October 12, 2010 / 6:00 AM / 7 years ago

iPhone maker faces new criticism over China labor practices

HONG KONG (Reuters) - Hon Hai, maker of Apple’s iPhone, faces new allegations of worker abuse at its sprawling China plants in two reports that claim conditions have not improved despite company promises after a rash of suicides.

One report, based on interviews with over 1,700 workers by 20 universities in Hong Kong, China and Taiwan, criticized Hon Hai for long working hours, a “militaristic” work culture and mass employment of low-wage vocational college students and interns on production lines to cut costs.

Hon Hai and its Hong Kong based Foxconn unit, which make iPhones and iPads for Apple and goods for Dell and Hewlett-Packard among others, dismissed the report’s “unsubstantiated allegations” and said it treated and paid its workers well.

“Foxconn Technology Group strongly and categorically rejects reports in the Chinese and international media that are attributed to research by academics and students alleging worker abuse, illegal labor practices, and unsafe working conditions at our operations in China,” it said in a statement.

Hon Hai, the world’s biggest electronic parts maker, and Foxconn came under criticism following 13 suicides at their China plants that labor activists said were triggered by the Taiwan firm’s tough labor practices and murky corporate culture.

But in recent years, multinationals including Honda Motor Co have recruited aggressively from Chinese technical and vocational schools, paying lower wages and skimping on benefits.

“It’s common now throughout the Pearl River Delta in any manufacturing sector,” said Geoffrey Crothall with the China Labor Bulletin in Hong Kong who added such interns often inked contracts lacking labor safeguards and workplace insurance.

“In terms of legal protection, they’re in no-man’s land.”

Since the suicides, Hon Hai pledged to improve the livelihood of its 937,000 or so workers in China by raising wages, cutting overtime and building a new factories in inland China to allow migrant workers to be closer to home.

However, the report, based on worker interviews carried out between June to August, said the workload was still unrelenting.

A second report by rights group Students & Scholars Against Corporate Misbehavior (SACOM) said many staff were still paid barely more than minimum wage levels in some factories despite promises to beef up basic wages to around 2,000 yuan by October.

Both reports said Hon Hai was hiring young students and interns on a vast scale at low wages to mitigate soaring costs that have eroded profits and hurt its share price this year.

Hon Hai denied this, saying that only around 7.6 percent of its workforce were interns and that those working overtime had done so voluntarily. It said it was working hard to ban such overtime work by interns.

“Foxconn is certainly not perfect, but we take our responsibility to our employees very seriously,” it said.

Major electronics brands like Apple were also blamed for driving Chinese workers and factory owners to the brink.

“Apple and other brands must raise the unit price of their orders to allow manufacturers to survive while providing a living wage for the workers who produce their electronics products,” wrote SACOM in its report.

Apple declined to comment.

Market research firm iSuppli estimates that a 4G iPhone costs $6.54 to make in China, or just around 1.1 percent of its retail price, while Apple’s profits margins hover above 60 percent.

Additional reporting by Argin Chang and Jonathan Standing in Taipei, editing by Jonathan Thatcher

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