Foxconn builds products for many vendors, but its mud sticks to Apple

Foxconn makes PCs, game consoles and network gear for many top companies, but Apple bears the brunt of bad publicity over working conditions

REUTERS/Michael Martina

The name Foxconn has become shorthand for the human costs of building the iPhone in China, linking Apple to bad publicity about worker suicides, deaths from a plant explosion and rioting factory workers.

But many other companies besides Apple contract with the Taiwan-based firm to build their products. Even if you don't have an iPhone, there's a good chance that something you own or use each day was built by Foxconn Technology Group, a company analysts say is the largest electronics manufacturer in the world.

Foxconn, which employs some 1.2 million workers in China, is secretive about who it does business with, and the company declined to name its customers for this article. But analysts who follow the company offered examples of the products assembled, and the list is long.

Sony's PlayStation 3, the Nintendo Wii and Amazon's Kindle Fire are just a few of the products Foxconn makes. It also produces TVs for Sony, Sharp, and Toshiba; handsets for Nokia, Motorola and Huawei, and networking equipment for Cisco, according to Arthur Liao, an analyst with Fubon Securities Investment Services Co.

Foxconn is also a major assembler of PCs for Hewlett-Packard, Dell and Acer, and manufactures all three of the big game consoles, from Microsoft, Nintendo and Sony, other analysts said.

Cisco, Huawei, Nintendo, Sony and Nokia all confirmed they use Foxconn as a manufacturer, though Nokia said the "clear majority" of its phones are made in-house. Other firms including Acer, Microsoft, Motorola, Sharp and Toshiba declined to comment about where their products are made.

Still, as allegations of abusive labor practices continue to be levelled at Foxconn, Apple has been the main target of complaints about the manufacturer's working conditions.

The strong association may not be unjustified. Among Foxconn's clients, Apple is the largest and contributes about 40% of the company's revenue, according to Liao. Another analyst put the figure higher, at more than 50%.

Apple's relationship with Foxconn is so extensive that the Taiwanese firm has been building factories exclusively to assemble Apple products, according to Helen Chiang, an analyst with research firm IDC. This is done to meet Apple's demand for secrecy regarding its products. In contrast, a manufacturer such as Quanta Computer, also based in Taiwan, will use one floor of a manufacturing plant for a vendor such as HP, and another floor for Dell, she said.

In the eyes of labor protection groups, Apple deserves to be singled out for criticism because of its powerful position in the market.

"Foxconn is the largest manufacturer and Apple is the largest electronics company, so they have an even greater responsibility than other companies," said Li Qiang, founder of New York-based China Labor Watch. Most recently, the group blamed Apple's iPhone 5 requirements for tension and violence at a factory in Zhengzhou.

That's not to say labor groups have ignored other electronics suppliers. China Labor Watch released a report last year about conditions at 10 factories in China, including ones operated by Foxconn, Quanta, Catcher Technology and Compal Electronics. It found instances of forced overtime, harsh worker treatment and poor dorm conditions. Chinese factories used by Samsung have also come under scrutiny.

"We never said that Apple was the worst in the industry," said Debby Chan, a project officer with Hong Kong-based Students & Scholars Against Corporate Misbehavior (SACOM). "Samsung, HTC, Motorola, Amazon and Nokia have the same problems."

SACOM has been one of the most vocal advocates for change at Foxconn. The issue was first raised in 2010 after a string of worker suicides prompted former Apple CEO Steve Jobs to defend its supplier. In a widely reported email, Jobs said, "Although every suicide is tragic, Foxconn's suicide rate is well below the China average."

"It was the main reason for us to target Apple," Chan said, referring to Job's comment defending Foxconn. While media and labor groups were looking into the root cause behind the problem, Apple ignored inquiries into the matter, she said.

Since then, Apple has been more active about addressing problems at Foxconn factories, for example working with the Fair Labor Association to audit facilities for labor violations. Apple declined to comment for this article. In the past it has said: "Our team has been working for years to educate workers, improve conditions and make Apple's supply chain a model for the industry."

Foxconn said it wants to give its employees in China "a safe and positive working environment and compensation and benefits that are much higher than government-mandated wages, and that are competitive with all of our industry peers in every location where we operate."

It provides housing, food allowances and medical benefits, and has raised wages five times in three years, it said in a statement. "Foxconn is not perfect, but we have made tremendous progress," it said.

While labor groups remain unconvinced that the progress is sufficient, Chan agreed that Apple's influence over its suppliers could help to improve working conditions in factories across China. In addition to Foxconn, Apple uses 155 other suppliers, some of which have also drawn allegations of poor working conditions. Chan's group hopes Apple will take the lead and help to reform the entire electronics manufacturing industry.

Copyright © 2012 IDG Communications, Inc.

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