Foxconn increases wages in China | Connect Asia

Foxconn increases wages in China

Foxconn increases wages in China

Updated 21 February 2012, 9:59 AEDT

One of the largest suppliers of Apple iPads and iPhones has increased the wages of its Chinese workers by up to 25 per cent.

It follows widespread criticism from labour groups about the working conditions in many of the Chinese-based factories that are outsourced to produce electronics.

The Taiwan-based Foxconn Technology Group announced the move to lift wages after an independent labour rights organisation, Fair Labor Association, and representatives from Apple visited the company's plant in Shenzhen.

Presenter: Joanna McCarthy

Speaker: Dr Larry Li, senior finance lecturer at RMIT University

LI: Foxconn is one of the biggest employers in China. It's got more than a million workers and is one of the major sub contractors of Apple and, of course, what make Foxconn famous is a couple of years ago, we got 13 staff who committed suicide consecutively. So, of course, that brought the media's attention.

McCARTHY: And do you think it's because they produce Apple products as well that they do receive so much international scrutiny?

LI: I think yes and no, and as you can say everybody loves Apple products, for example, iPad, iPhone. I do have an iPad at home. But if you have little bit of financial background you got to say, for example, if you check the Apple profit margin. Apple profit margin has been doubled since 2007 from 15 per cent to 30 per cent and for Foxconn, on the other hand, their profit margin has been declined to less than two per cent and this year we just got the news, Foxconn to get the big contract from Apple further cut the price to retain the order from Apple. So personally I don't think Foxconn is the only bad boy to blame.

McCARTHY: It certainly has been receiving a fair share of media attention though. Apple, of course, responded by partnering with the Fair Labour Association to audit all of its suppliers. Can we assume that Apple is concerned about a consumer backlash?

LI: I believe so, I'm sure after the investigation of the Fair Labour Association, the working condition in Foxconn will be lift up a little bit, but in the long term I doubt. For example, I'm a finance person. If we check the profit margin, it's only two percent, so is there anymore room for Foxconn to play. And Apple on the other hand got 30 per cent. And again, I do very happy to help out the Foxconn increase in salary for the ordinary workers, because everybody wants to get better pay and less working time, that's for sure.

McCARTHY: So should Apple be prepared to pay more when it outsources these contracts to companies like Foxconn?

LI: Yes, I believe so.

McCARTHY: There's also you mention the spate of suicides at the factory in 2010. How much of this can be attributed to the difficulties that some of these young rural Chinese workers have in moving to urban areas and adjusting to an industrial lifestyle?

LI: Yes, because for the teenagers, the young generations, of course, they want to go to the big cities to try their luck and try to find a job at better pay. But if they work for a company like Foxconn, they do not have too much choice, because Foxconn is competitive because of the labour intensive and the cheap labour and in the long term, I'm sure Foxconn needs to think about a change.

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