The Foxconn's Investment
The Foxconn's Investment
Until February 2023, no clear sign about Foxconn to build a factory in Indonesia. By Reuters on Feb 9th, 2022 (nearly 1 year ago), Taiwan-based Foxconn (2317.TW) will launch an investment to manufacture electric vehicles and batteries in Indonesia in the third quarter, an Indonesian minister said (Minister of Investment Bahlil Lahadalia), amid efforts by Southeast Asia's biggest economy to become a global hub for EVs (Electric Vehicle).
In 2012, (now CEO Apple) Tim Cook was spotted at the new Foxconn Zhengzhou Technology Park, where 120,000 people work, Bloomberg reports. When then next iPhone begins production, it could be this factory that manufactures the popular smartphone.
Apple's chief executive also met with Chinese Vice Premier Li Keqiang, paid a visit to the Foxconn plant in Tianjin and stopped by an Apple Store in Beijing.
The Xinhua news agency reports that Cook told Li that Apple "will strengthen comprehensive cooperation with the Chinese side and conduct business in a law-abiding and honest manner," according to Bloomberg.
The motive behind Cook's visit has not been made clear by Apple. A spokeswoman for the company only said the CEO was there to meet with "government officials." One thing's for sure, speculation over the high-profile visit is running rampant.
There are several reasons Cook could be in China. Topping the list is to iron out problems with the controversial iPad and iPhone manufacturer Foxconn. Apple became the target of complaints over the working conditions of Foxconn plants, which manufactures about 50 percent of the world's electronics.
Foxconn has been continuously in the headlines. In January, 300 employees working on Microsoft's Xbox 360 threatened mass suicide. In the same month, the public radio program "This American Life" broadcast a show featuring American monologist Mike Daisey's harrowing account of poor working conditions. The show was later retracted because of fabrications in Daisey's report.
Nonetheless, the issues at Foxconn came to light and after an explosive expose by the New York Times - with Apple at the center of the storm.
One of themany petitions to surface asked Apple to make the next iPhone ethical. Cook responded to allegations of unethical working conditions by saying that Apple cares about every worker in their worldwide supply chain.
"Any accident is deeply troubling, and any issue with working conditions is cause for concern," Cook said in an email to Apple employees in January. "Any suggestion that we don't care is patently false and offensive to us."
A violent workers’ revolt at the world’s largest iPhone factory (November 2022) in central China is further scrambling Apple’s strained supply and highlighting how the country’s stringent zero-Covid policy is hurting global technology firms.
The troubles started last month when workers left the factory campus in Zhengzhou, the capital of the central province of Henan, due to Covid fears. Short on staff, bonuses were offered to workers to return.
But protests broke out this week when the newly hired staff said management had reneged on their promises. The workers, who clashed with security officers wearing hazmat suits, were eventually offered cash to quit and leave.
Analysts said the woes facing Taiwan contract manufacturing firm Foxconn, a top Apple supplier which owns the facility, will also speed up the pace of diversification away from China to countries like India.
Daniel Ives, managing director of equity research at Wedbush Securities, told CNN Business that the ongoing production shutdown in Foxconn’s sprawling campus in the central Chinese city of Zhengzhou was an “albatross” for Apple.
“Every week of this shutdown and unrest we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China,” he said.
In a statement sent to CNN Business on Thursday after the protests had wound down, Apple said it had a team on the ground at the Zhengzhou facility working closely with Foxconn to ensure employees’ concerns were addressed.
Even before this week’s demonstrations, Apple had started making emergency option that the iPhone 14 built in other countries (in India, or in Indonesia via Foxconn, or Vietnam), as it sought to diversify its supply chain away from China.
The announcement in late September marked a major change in its strategy and came at a time when US tech companies were looking for alternatives to China, the world’s factory for decades.
The Wall Street Journal reported earlier this year that the company was looking to boost production in countries such as Indonesia, Vietnam and India, citing China’s strict Covid policy as one of the reasons.
Kuo said on Twitter that he believed Foxconn would speed up the expansion of iPhone production capacity in India as a result of Zhengzhou lockdowns and resulting protests.
The production of iPhones by Foxconn in India will grow by at least 150% in 2023 compared to 2022, he predicted, and the longer term goal would be to ship between 40% and 45% of such phones from India, compared to less than 4% now.
Chinese factory laborers call jobs like Hunter’s “working the screws.” Until recently, the 34-year-old worked on the iPhone 14 Pro assembly line at a Foxconn factory in the central Chinese city of Zhengzhou. His task was to pick up an iPhone’s rear cover and a tiny cable that charges the battery, scan their QR codes, peel off adhesive tape backing, and join the two parts by tightening two screws. He’d then put the unfinished phone onto a conveyor belt that carried it to the next station.
Hunter had to complete this task once every minute. During a normal 10-hour shift, his target was to attach 600 cables to 600 cases, using 1,200 screws. Every day, 600 more unassembled iPhones awaited him.
Apart from a strictly timed hour-long lunch break, he spent his days inside a windowless workshop that smelled of chlorine, wearing an antistatic gown and a face mask. If he needed to take a toilet break, he had to make up for lost time. Behind the assembly line, supervisors — known as xianzhang, or “line leaders” — monitored workers’ progress on a computer and frequently admonished those who fell behind.
“I feel we have no rights and dignity inside the workshops,” Hunter, who asked to be identified by his nickname, told Rest of World in a call after work one day. “Some line leaders just can’t live a day without scolding people.” He hated the humiliation and tediousness of the production line job, but he gritted his teeth. The pay would be worth it.
Foxconn’s compound in Zhengzhou makes about half of the world’s iPhones. Nicknamed “iPhone City,” it covers an area of 5.6 square kilometers — about one-tenth the size of Manhattan — and at full capacity employs some 200,000 workers. Apple relies on just-in-time manufacturing, meaning it doesn’t build up a large inventory of products but has iPhones made as consumers order them. As a result, the megafactory’s busiest season starts around September or October, when Apple releases its new iPhone models, and continues through the end-of-year holiday season until the Lunar New Year, which falls in January or February.
As global demand for new phones surges, Foxconn offers pay and bonuses that are much higher than those of other blue-collar jobs to make sure its assembly lines can run at full speed. Workers, including rural migrants and college students, take on heavy workloads, skip holidays, and follow a tight schedule in order to qualify for their bonus at the end of the month.
The atmosphere was particularly tense this past peak season. Covid-19 outbreaks that disrupted production lines and a labor protest that pitted workers against riot police caused the factory to fall behind on its iPhone 14 Pro orders. Dan Ives, a tech analyst at U.S.-based financial services company Wedbush Securities, estimated that, during the crisis, Apple was losing out on $1 billion per week in iPhone sales.
“It’s been an unprecedented nightmare for Apple.”
The series of upheavals has drawn renewed attention to the precarious lives of Chinese manufacturing workers, who increasingly work on a gig-like basis. For Apple, it has also highlighted the reputational and economic risks of having the bulk of its most profitable product made by one facility. “It’s been an unprecedented nightmare for Apple,” Ives told Rest of World.
Responding to an emailed inquiry, a Foxconn spokesperson referred Rest of World to its revenue report published in January, which said the company was “making every effort” to protect the rights of employees during Covid-19 outbreaks and that its Zhengzhou factory had returned to normal operations by December. Apple did not respond to requests for an interview or comment.
Over several months, ending this January, Rest of World kept in touch with Hunter and spoke to other Foxconn workers as they witnessed the turmoil inside iPhone City. While Hunter had previously worked for Foxconn, this was his first time on the assembly line. He said the experience left him with the impression that making iPhones is like “working under a whip” — made bearable, he and other workers acknowledged, by the generous pay.
“It’s hard to make a living elsewhere, so we came to the factory,” another Foxconn worker, who assembles iPhone rear covers and who requested anonymity out of fear of retribution, told Rest of World in December. A former chef, he said he had been living on credit card debt after a restaurant he had invested in shut down during the pandemic. “We have no other choice but to work for Foxconn’s high pay,” he said.
Hunter first started working for Foxconn more than 10 years ago as a security guard. He comes from a village in Henan, the inland province also home to Zhengzhou, where his parents make a living growing wheat and corn. Like many of his rural peers, he dropped out of school as a young teenager to find work in China’s more affluent coastal areas. In 2011, when he was around 23, he moved back home after hearing the news that Foxconn had opened a new factory in Zhengzhou.
At the time, the Taiwanese manufacturing giant was grappling with a spate of suicides at its plant in the southern metropolis of Shenzhen. In interviews with a researcher, one survivor described a lonely, exhausting factory life. Foxconn responded by cutting overtime work, installing anti-jump nets between dormitory buildings, and hiring counselors.
Hunter had heard of the suicides, but he was excited by the opportunity to work for a company that was close to his home and had a better reputation than many Chinese firms. Back then, Hunter recalled, Foxconn paid a basic salary of around 1,200 yuan ($182) a month, comparable to coastal factory wages, and it paid on time. Quotes from company founder Terry Gou about precision and innovation, included in videos shown to new hires, impressed him.
Hunter told Rest of World that management seemed to care and that they had set up a complaint hotline for employees. One time, he called about his scooter getting stolen, and the factory helped him make a police report. “They still haven’t found that scooter,” he said. “But the attitude was good.”
In the early 2010s, manufacturing jobs in China were more stable. Workers often stayed in one factory for years at a time, returning home and seeing their families only during the Lunar New Year holidays. But over the last decade, with increasing urbanization and an expanding service sector, factories have seen growing turnover. Eli Friedman, a Cornell University professor who studies labor politics in China, told Rest of World that with more options available, young workers became less willing to put up with repetitive production line work and cramped factory dorms. “I’m just not sure that seems like the kind of life that people mostly want anymore,” Friedman said. “But money talks.”
Foxconn adapted. The seasonal nature of iPhone sales means most workers are only needed during certain times of the year. The company now keeps its basic monthly salary at about 2,200 yuan ($324), which workers told Rest of World is barely enough to cover rent and food costs. To attract recruits during production peaks, it lures them with overtime hours that pay up to double the minimum hourly wages and lucrative end-of-month bonuses. When iPhone orders decline, the company cuts overtime and terminates bonuses as a way to shrink its workforce, according to labor researchers.
Yige Dong, a sociology professor with the State University of New York at Buffalo, calls such short, seasonal factory work “gig manufacturing.” Manufacturers retain a core group of skilled employees, while the rest of the workforce is brought in for a few weeks at a time. “[Foxconn] recruits like hundreds and hundreds of people each day, and they couldn’t care less if you leave,” said Dong, who worked at a Foxconn factory in 2017 to research its female employees. “They keep the workforce as flexible and dynamic as they can.”
Between 2011 and 2022, Hunter quit the company from time to time to work at other Apple assemblers in southern China, get married, run a snack shop, or just because he hated a particular task assigned to him. But, as neither the other jobs nor the marriage proved stable, he always came back to Foxconn, where he could make a living while being close to his family.
In November, while Hunter was still confined in his room, Gou, Foxconn’s founder, wrote a letter to the Communist Party leadership warning that stringent Covid-19 measures were threatening China’s position in global supply chains, the Wall Street Journal reported. (Gou’s office denied sending the letter.) In recent years, Foxconn has been setting up production lines — including for Apple — in other countries too. On November 11, China tweaked its zero-Covid restrictions, including requiring shorter quarantines.
Around this time, Foxconn launched an aggressive recruitment campaign to fill the posts vacated by fleeing workers. The company increased its daily and monthly attendance bonuses and bumped its hourly base pay. Recruits said they could make more than 10,000 yuan ($1,474) a month if they worked 10 hours a day, six days a week — nearly double the average salary in Henan province. “This is indeed a sky-high salary for frontline factory workers,” Han Song, a recruiter in Shenzhen who sent workers to Foxconn in Zhengzhou, told Rest of World over a messaging app.
The Henan government also tasked village officials with finding recruits; Foxconn is the region’s top exporter — in 2019, it was responsible for nearly 80% of Zhengzhou’s total cross-border trade volume. The company bussed tens of thousands of workers to the factory complex and housed them in dorms, where they quarantined before entering the closed loop.
“I’ve been sitting here looking out over the balcony,” a worker in her mid-20s who was isolating in a three-person dorm room told Rest of World in mid-November. Mother to a three-year-old, she was waiting to start her first-ever factory job. “The pay is high,” she said.
She and two other November recruits told Rest of World they were expecting to make some quick money, which many blue-collar workers sorely needed after a tumultuous year during which frequent zero-Covid lockdowns closed factories and otherwise reduced demand for labor.
“The high wage was very enticing,” Chen, a 28-year-old worker, told Rest of World. He quit a job in Shanghai packing Disney dolls so he could work at Foxconn. Another worker, Zhou, also in his 20s, took a 20-hour bus ride from Shenzhen, where he had been working in a different Foxconn factory, to join the Zhengzhou workforce. Both asked to use only their surnames to avoid being identified by their employers.
“Foxconn made me feel disillusioned this time.”
Once in Zhengzhou, Chen and Zhou said they and other recruits felt deceived when they heard chatter that they could be working alongside colleagues infected with Covid-19 — a rumor Foxconn denied. On their contracts, they noticed that their monthly bonuses would be paid in three months’ time, instead of the two months promised in the job ad. Foxconn blamed the discrepancy on a technical error. The two workers also complained of seeing trash pile up inside their dormitories. “Foxconn made me feel disillusioned this time,” said Chen, who had worked for the company on and off since he was 16.
Frustrated, thousands of recruits broke out of their quarantine to vent their anger. In a video call with Rest of World on the morning of November 23, Zhou showed hundreds of fellow recruits carrying wooden sticks and metal poles, marching toward the Foxconn factory compound. During the day, footage of riot police beating up protesters and protesters smashing Foxconn offices circulated in workers’ group chats. The conflict intensified at night, as workers, some carrying Chinese national flags in an apparent attempt to tie their cause to the Communist state, threw objects at the police. “Hit back at them!” the crowd chanted in a video Zhou filmed.
The same night, Chen walked out of a different dormitory complex and joined thousands of others in demanding compensation.
Hunter had been spending his quarantine circumventing Chinese censorship to access Twitter and Wikipedia and read English-language news about China with the help of a translation service. Stuck in his room, he tweeted out protest videos he had received in workers’ group chats.
In an attempt to quell the protests, Foxconn offered the workers payouts of 10,000 yuan ($1,474) if they chose to leave the next day. Reuters reported that some 20,000 recruits left. Partly as a result, the factory was operating at only 20% of its capacity in November, Ming-Chi Kuo, an analyst at TF International Securities, wrote. The Financial Times reported that beginning in November, Apple shifted some iPhone 14 Pro production to a Chinese competitor of Foxconn, Luxshare Precision, and was, by early January, on the verge of signing a big order with the company.
Zhou, who comes from an impoverished area of Guizhou, in southwestern China, took the post-protest payout and hopped onto a bus home. In a call after he arrived, on December 5, he told Rest of World that after several years of working factory gigs, he missed home, where his parents made a humble living growing corn and potatoes. “It’s easy to feel jaded working the screws,” he said. “In the big city, you being there or not doesn’t make a difference.”
Chen also took the payout and went home to his village in the northwestern province of Shaanxi, arriving early for the Lunar New Year holiday — an annual opportunity for him and his father, a construction worker, and mother, also an electronics factory worker, to see one another. Each family reunion ends with them going their separate ways to look for new jobs.
“Factories might not give you a great life,” Chen said. “But at least you won’t starve.”
In December, as Western holiday shoppers were preparing Christmas presents, Foxconn renewed efforts to rev up its iPhone 14 Pro production. To attract a new crop of workers, the company again raised its pay. One contract seen by Rest of World promised a monthly bonus of 6,000 yuan ($885) if recruits worked at least 26 full days in December and 23 days in January. On social media, people described the proposition as the “60-day Foxconn challenge.”
Hunter had planned to return home once his quarantine ended, but the bonus made him reconsider. Going through a routine he was well familiar with, he lined up at the factory’s recruitment office, had his blood taken as part of a mandatory health check, and carried his belongings into an eight-person dorm room. The next day, he completed a mental health questionnaire, which asked whether he had insomnia or relationship issues — a practice that dates back to the spate of suicides in 2010 — and spent eight hours watching orientation videos on his phone. A frequent pop-up asking for a facial scan made sure he was paying attention. After three more days of quarantine, he started his most recent role — working the screws on the iPhone 14 Pro assembly line.
Inside the workshop, Hunter said he felt a kind of oppression he had never experienced in his previous Foxconn jobs, which were away from the factory floor. With no windows, he said that it was impossible to tell day from night without checking a clock. Managers required such a high tempo that he felt he could not stop for a second. Hunter even witnessed one colleague getting his pay reduced for spending too long drinking water. The constant scolding was humiliating, he said, even though he was rarely the target. Colleagues broke into tears under the stress.
Hunter recalled hearing one line leader shouting and swearing after a colleague went to the toilet and another supervisor yelling at a worker who had completed their task only 40 times in one hour, while others had managed 60. Occasionally, a worker, usually someone new, decided they had had enough and yelled back. Such rebellion never ended well. Disobedient workers, Hunter said, would be fired on the spot or banned from working overtime so they would have little reason to stay.
One 30-year-old worker, Wang, who requested to be identified only by his surname to avoid being identified by his employers, recently spent a month at the Foxconn factory while on a winter break from his regular work on container ships. He told Rest of World that one day, after he spent part of his lunch break smoking a cigarette, supervisors penalized him for not returning to his station as fast as possible, banning him from lucrative overtime work for three days. “They yell at me more than my parents,” Wang said. “I was having mental breakdowns all the time.”
“iPhones are made in hell.”
Despite occasional shouted threats of violence, conflicts seldom turned physical, Hunter said, perhaps because both workers and their bosses were aware of the ubiquitous surveillance cameras. But after lunch one day, he claims he spotted a police vehicle outside of the factory building. He recalled that a co-worker said a disgruntled employee had just been taken away for poking her line leader in the face with a screw gun. Hunter noticed the manager’s wounds. Foxconn did not respond to an email asking for comment on these incidents..
Some line leaders are more lenient. Che Gege, a 22-year-old college student who has been using her winter break to earn tuition money examining iPhone 14 Pro screens on the Foxconn production line, told Rest of World her supervisor was good-tempered, except for occasionally calling a worker “dumbass” when they made a mistake. He imposed no time limit for toilet or water breaks, she said, though security guards scolded those who lingered in the hallways. “Usually we need to run [to the toilet],” Che said.
On December 7, as the zero-Covid policy’s economic and social toll was becoming increasingly clear and the virus continued to spread anyway, the Chinese government announced an abrupt end to mass quarantine, lockdown, and daily testing requirements. Soon after, Foxconn lifted its closed-loop system, meaning employees could finally exit the compound after work.
Partly because China’s population had built up relatively little immunity, highly contagious Omicron subvariants spread fast. It took just two weeks for several hundred million citizens to fall sick across the country.
At Foxconn, masks and quarantine mandates for those who tested positive failed to stop the virus. Many people on the factory floor appeared to be experiencing Covid-19 symptoms, according to workers’ social media posts. “The supervisors on my production were having a damn bad fever,” Wang, the container ship sailor, told Rest of World on December 17. “I had never seen such people who value money over their lives.”
Hunter and Wang alleged that, at their work stations, line leaders advised workers not to get tested, so they could keep working the screws while sick. Hunter said he took the advice. He was worried about the conditions inside quarantine centers — two roommates had moved in and complained of medicine and food shortages — and about losing his attendance bonuses if he took sick leave. Despite feeling feverish, he went to work for 10 to 11 hours a day. He sometimes felt suffocated behind his mask. “I was sitting in the middle, and the people on my left and right were both having a fever,” he said between coughs in an interview on December 15. A Foxconn spokesperson told Rest of World that sick employees can apply for sick leave and receive free medical services. “The company will not force employees diagnosed with Covid to work on production lines,” they said.
Foxconn caught up to demand. By the end of December, the assembly line was running at 90% capacity, executives told the government-run newspaper Henan Daily. The executives said that to prevent workers from quitting ahead of January’s Lunar New Year holidays, the factory was providing up to 13,000 yuan ($1,917) in bonuses as well as hosting festive activities, like making dumplings and sports contests.
Hunter said that as the factory got nearer to its target output, his supervisors started asking him to take 10-minute breaks in the afternoon. On December 25, for the first time that month, his manager asked him to take the day off. He spent a few hours playing League of Legends at an internet café and later posted on Twitter. “The reason I said iPhones are made in hell,” he wrote, “is that workers are leading prisoner-like lives in workshops that see no sunlight.”
By January 2, Hunter decided he’d had enough of screws. Back home, all of his family members had contracted Covid-19 and recovered from the virus. But his grandmother, in her 90s, subsequently had a stroke, and Hunter wanted to visit her in the hospital.
At 5 p.m. on January 3, after tightening nearly 800 screws that day, he resigned. “I’m not coming tomorrow,” he told his supervisor.
“All right,” he recalled the manager responding.
Hunter walked out of the workshop joyfully. “Finally, I’m free,” he told Rest of World later that night.
Over the past decade, he said, he had witnessed colleagues at Foxconn passing out on the job, attempting suicide, and getting into fistfights with their supervisors. After a month on the assembly line, he understood why. “It’s suffocating here. To put it bluntly, working at Foxconn means surrendering one’s dignity,” he said.
Some Foxconn workers hold a more positive view. Che, the student, said that, although she was also looking forward to the end of her two-month gig, it was no harder than any of her previous jobs, including as an instant noodles salesperson and hotel receptionist. “If it’s as bad as you say, why do you keep coming here?” she said of her more critical colleagues. “There’s no easy way to make money. If you intend to make money from someone, you have to work as they ask.”
Jenny Chan, a sociologist with Hong Kong Polytechnic University who has been studying labor issues at Foxconn since 2010, said that the conditions at the company are far from the worst in China but that they nevertheless show the precarious lives of manufacturing workers. They get hired or fired following the ups and downs of global electronics markets and are left with few skills or career prospects. “Foxconn never aims at having a stable workforce with roots, social relations, solidarity, or bargaining power. It’s always change, change, and change,” Chan told Rest of World. “These workers will not have a promotion path or really share the prosperity in China.”
Friedman, at Cornell University, said that besides China’s shifting Covid-19 policies, Foxconn’s strict control over its employees had also contributed to labor conflicts. Few young people would feel a sense of belonging at Foxconn, he said. But he added that, as China’s economic growth slows down and job opportunities dry up, they might be unable to ignore the money on offer. “People have this idea that Foxconn is the worst possible job in China,” Friedman said. “That’s actually not [the case].”
On January 9, after bidding farewell to his friends at Foxconn over some local Henan cuisine, Hunter returned to his hometown, an hour’s drive away. The next day, he got to see his grandmother. He said he would spend some of the $2,200 he earned at Foxconn this time on Lunar New Year gifts for his relatives and cash-filled red envelopes for the children in his family.
He hopes he won’t be back at Foxconn during the next iPhone season production hike. “But I can’t be absolutely sure,” he said.
Viola Zhou is a reporter at Rest of World.