Corporate Social Responsibility and Environmental Management
Corp. Soc. Responsib. Environ. Mgmt. 14, 103–113 (2007)
Published online in Wiley InterScience
(www.interscience.wiley.com) DOI: 10.1002/csr.146
Case Study: the Apple iPod in China
Stephen Frost1* and Margaret Burnett2*
1
Department of Asian and International Studies, City University of Hong Kong, China
2
Corporate Environmental Governance Programme, University of Hong Kong, China
Keywords: Apple; iPod; Foxconn; China; sweatshop; Hon Hai; supply chain; electronics
Introduction to the Case
ll material in this case is based on publicly available information. The case is intended to be
used for both research and teaching purposes. The authors make no judgment whatsoever about
the conduct of any of the parties involved in this case study.
A
Background
As with many other manufactured items these days, the bulk of electronic products sold on the global
market are made or assembled in China. Although this has made good business sense, the outsourcing
of production to the developing world (and particularly to China) has resulted in criticism from civil
society organizations about workplace standards. Since the early 1990s, a range of people (including
labour rights activists, trade unionists, students, journalists, academics and other concerned citizens)
have targeted companies in the apparel, sports shoe and toy industry over the low wages, long hours
and poor workplace safety in the factories from which they source (but do not usually own). Among the
most well known recipients of such criticism have been Gap, Nike and Mattel, all of whom – along with
many others – have attempted to use their buying power in the supply chain to encourage factories to
improve.
Until the 2000s the anti-sweatshop movement – as it has been generally called – focused almost
exclusively on the three sectors mentioned. Several large retailers such as Tesco and Wal-Mart have
found themselves under fire over the same issues, but in general the fight for better conditions in countries such as China has been confined to shoes, toys and garments.
From 2003 to 2004, several non-governmental organizations (NGOs) concerned about labour rights
started to turn their attention to the electronics sector. In early 2004, the Catholic Agency for Overseas
Development (CAFOD, 2004a) released Clean up your Computer, a report that aimed to shine a light on
poor workplace practices in the computer manufacturing industry. CAFOD updated the report later in
2004 (CAFOD, 2004b), and revisited the issues in 2005 (CAFOD, 2005) and 2006 (CAFOD, 2006).
In the meantime, other groups also started paying more attention to the electronics sector, where it was
* Correspondence to: Stephen Frost, Department of Asian and International Studies, City University of Hong Kong, Tat Chee Avenue, Kowloon,
Hong Kong, and Margaret Burnett, Corporate Environmental Governance Programme, Centre of Urban Planning and Environmental Management, University of Hong Kong, Knowles Building, Pokfulam Road, Hong Kong, China. E-mail: s.frost@cityu.edu.hk, maggieb@hkucc.hku.hk
Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment
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S. Frost and M. Burnett
alleged that working hours, pay and other workplace issues were exacerbated by a greater array of more
hazardous chemicals.
Surprisingly, it took until 2006 for the first major sweatshop story about the electronics industry to
appear. In mid-2006, Britain’s Mail on Sunday broke a story alleging Apple’s iconic iPod was made in
Chinese factories where workers earned per month around one-quarter the UK retail price (Joseph,
2006). The paper claimed that workers who assemble iPods work 15 hours a day for US$50 per month.
The report also stated that employees work and sleep at the plant, sleeping in dormitories with more
than 100 people, outside visitors are not allowed, employees have little choice about overtime and they
stand at their posts for long hours without being allowed to take a rest.
The outcry was enormous and immediate. Media outlets sensed a strong story linking one of the best
selling products globally with Chinese workplace conditions (a sure fire hit). The story also spread rapidly
on blogs and Internet sites, partly due to the IT savvy of many iPod owners and Apple fans. Apple initially moved slowly, and, combined with a general perception that the company had paid little attention
to workplace conditions (despite its reputation as an edgy company with a strong moral core), this exacerbated criticisms.
The major actors in the media furore that followed publication of the allegations were Apple, Foxconn
(a manufacturer with a contract to manufacture iPods in a Chinese factory) and the iPod itself. Two of
the three are well known; prior to the adverse publicity, Foxconn was barely known outside the industry. But first to the iPod.
As of January 2007, Apple had sold over 88 million iPods, the sales of which have helped boost
company earning significantly. For instance, results from Apple’s fiscal 2007 first quarter (which ended
30 December 2006) included record revenue of US$7.1 billion and record net quarterly profit of US$1.0
billion. iPods accounted for much of the profit, with the company shipping 21 066 000 iPods during
the quarter, a 50 per cent increase year on year (Apple, 2007). iPods come in several versions (with the
main differentiating factor being storage capacity), and range – at Apple’s online store – from US$250
to $350 (although better online bargains are available).
Apple was incorporated in 1977, and as of September 30 2006 it had 17 787 full-time equivalent
employees and an additional 2399 temporary equivalent employees and contractors (Apple, 2006a). Net
sales for fiscal year 2006 were US$19.315 billion for earnings of US$1.989 billion (Apple, 2006a). These
figures are up significantly from 2002, when net sales were US$5.742 billion and earning stood at
US$420 million (Apple, 2006b). The iPod accounted for sales worth US$7.676 billion in financial year
2006, or 39.7 per cent of total sales (Apple, 2006b).
Apple and the iPod are well known, but Foxconn, one of the company’s external (or third party)
vendors in China, was until the Mail on Sunday’s allegations virtually unknown outside the electronics
sector. It is, as readers discovered in June 2006, worthy of attention.
Known under the registered trade name of Hon Hai Precision Industry, Foxconn is a manufacturing
services provider with its origins in Taiwan. Contract manufacturing in the electronics sector is big business, with companies such as Flextronics, Solectron, Celestica and Jabil Circuit all registering revenues
for 2005 above US$8 billion (Baldwin, 2006). For more than half a decade the number one spot in this
industry, which manufactures products for a Who’s Who of electronic brand names, has been a contest
between Flextronics and Solectron, but in 2005 a new company surpassed both; the company was
Foxconn.
Foxconn’s revenue in 2004 was US$15.811 billion. This figure jumped by 33 per cent in 2005 to
US$20.981 billion (more than $5 billion more than second place Flextronics) (Baldwin, 2006), and more
than Apple. As of February 2007, Hon Hai Precision Industry had a market capitalization of US$36.5
billion, and Chairman and founder Terry Guo believed that revenue for 2007 would top $US60.7 billion
(EMSNow, 2007). If realized, this would make Foxconn – a contract manufacturer – larger than all but
Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment
Corp. Soc. Responsib. Environ. Mgmt. 14, 103–113 (2007)
DOI: 10.1002/csr
Case Study: the Apple iPod in China
Company
105
Revenue, 2006 (US$ billion)
Fortune 500 rank, 2006
86.696
66.025
56.028
55.908
36.843
24.801
13.931
33
65
87
88
152
241
492
Hewlett-Packard
Sony
Toshiba
Dell
Motorola
Cisco Systems
Apple
Table 1. Selected Foxconn clients’ revenue, 2006
the very biggest companies for which it manufactures products – as Table 1 shows (all data from Fortune
Global 500 Annual Ranking, 2006). Foxconn also claims 200 000 employees globally (Foxconn, 2007).
Part 1
June 2006
11 June 2006
An article in the Mail on Sunday alleged that Apple iPods were made in poor conditions in Chinese factories (most notably Foxconn’s facility in Shenzhen) (Joseph, 2006). The news article was not readily
available freely online, but a number of bloggers scanned and posted it. The Daily Mirror published an
article later in the week that covered the same factories and allegations (see 14 June below), but almost
all subsequent commentary focused on the Mail on Sunday article.
The article looked at two facilities: Foxconn in Longhua, Shenzhen (just across the border from Hong
Kong in southern China), and Asustek in Suzhou (near Shanghai).
Key claims about Foxconn. 200 000 employees, advertising for 16-year-old workers, 100 persons per
dormitory, 15-hour workdays, £27 per month in wages (or 400 RMB; US$53) and military-style drills.
Key claims about Asustek. The site is surrounded by barbed wire, 50 000 workers, £54 per month in
wages (791 RMB; US$106) – of which half went on accommodation and food, 12-hour days and most
workers are women.
12 June 2006
The story immediately attracted attention, with key sources of information coming from websites
devoted to Apple or the IT sector in general.
Tanya Klowden (2006) summarized and analysed the Mail on Sunday article.
What results is an unpleasant catch-22. Overseas companies need to keep their costs down so firstworld consumers can afford their products and they can stay in business. In places like China, the
low wages and shocking conditions present an opportunity not unlike what came of the Industrial
Revolution. . . . Further, China has no unions, which allows subcontractors like Foxconn to keep
wages artificially low. . . . We can only hope that Apple, who puts at least a little of that marketing
budget into trying to promote themselves as a socially responsible company, can get on board with
the movement towards technology manufacturing ethics.
Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment
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Commentary on Apple-related websites attracted numerous public comments. For instance, a summary
of the report on AppleInsider (AppleInsider, 2006a) attracted over 100 comments from readers (fairly
evenly split between critics of the company and its supporters).
13 June 2006
As the story built, it became apparent that this was not a usual sweatshop story. Unlike other previous
stories, this one was gaining most traction on the Internet rather than the mainstream media, and most
commentary was emanating from the IT sector (a radical departure from the kinds of story that had previously focussed on the shoe, toy or apparel sector and were driven by journalists, trade unionists and
labour activists). The result of this, however, was that the Apple iPod story circulated extremely quickly,
particularly on blogs and other Internet sites that enabled linking (which can lead to the fast spread of
stories on multiple sites).
Wired, one of the pioneer Internet publications to cover IT-related topics, published an interesting
account of the issue (Kahney, 2006). The article is worth quoting at some length.
Steve Jobs’ Think Different campaign celebrated labor leaders like Gandhi, who used strikes as a
form of civil protest, and Ceasar Chavez, who organized poor, migrant farm workers. But a British
newspaper at the weekend published a rather shocking report about the factories in China that make
his company’s iPods. . . . The situation is too murky for a rush to judgment on Apple’s ethics here,
and it may well meet minimum global standards. But for a company that has staked its image on
progressive politics, Apple has set itself up as a potential lightning rod on global labor standards.
Sweatshops came back to bite Nike after its customers rose up in arms; and Apple can expect a
similar grilling from its upscale Volvo-driving fans in the months ahead.
The Wired article quotes Nicholas Lardy (who seemed to be under the impression that Chinese factories operate in exactly the same way as factories in developed countries), but offered counter views from
Dan Viederman, executive director of Verité (a not-for-profit auditing firm), China Labor Watch (a USbased labour rights NGO) and Christopher Foss from Social Accountability International (the US-based
NGO that developed SA8000). All of them had opposing views to Lardy.
14 June 2006
A second story on the issue was published in the British press. Like the Mail on Sunday, the Daily Mirror
also described workplace conditions in ‘iPod City’ and carried many of the same allegations (Webster,
2006). The abstract on the ProQuest news database summarized it thus:
This is life in iPod City, once the Chinese fishing village of Shenzhen but now home to the factories that churn out millions of Apple’s astonishingly popular music players every year. One of the
biggest employers is Taiwanese electronics giant Foxconn, which manufactures the iPod nano for
Apple. Foxconn has 200,000 workers beavering away in 10 large factories and 11 research units in
a sprawling complex covering several square kilometres. Salaries start at pounds 27 a month. While
Foxconn makes the nano, the iPod Shuffle is put together by Asustek in Suzhou, two hours outside
Shanghai at another sprawling site – the size of eight football pitches and employing 50,000 people
– bordered by a canal and river and surrounded by barbed wire to deter intruders.
On the same day, the BBC published a story online entitled ‘iPod “slave” claims investigated’, which
claimed that ‘Apple is investigating a newspaper report [Mail on Sunday] that staff in some of its Chinese
Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment
Corp. Soc. Responsib. Environ. Mgmt. 14, 103–113 (2007)
DOI: 10.1002/csr
Case Study: the Apple iPod in China
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iPod factories work long hours for low pay and in “slave” conditions’ (BBC, 2006a). The term ‘slave’ –
it should be noted – appears nowhere in the Mail on Sunday article.
AppleInsider also reproduced two of the photographs from the Mail on Sunday article. The photographs
are grainy and not particularly clear (perhaps reinforcing the perception that life in a Chinese factory
is grim and prison-like). The first photograph allegedly shows a dormitory in E3, a Foxconn-owned
manufacturing facility responsible for producing iPod nanos, and ‘packed tightly with cots and lined
with wash buckets, lockers and clothes lines’ (AppleInsider, 2006b). Another photograph ‘appears to
show employees lined on one of the factory’s roof tops as they prepare to begin work for the day’
(AppleInsider, 2006b). The article attracted nearly 40 comments from readers.
Questions
1. Review and assess the situation in which Apple found itself.
2. If you were a director of Apple what would you do now?
3. If you were a director of Foxconn what would you do now?
Part 2
June 2006
14 June 2006
Apple responded to the Mail on Sunday claim with a statement, extracts of which were published widely
on IT sites and in the general media. The company stated, in part, that
Apple is committed to ensuring that working conditions in our supply chain are safe, workers are
treated with respect and dignity, and manufacturing processes are environmentally responsible . . .
[The company also explains that it is] currently investigating the allegations regarding working conditions in the iPod manufacturing plant in China. . . . [Apple] does not tolerate any violations of its
supplier code of conduct, which is posted online.
The Apple code of conduct was, as the company states, on its website. Although it does not adopt or
endorse it, Apple’s code (as it was in June 2006) was modelled on the Electronic Industry Code of
Conduct (also available online). The EICC was an initiative driven by HP, Dell, IBM, Cisco and various
other electronics companies. Included in a list of companies adopting/endorsing the code and/or joining
the implementation group was Foxconn.
15 June 2006
The first news article from the mainland Chinese press on Foxconn and workplace conditions appeared
in China Business News (Wang, 2006).
A worker claimed that three female colleagues had fainted on Foxconn production lines. The worker
claimed production workers have no seats and have to stand for 12 hours while working. The factory
does not provide seating to workers since they believe seats will decrease efficiency. According to a
public relations representative from Foxconn – Ms He – some workers need to stand when they
work, but there are seats available where they can sit when they are tired. She also said if the working
conditions are so bad at Foxconn, the company would not be able to pass all the audits from foreign
Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment
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S. Frost and M. Burnett
buyers. Foxconn also requested workers to have an examination to test bone marrow, since a family
member of one of the company’s managers has leukaemia. Ms He confirmed that the company did
in fact require the examination [summary translation by Stephen Frost].
16 June 2006
By now the story is very hot, but some of the more interesting material is still coming out of the ‘tech
press’ and blogs. The mainstream media starts coverage, with reports appearing in papers such as the
Washington Post.
In China Tech News, for instance, Perry Wu (2006) takes issue with what he sees as sloppy laowai (a
Mandarin-Chinese term for foreigner) journalism.
I’m no fan of big corporations bullying workers. But I am also no friend to shoddy, sensationalist
journalism. . . . Workers live in dormitories? Good for them. I’ve worked in the offices of Chinese
companies that also give white-collar workers dormitories – and they provide showers. Visitors are
not permitted into the factory? Since when were you able to tiptoe around the vats of beer at
Anheuser-Busch’s brewery in Williamsburg, Virginia? Or when was the last time you showed up at
Microsoft’s compound unannounced in Redmond and expected the royal treatment?
Mike Musgrove (2006) wrote in the Washington Post that Apple had not been paying attention to the
issues:
. . . activists accuse Apple of having bad karma. Over the past year, environmentalists went after
Apple for not having a full-fledged computer recycling program, unlike its competitors. In May,
Apple beefed up its recycling program, in which customers can recycle old machines for free with
the purchase of a new one.
The Washington Post also thought the story important enough to provide a summary of the main
allegations (Kurtenbach, 2006a).
By now, however, people were also starting to take a closer look at the original claims. R-Squared
(2006) took umbrage with the wage claims on his blog (Development Bank Research Bulletin):
. . . it is impossible to hire assembly workers at $50/month. It is just impossible, not because the
employers are benevolent, but because factories next doors will recruit away all you workers at the
prevailing market price if you offer only $50/month.
19 June 2006
Apple reportedly started an audit of the Foxconn facilities. The mainland Chinese media also started to
play closer attention to the story.
Reuters (2006) reported that Apple said it began ‘a thorough audit’ of a Chinese manufacturing plant
operated by Foxconn.
‘Apple has begun a thorough audit of the manufacturing plant operated by Foxconn in Longhua,
China,’ said Apple spokesman Steve Dowling. The audit will look at ‘employee working and
living conditions, interviews of employees and managers, compliance with overtime and wage regulations, and other areas as necessary to insure adherence to Apple’s supplier code of conduct,’
Dowling said.
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Case Study: the Apple iPod in China
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In Chinese, Zhuang Juan and Li Qiang (2006) wrote a long article that delved more fully into conditions at Foxconn than anything previously published in English. The original article was published online
with numerous photographs of the facility in question. The following extract details plant and living
conditions through the eyes of a worker:
Zhang got off work at 5pm from the production line at the mobile telephone assembly plant. He
was sitting in a Foxconn District C garden and trying to figure out how much money he made last
month. ‘On our production line, the base salary is 490 yuan per month.’ Although he knew that
Shenzhen City has stipulated that the minimum wage outside the Special Economic Zone is 580
yuan per month, Little Zhang could not do anything. ‘If you want to make more, you work overtime. But there are fewer orders nowadays, and we have no overtime work for some time already.’
Little Zhang told the reporter that he hates rest days the most. If there are no orders, the workers
are forced to rest for which 60 yuan will be deducted from the overtime pay. If the overtime payment
is used up this way, they will take it off the regular salary. ‘There was one month in which I was cut
down to 340 yuan!’ As for ‘rest day equals withholding pay,’ Little Zhang and his co-workers think
it is unreasonable but they don’t feel that they can do anything about it. ‘Sigh! I had to rest six days
this month’ [Translation by Roland Soong].
20 June 2006
The news of the Apple audit announced on 19 June was published in over 400 locations on the
Internet by 20 June, the day after the announcement. Websites that cover Apple news carried the
audit announcement, one of which even picked up on the Chinese article published on 15 June (see
China Business News article above), though in a rather different context. The article in MacNN (2006)
stated
‘Foxconn’s employment practices are completely in accordance with the requirements of Shenzhen
labor supervision departments and the Shenzhen Labor Supervision Bureau can come to our factory
to carry out inspections,’ Foxconn spokeswoman Miss He was quoted in the Beijing Times’ Web
site on June 16.
21 June 2006
Discussion started to veer away from the sweatshop allegations, and commentators on blogs and other
sites where comments are not moderated began to focus on the connection between poor conditions
and product issues. On MacRumours:Forum (the name of which should alert readers to the type of
comment they might expect), one commentator is sceptical of the entire audit process (Stoid, 2006):
Well, if this is anything like Apple’s recent audit into what happened to my mis-delivered iPod, don’t
expect anything productive to come out of it. It’s been nearly four weeks of my regular calling in,
and we’re still a long way from resolution.
Questions
1. Review and assess actions take by Apple, particularly with reference to announcing an audit of
Foxconn facilities.
2. If you were a director of Apple what would you do next?
3. If you were a director of Foxconn what would you do next?
Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment
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Part 3
July 2006
Throughout July, the case stays in the public eye. The San Francisco Chronicle gives readers a more substantial account when it begins a series of articles on the issues (McLaughlin, 2006). The article points
out that Hon Hai is a Taiwanese electronics giant that makes electronic components for other big name
brands such as Cisco Systems, Dell, Hewlett-Packard, Intel, Nokia and Sony. The article repeats a point
made in Wired (see 13 June above), and speculates about whether anyone would have cared if the product
was not the iPod:
That the criticism fell squarely on Apple, a company that trumpets the lofty ideals of Gandhi and
Bob Dylan, was not a surprise. . . .’ Apple is selling a lifestyle aimed at youth,’ said Robert [sic – it
should be Robin] Munro, research director of China Labour Bulletin, a workers rights group in Hong
Kong. ‘It would not probably have attracted attention if the products had been axle grease or steel
punching machines.’
The article also provides background on the workforce that makes iPods in China:
An estimated 90 percent are part of China’s massive, illegal migrant workforce. They leave inland,
poorer farming provinces where work is scarce and head to coastal areas in the south where factories produce the world’s consumer goods . . . Central and local governments ignore this migration,
which has resulted in a 120 million- to 150 million-strong workforce responsible for building much
of the country’s new wealth.
As Robin Munro says in the article, this workforce is ‘not sharing proportionally in the benefits and
profits in this huge globalization effort . . . They’re just doing the work. The only reason they can survive
in these cities is because all they do is work’ (McLaughlin, 2006).
August 2006
The story, now six weeks old, received less media attention in early August. All this changed, however,
with two events in the latter half of the month. The first was that Apple released the audit findings on
the Foxconn facility. The second was that Terry Guo (Guo Taiming) sued two Chinese journalists.
Apple released the audit findings online on 17 August (Apple, 2006b). The findings were widely
covered by the media and online sources. Several points are worth noting. First, Apple indicated it had
secured the services of Verité, ‘an internationally recognized leader in workplace standards dedicated to
ensuring that people around the world work under safe, fair and legal conditions’ (Apple, 2006b).
Second, the audit found Foxconn to be mostly in compliance, but that there were ‘violations to our Code
of Conduct, as well as other areas for improvement that we are working with the supplier to address’
(Apple, 2006b). The major area of non-compliance was in the hours worked:
. . . employees worked longer hours than permitted by our Code of Conduct, which limits normal
workweeks to 60 hours and requires at least one day off each week. We reviewed seven months of
records from multiple shifts of different productions lines and found that the weekly limit was
exceeded 35% of the time and employees worked more than six consecutive days 25% of the time.
Although our Code of Conduct allows overtime limit exceptions in unusual circumstances, we
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Case Study: the Apple iPod in China
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believe in the importance of a healthy work–life balance and found these percentages to be excessive (Apple, 2006b).
The media focussed on the long hours. The BBC (2006b) quoted Apple as saying the hours were excessive and said its supplier would enforce the 60 hour week. It also quoted Janek Kuczkiewicz (director
of human and trade union rights at the International Confederation of Free Trade Unions – the ICFTU),
who was not impressed by the report because it was not independently verified, and because it was based
on interviews with 100 workers out of 30 000 and where the conditions of these interviews were not
made clear. Kuczkiewicz was also critical of the labour standards as defined by Apple: ‘There are other
labour standards,’ he said, such as ‘freedom from discrimination, freedom of association and freedom
to bargain collectively’ (BBC, 2006b).
In the International Herald Tribune (IHT, 2006), Apple was quoted as saying
Apple has a zero tolerance policy of any instance, isolated or not, of any treatment of workers that
could be interpreted as harsh. . . . It also said the factory had started an ‘aggressive’ management
and employee training program to prevent such behaviour.
All this is put to one side, however, when news broke that Terry Guo – the Chairman of Hon Hai – had
sued two mainland journalists for 30 million RMB (US$3.878 million). This aspect of the case consists
of two main issues: the court case brought against two journalists, and the means by which this story
came to Western attention.
The court case is relatively straightforward. Terry Guo claimed damages from journalist Wang You
and her editor Weng Bao of China Business News of 20 million RMB and 10 million RMB respectively.
Guo’s lawyers alleged that articles published on 15 June and 22 June in China Business News defamed
the company and that Wang You (the journalist) should ‘cease and desist on all reporting and commentary that damage the plaintiff’s reputation; apologize publicly to the plaintiff in order to eliminate
the deleterious influence and restore the reputation; compensate the plaintiff 10 million RMB for the
damage to its commercial reputation and other economic damages; and assume payment of all legal
fees’ (Soong, 2006a). Later, the Shenzhen Interim Court issued an order to freeze the assets (such as
bank savings, stocks and cars) of defendants Wang You (not more than 20 million RMB) and Weng Bao
(not more than 10 million RMB) (Soong, 2006a).
One of the articles in question is the 15 June article by Wang You (see 15 June above). The other, also
by Wang, was published on 22 June and entitled ‘Female FoxConn ex-worker: the base pay is low but
the benefits are very good’. The point to note here is that Foxconn sought not sue the newspaper, but
an individual journalist and her editor.
The story was not initially picked up by the media outside of China. In fact, in China itself, the story
was initially the subject of online discussions. This was partly the result of both Wang and Weng commenting on the case on their blogs. However, as the mainland media picked up the story, the foreign
press still failed to catch the significance. The story only came to light after Roland Soong (who maintains the well read ESWN website) blogged up a storm. There is far too much material on ESWN to
include here, but suffice it to say that nobody translated as much material from Chinese on the issue,
nor offered as much commentary. As he notes (Soong, 2006b), he translated so much material and contacted so many foreign correspondents on the issue that eventually the story was taken up (over 50 Internet and mainstream news outlets eventually picked up the story). The point here is not that Soong’s site
is well read, but rather that one person in Hong Kong with a website and translation skills singlehandedly brought a an aspect of company behaviour to widespread public attention.
Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment
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S. Frost and M. Burnett
The journalists’ case was taken up by Reporters Without Borders, and direct appeals made to Apple
CEO Steve Jobs. The assets were unfrozen and the case eventually dropped. As Elaine Kurtenback
(2006b) points out,
The dispute highlights challenges big companies face in living up to their codes of conduct while
outsourcing most of their production. It also reflects the pressures Chinese journalists confront in
doing their jobs.
September 2006
In September, the story had all but disappeared from the mainstream press. The final act occurred when
organizations such as the BBC (2006c) reported that the lawsuit brought by Terry Guo had been
dropped.
In a joint statement Hongfujin’s [Foxconn’s] Taiwanese owner, Foxconn Technology, and China
Business News pledged to work together to protect workers’ rights and to respect their own business activities. ‘Both sides believe the media should respect enterprises’ just rights and enterprises
should respect media’s just and reasonable ability to supervise society,’ the statement read.
Questions
1. Review and assess actions take by Apple.
2. If you were a director of Apple what would you have done in retrospect? And what would your next
steps be now?
3. If you were a director of Foxconn what would you have done in retrospect? And what would your next
steps be now?
References
Apple. 2006a. Form 10-K: for the Fiscal Year Ended September 30, 2006. 29 December.
Apple. 2006b. Report on iPod Manufacturing. 17 August.
Apple. 2007. Apple Reports First Quarter Results. 17 January.
AppleInsider. 2006a. iPod City: inside Apple’s iPod factories. AppleInsider 12 June.
AppleInsider. 2006b. Photos: inside Foxconn’s ‘iPod City’. AppleInsider, 14 June.
Baldwin H. 2006. How Foxconn surpassed Flextronics. Reed Electronics 22 June.
BBC. 2006a. iPod ‘Slave’ Claims Investigated. 14 June.
BBC. 2006b. Apple Admits Excessive iPod Hours. 18 August.
BBC. 2006c. China iPod Labour Lawsuit Dropped. 4 September.
CAFOD. 2004a. Clean up your Computer: Working Conditions in the Electronics Industry. CAFOD: London.
CAFOD. 2004b. Ethical Trade and the Electronics Industry. CAFOD: London.
CAFOD. 2005. Clean up your Computer Progress Report. CAFOD: London.
CAFOD. 2006. Computer Conditions Update 2006. CAFOD: London.
EMSNow. 2007. Hon Hai Group Aims for $61B Revenue in 2007. 16 February.
Foxconn. 2007. About Foxconn. http://www.foxconn.com/WorldLayout.html [22 February 2007].
International Herald Tribune (IHT). 2006. Apple cites China firm for violating standards. 18 June.
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DOI: 10.1002/csr