billion in 2021, with an operating income of US$5.8 billion and a net income of US$4.17 billion. The company has total assets of US$117 billion and a total equity of US$47.2 billion.

Fxoconn had 1,290,000 employees in 2020. It main services are electronics manufacturing and services. It main products are electronics, electronic components, PCBs, PCB components and computer chip. Among its subsidiaries are: Fii Foxconn Industrial Internet, FIT Foxconn Interconnect Technology, FIH Mobile, ShunSin, Healthconn, CircuTech, Asia Pacific Telecom, Sharp Corporation, Smart Technologies, Belkin

Foxconn has two huge campuses in Shenzhen, where about 400,000 employees live and work. The main Foxconn facility covers about one square mile and is a city within a city, with its own bakeries, banks, fast food outlets and acupuncture clinics. It teems with uniformed migrant workers, filing into work at gray, low-slung factory complexes, or entering utilitarian high-rise dormitories.Workers say they rarely have time to enjoy the facilities’ amenities like Olympic-size swimming pools. “How can I have time for swimming?” a 21-year-old assembly line worker said, adding she had only 30 minutes to eat her lunch, including the walk to and from the cafeteria. [Source: David Barboza, New York Times, June 6, 2010; Peter Brieger, AFP, May 2010; Barbara Demick, David Sarno, Los Angeles Times, June 2010]

John Bussey wrote in the Wall Street Journal,”Hon Hai is a colossus because its founder, Terry Gou, early and adroitly capitalized on labor and supply chains in China, building economies of scale competitors couldn't easily match. His factories include dorms, dining halls, book stores and recreation facilities. And they are versatile: In meetings with visitors, Mr. Gou is given to leaping from his chair to outline his next idea for integrating production on a large pad of paper. [Source: John Bussey,Wall Street Journal, June 3, 2011]

Foxconn has started to shift production from southern China, near Hong Kong, inland with a few giant new factories, taking entire supply chains with them. Companies like Apple use Foxconn because it was one of the few enterprises that can meet its production requirements and churn out millions of devices a month.

Foxconn’s Relationship With It’s a-List Brands

Among the products produced by are the iPhones, iPads, BlackBerry devices, Kindle, all Nintendo gaming systems since the GameCube, Nokia devices, Sony devices (including the PlayStation 3 and PlayStation 4 gaming consoles), Google Pixel devices, Xiaomi devices and every successor to Microsoft's first Xbox console.

John Bussey wrote in the Street Journal, It's a tricky dance between first-world brands and third-world production. Customers like Apple can't afford the hit to their reputation that dust explosions and worker suicides tend to produce. Hon Hai can't afford to alienate customers as big as Apple. So the electronics companies have created their own oversight. Apple audits Hon Hai's facilities and requires its suppliers to agree to a "Supplier Code of Conduct" that sets expectations for worker protections and factory conditions. It also produces an annual "Supplier Responsibility" report, detailing efforts to assure safety, fairness in hiring, and attention to pollution control, among other things.

Dell conducts on-site reviews and has a code of conduct for suppliers. "Earlier this year, our team reviewed Foxconn's proposed procedures to improve working conditions and employee morale," David Frink, a Dell spokesman says. Then Dell went back and walked the line at Hon Hai's plant in Shenzhen to see if the initiatives were working. H-P and other companies use similar measures and codes of conduct.

Poor Working Conditions at Foxconn

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John Bussey wrote in the Street Journal, “Compared with conditions at factories when the West industrialized, Hon Hai may not look half bad. But labor groups complain about low morale, subsistence wages, overcrowding, and excessive hours on Foxconn production lines. Before the recent dust explosion, an advocacy group in Hong Kong pummeled the company for what it said were dirty and dangerous conditions at the Chengdu plant. In the last 18 months, there have been a spate of highly publicized suicides at Hon Hai facilities. [Source: John Bussey,Wall Street Journal, June 3, 2011]

The company has defended its treatment of workers and announced big wage increases in 2010 to address employee discontent. It says that worker safety is its top priority and it will fix any problems at its factories. A spokesman says Hon Hai is "applying the highest possible safety practices."

Roughly 300,000 people — most of the them migrants between aged 18 to 24 — work in the drab factory buildings at one of the sprawling Foxconn facility in Shenzhen. Many work long hours for low pay under heavy pressure, sleeping seven to a room hundreds of kilometers away from their home villages. [Source: David Barboza, New York Times, June 6, 2010; Peter Brieger, AFP, May 2010; Barbara Demick, David Sarno, Los Angeles Times, June 2010]

Foxconn has a reputation for military-style efficiency that includes mapping out assembly line workers? movements in great detail and monitoring tasks with a stopwatch. A typical worker shares a dormitory room with nine other workers, eats in the campus cafeteria and works 11 to 13 hour shifts. Often they do little more than work and sleep. Some have no friends on campus and do not even know the names of their roommates. Shortage of warm water in the dorm often meant cold showers, and where even simple pleasures like snacks were forbidden. [Source: David Barboza, New York Times, June 6, 2010]

Liu Zhiyu, a reporter with the Southern Weekly, worked undercover at the factory for a month. He said the employees rarely stop working except to eat and sleep and are forced to put in long hours and work overtime just make a $130 month, “If you don’t work overtime, you don’t make money,” he wrote. “If you take the overtime, the fatigue will make your whole body feel the pain.”

Many workers quit not long after they start working for the company. In interviews with the New York Times employees said the typical Foxconn hire lasted just a few months at the factory before leaving, demoralized. They complain about military-style drills, verbal abuse by superiors and self-criticisms they are forced to read aloud, as well as occasionally being pressured to work as many 13 consecutive days to complete a big customer order — even when it means sleeping on the factory floor. [Barboza]

Although the legal limit in China is 36 hours of overtime a month, several workers interviewed here said they regularly exceeded that by wide margins. They leave so soon because they can’t adjust to factory life, said Wang Xueliu, a production team leader who has worked at Foxconn for six years. He, too, plans to leave soon, to join a new business with his brother making candles for export.

Report on Grim Working Conditions at Apple-Foxconn Plants

An audit of Apple Chinese factories by the independent Fair Labor Association (FLA) released in March 2022 detailed "serious and pressing" concerns over excessive working hours, unpaid overtime, health and safety failings, and management interference in trade unions. It was the most detailed public investigation into conditions at Foxconn factories up to that time. Among other things it found that more than half of employees had worked 11 days or more without rest. Apple hired the FLA to do the investigation. [Source:Juliette Garside, The Guardian, March 30, 2012]

Juliette Garside wrote in The Guardian: More than 43 percent of workers reported experiencing or witnessing an accident at the three plants audited. Health and safety breaches found by auditors included blocked exits, lack of or faulty personal protective equipment and missing permits, which the FLA said was remedied when discovered. Despite several suicides, which raised the alarm two years ago, and an explosion that killed three workers last year, Foxconn still failed to consult workers on safety, with the committees "failing to monitor conditions in a robust manner", the report found. The management was found to be nominating candidates for election to worker committees, with the result that "committees are composed not by those who need representation, but instead are dominated by management representatives". This left workers feeling "alienated" and lacking confidence in safety procedures.

In December 2011, 46 percent of the workforce clocked up to 70 hours per week, although Chinese labour laws say employees should work no more than an average of 49 hours a week, including overtime. The average maximum week was 61 hours, and between November and January more than a third of staff did not receive the statutory one day off in seven.

The breaches were discovered during a month-long investigation, described by the FLA as a "full-body scan"; 35,000 employees were asked to fill in anonymous forms and auditors patrolled factory floors and examined paperwork. The audit focused on the Guanlan, Longhua and Chengdu plants, which have a combined workforce of 178,000.

While high turnover made Foxconn dependent on overtime, workers were often denied pay for extra hours, and around 14 percent were likely to have worked unpaid time. Overtime was only paid in 30-minute increments, so 29 extra minutes worked was not paid. Foxconn and Apple have agreed to compensate workers, and reduce increments to 15 minutes. A third of employees surveyed wanted to work more hours so that they could earn more, and half felt their hours were reasonable but around two-thirds of workers said their take-home pay did not meet their basic needs.

At Chengdu, 5.5 percent of employees were aged 16 or 17. The average age of all workers across the three plants was found to be 23, and many were migrant workers, with around a third of the workforce living in dormitories. The use of student interns, supposedly on work experience related to their studies, but who are in fact used to supplement the workforce during holidays, was raised as of "major concern for external stakeholders", according to the report. The FLA found interns working both overtime and night shifts, in violation of the regulations, and said "their employment status remains vague and represents a major risk". Student labour peaks in the summer months, and stood at 5.7 percent in August 2011.

Foxconn Electronics factory in Shenzhen

Foxconn Suicides in China

Wang Ling was 25 years old when she ended her life in January 2011 by jumping from her brother's high-rise flat, days after being dismissed from her job as an engineer at Foxconn's Longhua factory. An employee of over six years' standing, she had recently been diagnosed with schizophrenia. She was the 15th Foxconn employee reported to have committed suicide since the beginning of 2010. There have been at least two since.

In early 2010 eleven workers for Foxconn died from apparent suicides, with 10 of them leaping to their deaths from buildings at a huge factory complex in Shenzhen (two others survived falls). Most of the victims were migrants between aged 18 to 24. Of those that leapt from buildings eight were men and four were women. This was in addition to a Foxconn worker who killed himself in July 2009 after losing a prototypes of a new Apple iPhone.

The factory’s first death this year came on Jan. 23. The body of a 19-year-old worker from Henan named Ma Xiangqian was found in front of his high-rise dormitory at 4:30 a.m. Police investigators concluded that he had leapt from a high floor, and they ruled it a suicide. Ma was described by his father as quiet and determined to help alleviate his family’s poverty. His three older sisters, like him, had traveled more than 800 miles from a poor farming village to seek employment in Shenzhen. In July 2010, a 19-year-old intern at a factory affiliated with Foxconn fell to his death from a six-story dormitory, in a apparent suicide. The teenager, surnamed Liu, worked for Chimei Innolux Corp. He was in the process of being let go for failing to show up for work for several days.One of the survivors, who leapt from he seventh story of her dormitory and was saved by a tree that broke her fall, was quoted as saying she was “under work pressure” and had “deep” money problems. When she jumped she had $2.30 in her pocket and owed money to a friend. [Source: David Barboza, New York Times, June 6, 2010]

In many ways it was unclear what to make of the suicides. The Foxconn facility is so huge that even with the string of suicides in 2010 the total number suicide there is less than the national average of roughly seven per 100,000 people. All of the Foxconn employees that committed suicide were young workers who had joined the company just months before. In response to Foxconn suicides, Sony released a statement saying that it “has begun taking steps to re-evaluate the working environment at Foxconn.” Apple, Dell, Nokia and Hewlett Packard issued similar statements. Apple’s chief executive, Steven P. Jobs, said that he was troubled by the suicides but that Foxconn was not a sweatshop.

Reasons for Foxconn Suicides

Some have blamed loneliness and isolation for the suicides. Foxconn’s billionaire owner attributed the deaths to “personal problems.” An investigation of the local state-backed trade union decided each worker committed suicide for individual reasons. Li Qiang of China Labor watch said Foxconn workers complain of being “extremely exhausted” and “under great pressure.”

The average pay at Foxconn was $130 a month at the time of the suicides, with many workers putting in 12 hours a day, six days a week to earn that. The family of a 27-year-old engineer at a Foxconn iPhone factory who killed himself in June 2010, blamed over working for his death, saying he worked the night shift for one month straight, sometimes working 24 hours non-stop without sleep.

The family of 19-year-old Ma Xiangqian, one of the first to commit suicide, think their son was bullied into killing himself. The family, including Ma’s 22-year-old sister who also worked at Foxconn, said Ma hated the job he had held for only two months. He worked an 11-hour overnight shift, seven nights a week, forging plastic and metal into electronics parts amid fumes and dust. After a run-in with his supervisor, he was demoted to cleaning toilets. My brother called my parents and said he had a bad relationship with his production team manager, said his sister, adding her brother said the manager often cursed at him. [Source: David Barboza, New York Times, June 6, 2010]

Ma’s pay stub shows that he worked 286 hours in the month before he died, including 112 hours of overtime, about three times the legal limit. For all of that, even with extra pay for overtime, he earned the equivalent of $1 an hour. The factory was always abusing my brother, the sister, Ma Liqun, said tearfully last week.

High expectations among workers are also blamed. The mother of Lu Xin, a 24-year-old who jumped o his death, said her son told here, “There’ll come a day when I give you a big house to live in so you can live a good life.” [Source: Chris Buckley, Reuters, July 2010]

Foxconn in Taiwan

Efforts by Foxconn and Apple to Improve Working Conditions

After the FLA report Foxconn said it would reduce working hours to 49 hours per week, including overtime, while keeping total compensation for workers at its current level. In February 2012, the company said it raised wages by up to 25 percent in the second major salary hike in less than two years. The continuing reports of deaths and distress at Foxconn have created a PR problem for Apple, which is seen as the principal user of the company's facilities. Tim Cook, Apple's chief executive, said that Apple took working conditions very seriously and that every worker had the right to a fair and safe work environment. Apple has also given ABC News's Nightline TV program special access to the Foxconn plants[Source: The Guardian, Charles Arthur, February 20, 2012]

The Guardian reported: Chinese workers at Foxconn now receive between 1,800-2,500 yuan ($286-$400) per month following the raises that became effective from 1 February, the company said. "This is the way capitalism is supposed to work," David Autor, an economist at the Massachusetts Institute of Technology, told the New York Times . "As nations develop, wages rise and life theoretically gets better for everyone. "But in China, for that change to be permanent, consumers have to be willing to bear the consequences. When people read about bad Chinese factories in the paper, they might have a moment of outrage. But then they go to Amazon and are as ruthless as ever about paying the lowest prices." Foxconn is also taking measures to limit workers' total work hours. The raises come as a compensation for their reduced overtime, company spokesman Simon Hsing said in a statement. Foxconn said it is cooperating with the FLA inspectors, pledging again to provide a safe and fair work environment. The company has denied allegations that it ran excessively fast assembly lines and demanded too much overtime, but after the suicides it soon announced two pay hikes that more than doubled basic worker salaries to up to 2,000 yuan per month.

The New York Times reported that workers welcomed the announced raises and overtime limits, though some were unsure they would cause much real change. "When I was in Foxconn, there were rumors about pay raises every now and then, but I've never seen that day happen until I left," said Gan Lunqun, 23, a former Foxconn worker. "This time it sounds more credible." "China can't guarantee the low wages and costs they once did," Ron Turi of Element 3 Battery Venture, a consulting firm in the battery industry, told the paper. "And companies like Foxconn have developed international profiles, and so they have to worry about how they're seen by people living in places with very different standards." Foxconn has also announced plans to invest in millions of robots and automate aspects of production.

Foxconn Moves More Manufacturing Outside of China

Young Liu, the chairman of Hon Hai Precision Industry Co. (Foxconn), the main supplier for Apple and many other foreign tech companies, said it’s gradually adding more capacity outside of China, the main base of production for iPhones, Dell computers and Nintendo Switches. The proportion outside the country in August 2020 was 30 percent, up from 25 percent in June, 2019. One reason for this is the shift of manufacturing to Southeast Asia and other regions to avoid escalating tariffs on Chinese-made goods headed to U.S. markets, Liu said: “No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” Liu said, adding that while China will still play a key role in Foxconn’s manufacturing empire, the country’s “days as the world’s factory are done.” [Source: Bloomberg, August 12, 2020]

Bloomberg reported: “Intensifying trade tensions between Washington and Beijing have pushed device manufacturers to diversify their production bases away from China, and Liu last year said that Apple’s most prized product, the iPhone, can be made outside China if needed.

“Foxconn has been shaking up its traditionally China-focused operations. Hon Hai is among Apple assembly partners that plan to expand operations in India, potentially helping the iPhone maker grow its presence in the country of 1.3 billion and shift some of the U.S. company’s supply chain outside of China as ties between Washington and Beijing fray.

More Competitor Challenge Foxconn in China

In 2020, Bloomberg reported: “Chinese rivals are also posing a growing challenge. Local electronics titan Luxshare Precision Industry Co. is poised to become the first Chinese homegrown iPhone assembler after sealing a deal in July to buy an Apple handset production plant from Wistron Corp. While Hon Hai will keep assembly orders for premium iPhones, Luxshare will eat into the business for mid-to-entry-level Apple handsets, Fubon Securities analyst Arthur Liao wrote in a July 23 note. [Source: Bloomberg, August 12, 2020]

“Foxconn will work on its component business to maintain tech leadership and it also benefits from its long-term relationship with Apple, Liu said in response to several analysts’ questions about Foxconn’s competitive strategy against the rising Chinese supplier. [Source: Bloomberg, August 12, 2020]

Image Sources: Wiki Commons

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Yomiuri Shimbun, The Guardian, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated May 2022