Ryan Capistrano

AC181

Instructions: Answer each question in not less than SEVEN (7) sentences per
question.

Case: Worker Exploitation at Foxconn/Hon Hai

Foxconn/Hon Hai Precision Ind. Co. Ltd. is a key China-based supplier to several U.S.
high-tech companies like Apple, Dell, and HP. Manufacturers have a vested interest in
the quality of products from their suppliers and their labor practices. Low-cost labor
and a nearly endless supply of employees lead many U.S. companies to deal with
suppliers in China. As more U.S. corporations strive for social responsibility, it was only
a matter of time before production overseas saw the ripple effect of those decisions.
Labor laws in China provide limited protection for workers and therefore the U.S.
companies faced an ethical dilemma. Should they monitor labor practices at
Foxconn/Hon Hai to ensure that workers were treated respectfully, or should they
accept that if Foxconn followed Chinese labor laws it was not their concern?

Hon Hai, the world’s largest electronics contract manufacturer, employs over 800,000
workers, who produce parts for iPads, iPhones, and other devices. Workers are housed
in a campus with dormitories, a hospital, a bookstore, swimming pools, free bus
transportation, and other services. Many of the workers migrated from farm
communities to the industrial hubs where Hon Hai’s operations are located. Their jobs at
Hon Hai’s factories are often the first assembly-line jobs they have ever held and they
are frequently living far from home and family. Working conditions at Hon Hai’s factories
complied with Chinese labor laws but frequently led to what is considered in the U.S. as
worker abuse. Workers routinely worked in excess of 40 hours, with most workers
averaging 120 hours of overtime per month.
That calculates to an average workweek of 70 hours. Many machines were not properly
equipped with safety devices leading to injuries. Underage workers were employed. At
least 10 employees at the company committed suicide in 2010, which brought labor
conditions under great public scrutiny. The company’s response was to install safety
nets around the dormitories to prevent additional casualties. The uproar from customers
and the independent worker-advocacy agency, the Fair Labor Association, led to
serious review of working conditions. Apple had previously questioned labor conditions
at Hon Hai. The company sent a team to investigate reports of excessive overtime and
other “sweatshop” conditions. After the rash of suicides Apple sent a team of
executives to China to inspect the factories and meet with Foxconn’s CEO. Apple
continues to monitor conditions at the supplier that were so bad that the U.S. company
could no longer ignore the abhorrent labor practices. Because of the sheer size of Hon
Hai and its importance in the supply chain to electronics manufacturers, discontinuing
the relationship would be a very difficult and costly alternative for Apple and others. Hon
Hai has implemented a number of improvements for workers that should satisfy its
®
© 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
customers and keep its employees safe and healthy. Employees at Hon Hai’s factories
will now work fewer hours and receive higher pay. For example, there is now a
maximum 40- hour work week for each employee, with the option of working up to a
maximum of 36 hours of overtime each week. The probation period for entry-level
workers was cut in half from six months to three months. The company instituted an
Employee Assistance Plan to assist employees with mental health concerns.

Labor laws around the world reflect the priorities of each nation’s government and this
can lead to great differences between countries. When a U.S.-based company does
business with suppliers in other nations, one factor to consider is how workers are
treated and what is required by law to insure humane working conditions.

Questions for the Group:

1. What obligation does a company like Apple or HP have to insure that suppliers
follow the local labor laws? What should Apple do if it discovers that the
supplier is not in compliance with those laws?
 For my opinion, their obligations are to make sure that there are no
irregularities happening to their transactions. They should make sure there
are no one being punished or being degraded for every transaction they
do to their business partners. HP or Apple are will be held liable to the
employees of their suppliers because before entering the contract, they
should already know that they are dealing in good faith without breaking
any laws. They should also know the conditions of the employees of their
suppliers because the products being supplied are part of their hard work.
Maybe we can say that they only take part as responsibility but it should
be the whole responsibility of the supplier itself. Apple or HP should take
actions when they found out that their suppliers did not comply within the
laws as it will affect their image and also the production of their products.
They should ensure that they are transacting with someone who complied
with the laws. The buyers must be alarm if their suppliers are illegally
conducting their own business. They should also report it immediately so
that the damage caused will be minimized. Even if the supply of the
products will be postponed, they should be willingly to do it because it will
greatly affect them.

2. As someone who might purchase devices made by Apple, Dell, or HP, how
does this treatment of workers at a supplier influence your opinion of Apple
and other U.S. companies that deal with such suppliers? Does Apple bear any
responsibility for these labor problems because of its quest for ever lower costs?
Explain thoroughly your answer.
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© 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  For me, as someone who would be purchasing a device made by a
company where the parts of the products are made with such
discrimination and injustice treatment to workers, I would try to dig and
research more about it. If the company itself is involved with such
irregularities, ofcourse I would feel bad about it. For the case of Apple,
Dell or HP against their supplier, it is not entirely their fault as they don’t
even have any idea that such abuse is happening to the employees of
their suppliers. Maybe at some point, outsourcing is a good idea but we
need to be more knowledgeable to the partner who are we transacting
with. Apple bear a responsibility for the labor issues happening on their
suppliers as they benefit on it by paying for it in a low cost. They should
have done such investigation on why the cost is cheap. They should have
done such actions because the lives of people are at stakes. We should
not be blinded by the cost or appearance of a product. We should know
the reason behind it. We should learn ethical requirements to be followed
before we make decisions.

®
© 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.