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With the iPhone, iPad and Mac com- puter line in its arsenal, Apple Inc. enjoys popularity on a global scale among anyone with two thumbs to text and the desire to stay connected with people around the world.
The worldwide sale of iPhone helped Apple Inc. to exceed LG and ZTE to become the third largest cellphone manufacturer in the world, according to figures provided by International Data Corp. In the fourth quarter last year, Apple sold 37.04 million iPhones, taking 8.7 percent of the global market share.
Behind the curtain of hi-tech gadgets and breathtaking figures are the men and women producing these Apples: low-paid and hardworking Chinese laborers who work roundthe-clock shifts and are exposed to numerous health risks to meet production deadlines.
The legions of supply chain employees aside, Chinese manufacturers are also left with scraps compared to Apple’s overall annual profits.
Market discrimination
On the morning of January 13, the planned release date of the much-anticipated iPhone 4S in China, the Apple store in Beijing’s Sanlitun shopping area remained closed after a large crowd amassed outside its doors.
Fights eventually broke out among customers anxiously awaiting the new “it”product and a few pelted the store’s large glass windows to express their frustration.
Apple underestimated the Chinese demand for the iPhone 4S, said Tim Cook, Apple’s current CEO. Bloomberg quoted Cook as saying that “We thought we were betting bold. We didn’t bet high enough” on a conference call on January 24 when the company released its first fiscal quarterly report in 2012.
Apple said China has become its fastest
growing market with annual sales valued as high as $13 billion.
In 2011, the Chinese fervor for iPhone, iPad and Mac products led to 40,000 daily visits to Apple stores in Beijing and Shanghai.
The company sold 5.6 million iPhones in China in the first nine months last year, making it the fourth largest smartphone vendor in the country in the third quarter, according to Gartner Inc., a Stamford, Connecticut-based research company.
As Apple’s second largest market, China contributed $4.5 billion to Apple’s revenue in the fourth fiscal quarter of 2011, a staggering year-on-year increase of 270 percent, which accounted for 16 percent of Apple’s total quarterly revenue. In sharp contrast, sales in China only accounted for 2 percent of Apple’s revenue in 2009.
Despite the Chinese people’s craving for the devices, Apple has never attached importance to the Chinese market. China is still categorized as a third or fourth-tier market, along with the British Virgin Islands, and Cayman Islands, a clear distinction from its status as the second largest market.
Because Apple products are released much later in China than in other countries, many Apple fans turn to smugglers to satisfy demand.
China’s dilemma
Besides being its second largest market, China has also become Apple’s biggest and the most important manufacturing base, but Chinese companies have little say in the Apple supply chain and their profit margin is less than 2 percent.
As Apple products are warmly embraced around the world, the Apple industry has blossomed in Shenzhen, Guangdong Province. At present, a complete industrial chain for Apple products has taken shape in the world’s most vibrant manufacturing hub.
Manufacturers providing Apple-related products amount to more than 1,500 in Shenzhen, with annual turnover exceeding 100 billion yuan ($15.87 billion).
Although they have been working their heads off for Apple, suppliers have not gained matching return from it.
Apple’s profit margin has now surpassed 30 percent, while the Taiwan-listed Hon Hai Precision Ind. Co. Ltd., Apple Inc’s biggest manufacturing partner, has seen its profit margin drop to 2 percent from 5.9 percent in 2006. The margin dipped faster after Apple launched its all-time bestseller iPad and iPhone.
Meanwhile, Chinese workers at Apple’s suppliers are overworked to meet Apple’s requirements. “We are under heavy pressure and enormous workload, as the customer tolerates no mistakes. The leader of the assembly line often scolds us girls to tears,” complained Xiao Wei, who started working for Hon Hai’s Shenzhen-based Foxconn in September 2010.
Many of her co-workers still remember an incident in 2009 when 25-year-old Sun Danyong committed suicide after brutal interrogation when a N90 version of the iPhone went missing. The next year, another 10 Foxconn workers killed themselves due to various mental issues and heavy work pressure.
But when asked why she did not quit, she said she could not earn more working somewhere other than Foxconn, and most of the other jobs have no vacations. “Here in Foxconn, we can take one day off each week, plus annual leave and paid vacation.”
Thanks to Apple, tens of thousands of jobs were created in China. Many fresh college graduates and migrant workers are able to peek into the production process of the state-of-the-art electronic devices.
Foxconn has more than 1 million employees on the Chinese mainland. More than 200,000 workers, which is equivalent to the population of a medium-sized city in the United States, stuff the 2.3-square-km-large Shenzhen Longhuayuan Industrial Park.
Apple’s leftovers
Disguised by the shiny exterior of an iPad or an iPhone, pollution, occupational diseases, abuse of labor and occasional industrial accidents are the biggest problems that haunt Apple’s sourcing partners in China.
Apple’s harsh and demanding requests for suppliers and outsourcing partners, aggressive attitude to its outsourcing partners during negotiations, and its disregard of pollution have led to mounting problems with its suppliers that need immediate remedies.
A few days before the 2011 Christmas holiday, an explosion rocked the fourth floor of RiTeng Computer Accessory’s Shanghai plant, which provided accessories for Apple’s electronic devices. The accident left 61 workers seriously injured. A similar incident also occurred at another Apple supplier in May 2011 in Chengdu, Sichuan Province.
In January 2011, Ma Jun, director of the non-profit Institute of Public and Environmental Affairs (IPE) based in Beijing, issued a pollution report titled The Other Side
of Apple, which listed 11 cases of workers who were poisoned by n-hexane, a poisonous liquid cleaner which is used to clean the touch screens of Apple devices.
According to Ma, Apple said one thing and did another. Apple claimed that it is committed to ensuring that working conditions in its supply chain are safe, that workers are treated with respect and dignity, and that manufacturing processes are environmentally responsible.
IPE and some other NGOs conducted two surveys in 2011, and they found 27 Apple-related suppliers discharged excessive poisonous and polluting sewage into the rivers.
Some of Apple’s suppliers, like Foxconn, are major international companies; others are smaller and often under-regulated. Apple manages to squeeze profits from its suppliers to cut its costs. As a result, the suppliers have taken extreme measures such as forcing workers to work long shifts, hiring underaged workers, holding back workers’ salaries and polluting the environment.
When interviewed, workers at the factory of Lian Jian Technology in Suzhou, Jiangsu Province, stated that n-hexane evaporated much more quickly than alcohol-based cleaners, thereby increasing their efficiency. Inhaling n-hexane leads to peripheral neuropathy, numbness of the limbs, and impedes movement and the sense of touch.
The production area at the Lian Jian
Technology factory boasts an air tight clean room, which is a stuffy place with poor air circulation. When local authorities inspected the production site, they discovered a buildup of volatile n-hexane in the air that greatly exceeded national safety limits. Because the workers were not effectively protected, over time many in the production area were gradually poisoned.
The Chinese tax payers ended up paying the bill for treating employees injured by occupational diseases.
Ma went to Apple’s headquarters last November, and said he was happy to see the change of attitude of the Apple management, from “complete negligence” to willing to make
a difference, though it has so far done little to improve the work conditions of its suppliers.
Ma said Apple must choose between two options. One is to take advantage of the pitfalls in the Chinese legal system, side with the polluting companies and obtain its exorbitant profits at the cost of environmental pollution and the people’s well being; and the other is to open up and cooperate with the Chinese side and NGOs to boost green production and the construction of the green supply chain.
Under heavy pressure, Apple released a 27-page long 2012 Supplier Responsibility Progress Report in January. For the first time in Apple’s history, it revealed the list of 97 percent of its global suppliers. Apple said in the report that it has indeed found “a number of violations,” but did not say anything about how and when to correct them.
Analysts questioned Apple’s intention in disclosing the list, and argued the fingerpointing has actually shifted the social responsibility that Apple should carry to its suppliers in developing countries, which are in a weak position when doing business with Apple.
Wang Tieshan, professor at Xi’an Jiaotong University, said the problem of infringing on labor rights by some multinationals has become more and more serious, mainly in processing trade companies and exporting companies in the electronics, textiles, garments, shoes, toys and handicrafts industries. Enterprises in these industries ignore work safety and sanitation, environmental protection and labor protection, depress salaries and benefits, and provide inadequate remedies for industrial injury and medical treatment to avoid social responsibilities.
Multinationals like Apple claim to have a strict process for monitoring their suppliers, but with the continued refinement of work divisions and with the list of suppliers getting longer, it’s possible for them to lose control of their supply chains. Both the government and the multinationals should be involved in supervising the conduct of those suppliers and make sure they are properly guided to avoid future mistakes.
Of course, China needs to improve its legal system so that all downstream companies take action to prevent pollution just as upstream companies do. The Chinese authorities should also reflect on their role in corporate social responsibility supervision. Some cities, in order to attract investment, sacrifice their interests in environmental protection and labors’ rights. Local governments tend to spoil big companies which can bring considerable GDP growth to the local economy.
In addition, monitoring technologies of government departments are outdated and the working efficiency is poor, Dong Zhengwei, a lawyer at the Beijing Lianggao Law Firm who has participated in lawsuits against foreign brands, told Xinhua News Agency. Many government officials know little about corporate social responsibilities and government supervisors have no monitoring or prevention authority over these companies.
The worldwide sale of iPhone helped Apple Inc. to exceed LG and ZTE to become the third largest cellphone manufacturer in the world, according to figures provided by International Data Corp. In the fourth quarter last year, Apple sold 37.04 million iPhones, taking 8.7 percent of the global market share.
Behind the curtain of hi-tech gadgets and breathtaking figures are the men and women producing these Apples: low-paid and hardworking Chinese laborers who work roundthe-clock shifts and are exposed to numerous health risks to meet production deadlines.
The legions of supply chain employees aside, Chinese manufacturers are also left with scraps compared to Apple’s overall annual profits.
Market discrimination
On the morning of January 13, the planned release date of the much-anticipated iPhone 4S in China, the Apple store in Beijing’s Sanlitun shopping area remained closed after a large crowd amassed outside its doors.
Fights eventually broke out among customers anxiously awaiting the new “it”product and a few pelted the store’s large glass windows to express their frustration.
Apple underestimated the Chinese demand for the iPhone 4S, said Tim Cook, Apple’s current CEO. Bloomberg quoted Cook as saying that “We thought we were betting bold. We didn’t bet high enough” on a conference call on January 24 when the company released its first fiscal quarterly report in 2012.
Apple said China has become its fastest
growing market with annual sales valued as high as $13 billion.
In 2011, the Chinese fervor for iPhone, iPad and Mac products led to 40,000 daily visits to Apple stores in Beijing and Shanghai.
The company sold 5.6 million iPhones in China in the first nine months last year, making it the fourth largest smartphone vendor in the country in the third quarter, according to Gartner Inc., a Stamford, Connecticut-based research company.
As Apple’s second largest market, China contributed $4.5 billion to Apple’s revenue in the fourth fiscal quarter of 2011, a staggering year-on-year increase of 270 percent, which accounted for 16 percent of Apple’s total quarterly revenue. In sharp contrast, sales in China only accounted for 2 percent of Apple’s revenue in 2009.
Despite the Chinese people’s craving for the devices, Apple has never attached importance to the Chinese market. China is still categorized as a third or fourth-tier market, along with the British Virgin Islands, and Cayman Islands, a clear distinction from its status as the second largest market.
Because Apple products are released much later in China than in other countries, many Apple fans turn to smugglers to satisfy demand.
China’s dilemma
Besides being its second largest market, China has also become Apple’s biggest and the most important manufacturing base, but Chinese companies have little say in the Apple supply chain and their profit margin is less than 2 percent.
As Apple products are warmly embraced around the world, the Apple industry has blossomed in Shenzhen, Guangdong Province. At present, a complete industrial chain for Apple products has taken shape in the world’s most vibrant manufacturing hub.
Manufacturers providing Apple-related products amount to more than 1,500 in Shenzhen, with annual turnover exceeding 100 billion yuan ($15.87 billion).
Although they have been working their heads off for Apple, suppliers have not gained matching return from it.
Apple’s profit margin has now surpassed 30 percent, while the Taiwan-listed Hon Hai Precision Ind. Co. Ltd., Apple Inc’s biggest manufacturing partner, has seen its profit margin drop to 2 percent from 5.9 percent in 2006. The margin dipped faster after Apple launched its all-time bestseller iPad and iPhone.
Meanwhile, Chinese workers at Apple’s suppliers are overworked to meet Apple’s requirements. “We are under heavy pressure and enormous workload, as the customer tolerates no mistakes. The leader of the assembly line often scolds us girls to tears,” complained Xiao Wei, who started working for Hon Hai’s Shenzhen-based Foxconn in September 2010.
Many of her co-workers still remember an incident in 2009 when 25-year-old Sun Danyong committed suicide after brutal interrogation when a N90 version of the iPhone went missing. The next year, another 10 Foxconn workers killed themselves due to various mental issues and heavy work pressure.
But when asked why she did not quit, she said she could not earn more working somewhere other than Foxconn, and most of the other jobs have no vacations. “Here in Foxconn, we can take one day off each week, plus annual leave and paid vacation.”
Thanks to Apple, tens of thousands of jobs were created in China. Many fresh college graduates and migrant workers are able to peek into the production process of the state-of-the-art electronic devices.
Foxconn has more than 1 million employees on the Chinese mainland. More than 200,000 workers, which is equivalent to the population of a medium-sized city in the United States, stuff the 2.3-square-km-large Shenzhen Longhuayuan Industrial Park.
Apple’s leftovers
Disguised by the shiny exterior of an iPad or an iPhone, pollution, occupational diseases, abuse of labor and occasional industrial accidents are the biggest problems that haunt Apple’s sourcing partners in China.
Apple’s harsh and demanding requests for suppliers and outsourcing partners, aggressive attitude to its outsourcing partners during negotiations, and its disregard of pollution have led to mounting problems with its suppliers that need immediate remedies.
A few days before the 2011 Christmas holiday, an explosion rocked the fourth floor of RiTeng Computer Accessory’s Shanghai plant, which provided accessories for Apple’s electronic devices. The accident left 61 workers seriously injured. A similar incident also occurred at another Apple supplier in May 2011 in Chengdu, Sichuan Province.
In January 2011, Ma Jun, director of the non-profit Institute of Public and Environmental Affairs (IPE) based in Beijing, issued a pollution report titled The Other Side
of Apple, which listed 11 cases of workers who were poisoned by n-hexane, a poisonous liquid cleaner which is used to clean the touch screens of Apple devices.
According to Ma, Apple said one thing and did another. Apple claimed that it is committed to ensuring that working conditions in its supply chain are safe, that workers are treated with respect and dignity, and that manufacturing processes are environmentally responsible.
IPE and some other NGOs conducted two surveys in 2011, and they found 27 Apple-related suppliers discharged excessive poisonous and polluting sewage into the rivers.
Some of Apple’s suppliers, like Foxconn, are major international companies; others are smaller and often under-regulated. Apple manages to squeeze profits from its suppliers to cut its costs. As a result, the suppliers have taken extreme measures such as forcing workers to work long shifts, hiring underaged workers, holding back workers’ salaries and polluting the environment.
When interviewed, workers at the factory of Lian Jian Technology in Suzhou, Jiangsu Province, stated that n-hexane evaporated much more quickly than alcohol-based cleaners, thereby increasing their efficiency. Inhaling n-hexane leads to peripheral neuropathy, numbness of the limbs, and impedes movement and the sense of touch.
The production area at the Lian Jian
Technology factory boasts an air tight clean room, which is a stuffy place with poor air circulation. When local authorities inspected the production site, they discovered a buildup of volatile n-hexane in the air that greatly exceeded national safety limits. Because the workers were not effectively protected, over time many in the production area were gradually poisoned.
The Chinese tax payers ended up paying the bill for treating employees injured by occupational diseases.
Ma went to Apple’s headquarters last November, and said he was happy to see the change of attitude of the Apple management, from “complete negligence” to willing to make
a difference, though it has so far done little to improve the work conditions of its suppliers.
Ma said Apple must choose between two options. One is to take advantage of the pitfalls in the Chinese legal system, side with the polluting companies and obtain its exorbitant profits at the cost of environmental pollution and the people’s well being; and the other is to open up and cooperate with the Chinese side and NGOs to boost green production and the construction of the green supply chain.
Under heavy pressure, Apple released a 27-page long 2012 Supplier Responsibility Progress Report in January. For the first time in Apple’s history, it revealed the list of 97 percent of its global suppliers. Apple said in the report that it has indeed found “a number of violations,” but did not say anything about how and when to correct them.
Analysts questioned Apple’s intention in disclosing the list, and argued the fingerpointing has actually shifted the social responsibility that Apple should carry to its suppliers in developing countries, which are in a weak position when doing business with Apple.
Wang Tieshan, professor at Xi’an Jiaotong University, said the problem of infringing on labor rights by some multinationals has become more and more serious, mainly in processing trade companies and exporting companies in the electronics, textiles, garments, shoes, toys and handicrafts industries. Enterprises in these industries ignore work safety and sanitation, environmental protection and labor protection, depress salaries and benefits, and provide inadequate remedies for industrial injury and medical treatment to avoid social responsibilities.
Multinationals like Apple claim to have a strict process for monitoring their suppliers, but with the continued refinement of work divisions and with the list of suppliers getting longer, it’s possible for them to lose control of their supply chains. Both the government and the multinationals should be involved in supervising the conduct of those suppliers and make sure they are properly guided to avoid future mistakes.
Of course, China needs to improve its legal system so that all downstream companies take action to prevent pollution just as upstream companies do. The Chinese authorities should also reflect on their role in corporate social responsibility supervision. Some cities, in order to attract investment, sacrifice their interests in environmental protection and labors’ rights. Local governments tend to spoil big companies which can bring considerable GDP growth to the local economy.
In addition, monitoring technologies of government departments are outdated and the working efficiency is poor, Dong Zhengwei, a lawyer at the Beijing Lianggao Law Firm who has participated in lawsuits against foreign brands, told Xinhua News Agency. Many government officials know little about corporate social responsibilities and government supervisors have no monitoring or prevention authority over these companies.