Foxconn Bears The Brunt Of Ivory Tower Assault On Capitalism

Editor’s note: Ruslan Kogan is founder and CEO of consumer electronics company Kogan. Follow him on Twitter @ruslankogan.

Recent media reports about working conditions in Apple’s (Foxconn’s) Chinese factories are way off the mark.

Through Kogan, I have been working with China for the past six years. Having most of our production done in China, we take our factories and working conditions very seriously. I regularly visit all of our Chinese manufacturing facilities to keep an eye on what is going on and I am always talking to the factory owners, managers and assembly line staff.

Lately we have been hearing that companies like Apple are exploiting their Chinese employees. I think this suggestion is ridiculous. They are doing the exact opposite. The people who are making the accusations of “exploitation” have obviously never visited China or spoken to any of the factory staff or are deliberately misleading readers.

Chinese staff are generally very grateful for the work they are doing. They are all doing it by choice because it is the best opportunity they have to earn money and gain valuable skills. Not only do the workers earn enough for a very comfortable living, they also have their accommodation and most of their living expenses covered by the factories. Which western world employer does this? While the wages that the factory workers receive may seem low to a westerner, general living expenses in China are lower than the west. Many of the workers send excess money to their home villages to help support their families.

They are learning about quality control, the importance of scientific processes, assembly procedures and how to use some of the most sophisticated equipment in the world. They are also very proud of the part they play in the final finished product (for those who assemble the groundbreaking Apple products, you couldn’t be prouder of the finished product). While to some westerners it might appear to be repetitive work, the claims of sweatshop like conditions are patently false. Often the next best option would be to go back home to their village and work in agriculture for much less money and in much worse conditions than the factory could offer.

Although Foxconn’s employees get to work on some of the most innovative and important products in the world, it’s true to say that it’s not all glory. In May 2011, there was an explosion at one of the factories that killed two staff. Any loss of human life is tragic and must be avoided at all cost. It’s very easy to just blame Apple, Foxconn and industrial development in China for this, but that won’t get us anywhere. The fact is that accidents like this happen everywhere in the world — even in the most developed countries like America, England and Germany.

The most important thing is to do everything possible to avoid such occurrences. We must learn from them, take immediate action and ensure we put in serious measures to make certain these things never happen again. It is also important to note that more deaths occur during the backbreaking hard labour of the pre-industrial economies than the cutting edge factories, like Foxconn’s or Kogan’s. It is very easy to focus on isolated incidents, but all facts need to be seen in context, and when one takes a sober view of industrial development in China, only one conclusion can reasonably be drawn – the lot of the Chinese is improving.

A key point to note from all the commentary we have seen from the concerned reporters is not what is being alleged by them, but what is not. Despite their best efforts at exposing the supposed evils of industrialism, nothing akin to child labour or real abuse has even been alleged. The reason is simple – the manufacturing revolution in China has improved people’s lives, including the lives of workers.

Before the 20th Century in the West, and even in many parts of the world today, most children were made to work. Why don’t we see children working in the West today, or even in developing economies like the Chinese industrial zones? It isn’t because of some government decree banning child labour, it’s due to economic growth and capitalism. When a family survives on a dollar a day, they have no choice but to make their children work. But, as the economy develops and parents grow richer, they support their children’s education – freeing their children from labour, and providing genuine opportunities to the next generation.

I am actually writing this while traveling to Hong Kong after spending a week in Shenzhen. Last night, I caught up with someone I met in 2006. At that time, she was working as a product tester at a factory. Since then, she became a quality-control team leader and later got a job in the sales department of a large factory. She recently quit that role and became an entrepreneur – starting her own business helping clients all over the world source products and find the right factory for their requirements. I asked her how business is going and she replied:

“For now it is very slow but it is growing. I currently earn less money than in my previous job at the factory, but I am now working harder than ever – over 15 hours a day – and constantly learning new things. I am enjoying it very much. I now have two employees and I will continue to work hard and learn and one day I will have as many employees as you.”

Her response reminded me of how I felt about work when I started Kogan. Working long hours is not a sign that workers are being exploited. I know plenty of entrepreneurs who are very excited that they spend almost every waking moment creating something that will make the world a better place. The Chinese strike me as very enterprising people, who want to improve their lives and are prepared to work hard to achieve their goals.

The Chinese care more about learning and being productive than they do about how many sick days and annual leave days they will get each year. They live in a rapidly developing economy and the general attitude is “I want to work really hard and develop skills and progress in life.” They all know that they are in control of their destiny and the way to achieve what they want is through hard work.

So, what would happen if these self-righteous commentators got their way? It wouldn’t really hurt Apple or any other manufacturers like Samsung, Kogan, Sony, or LG. Assembly lines can be moved to new countries, or even replaced with robots. The people who would be hurt the most are the very people who the commentators are ostensibly trying to protect. It would mean that factories are producing less, there is less work around and inevitably lots of people would lose their jobs. People who were happy with their employer, their job, their wage, their learning opportunity and their livelihood would lose their jobs, despite never once complaining.

We also need to recognize that all countries go through a phase of industrial manufacturing during their development. This happened in England through the industrial revolution, and in the United States in the 19th century. We should not be trying to deprive the Chinese of increasing their prosperity through this significant and mandatory stage of development.

I believe there is a lot of value in open and transparent discussion over important issues. I also believe that discussions are best had with accurate information and facts rather than emotional fear-mongering sermons from people sitting atop ivory towers with little experience in what they are talking about. We need to remember that no Chinese employees complained about their situation or working conditions. It was fabricated by opportunistic reporters vying for a few clicks or views.

If anyone has serious concerns about this issue, I highly recommend they actually get on the ground in China and travel to some factories and speak to the staff – I am happy to assist in this process, because I am doing it all the time. In the meantime, whether the fear mongering continues or not, Kogan will continue to closely monitor and audit all our manufacturing partners in the same way we do with all our vendors. It’s very important to us that everyone handling Kogan products is happy, because happy people provide better products and services.

[photo of Shenzhen by John Biggs]