The Politics of Global Production: Apple, Foxconn and China's New Working Class

Abstract

Apple's commercial triumph rests in part on the outsourcing of its consumer electronics production to Asia. Drawing on extensive fieldwork at China's leading exporter—the Taiwanese-owned Foxconn—the power dynamics of the buyer-driven supply chain are analysed in the context of the national terrains that mediate or even accentuate global pressures. Power asymmetries assure the dominance of Apple in price setting and the timing of product delivery, resulting in intense pressures and illegal overtime for workers. Responding to the high-pressure production regime, the young generation of Chinese rural migrant workers engages in a crescendo of individual and collective struggles to define their rights and defend their dignity in the face of combined corporate and state power.

Full text

The politics of global production: Apple,
Foxconn and China’s new working class
Jenny Chan, Ngai Pun and Mark Selden
Apple’s commercial triumph rests in part on the outsourcing of
its consumer electronics production to Asia. Drawing on exten-
sive fieldwork at China’s leading exporter—the Taiwanese-
owned Foxconn—the power dynamics of the buyer-driven
supply chain are analysed in the context of the national ter-
rains that mediate or even accentuate global pressures. Power
asymmetries assure the dominance of Apple in price setting and
the timing of product delivery, resulting in intense pressures
and illegal overtime for workers. Responding to the high-
pressure production regime, the young generation of Chinese
rural migrant workers engages in a crescendo of individual and
collective struggles to define their rights and defend their
dignity in the face of combined corporate and state power.
Keywords: Foxconn, Apple, global supply chains, labour,
China, outsourcing, consumer electronics manufacturing,
collective actions.
Introduction
The magnitude of Apple’s commercial success is paralleled by, and based upon, the
scale of production in its supply chain factories, the most important of them located in
Asia (Apple, 2012a: 7). As the principal manufacturer of products and components for
Apple, Taiwanese company Foxconn1currently employs 1.4 million workers in China
alone. Arguably, then, just as Apple has achieved a globally dominant position,
described as ‘the world’s most valuable brand’ (Brand Finance Global 500, 2013), so too
have the fortunes of Foxconn been entwined with Apple’s success, facilitating
Foxconn’s rise to become the world’s largest electronics contractor (Dinges, 2010). This
article explores the contradictions between capital and labour in the context of the
global production chains of the consumer electronics industry. Drawing on concepts
from the Global Commodity Chains and Global Value Chains framework (Gereffi and
Jenny Chan (wlchan_cuhk@yahoo.com) is a Ph.D. candidate, Great Britain-China Educational Trust
Awardee and Reid Research Scholar in the Faculty of History and Social Sciences at Royal Holloway,
University of London. She was Chief Coordinator (2006–2009) of Hong Kong–based labour rights group
Students and Scholars Against Corporate Misbehavior (SACOM). Ngai Pun (punngai@gmail.com) is
Professor in the Department of Applied Social Sciences at Hong Kong Polytechnic University and
Deputy Director in the China Social Work Research Center at Peking University and Hong Kong
Polytechnic University. Mark Selden (mark.selden@cornell.edu) is Senior Research Associate in the East
Asia Program at Cornell University, Coordinator of The Asia-Pacific Journal and Professor Emeritus of
History and Sociology at State University of New York, Binghamton.
The authors have jointly written a book entitled Separate Dreams: Apple, Foxconn and a New Generation of
Chinese Workers (Ngai Pun, Jenny Chan and Mark Selden, forthcoming).
New Technology, Work and Employment 28:2
ISSN 0268-1072
© 2013 John Wiley & Sons Ltd100 New Technology, Work and Employment

Korzeniewicz, 1994; Bair, 2005; Gereffi et al., 2005), the article analyses the power
dynamics of the buyer-driven supply chain and the national terrains that mediate or
even accentuate global pressures.
The principal focus is on labour in the electronics supply chain, including working
conditions and labour as agency, consistent with recent studies of labour as the key
element in global production chains or networks (McKay, 2006; Smith et al., 2006; Taylor
and Bain, 2008; Webster et al., 2008; Taylor et al., 2013). In particular, the concentration
of capital in China and the important roles played by Asian contractors open new
terrains of labour struggle (Silver, 2003; Appelbaum, 2008; Silver and Zhang, 2009).
This inquiry evaluates the incentives for Apple to outsource and to concentrate pro-
duction in a small number of final-assembly facilities in China. It also examines the
potential risks or disincentives that might compel Apple to respond more directly, or
responsibly, to negative publicity surrounding labour conditions and the collective
actions of workers in its supply chain. While the specific detail is concerned with the
interaction between Apple and Foxconn, the article briefly considers the relationship
between other buyers (e.g. Dell) and contractors (e.g. Pegatron). Consequently, it
locates emergent labour struggles more broadly in the electronics sector as a whole.
The authors draw on interviews with 14 managers and 43 workers outside of major
Foxconn factory complexes, where employees were not subjected to company surveil-
lance. The manager interviewees were responsible for production management (four
persons), commodity procurement (three persons), product engineering (two persons)
and human resources (five persons). All workers interviewed were rural migrants aged
16–28, who worked in assembly (semi-finished and finished products), quality testing
(functionality and audiovisual appearance), metal processing and packaging. These
interview data are complemented by fieldwork observations conducted between June
2010 and May 2013 in Shenzhen (Guangdong), Taiyuan (Shanxi) and Chengdu
(Sichuan), which are major industrial centres in coastal, northern central and south-
western China. New enterprise-level data have provided evidence of the replication of
Foxconn’s management methods across its plants, the tensions between Foxconn and
its largest corporate buyers, the working experiences and discontents of workers, and
explosive episodes of labour protest. Primary evidence is supplemented by company
annual reports, scholarly studies, reports from labour rights’ groups and journalistic
accounts.
The article is structured as follows. First, the literature on global outsourcing and the
challenges to labour will be reviewed. The next section will consider the growth of
China as industrial superpower and the emergence and distinctive character of a new
working class. These discussions will be followed by an analysis of the Apple–Foxconn
business relationship, and the responses of workers to heightened production
demands in the ‘just-in-time’ regime. The concluding part will consider the future of
the young generation of China’s rural migrant workers who are struggling to define
and defend their rights and dignity in the multilayered network of corporate interests
and state power.
The politics of global production
The corporate search for higher profits has been enhanced by efficient transportation
and communications technologies, neoliberal trade policies and international financial
services, as well as access to immigrants and surplus labour. Multinationals have
reduced, if not eliminated, major barriers to capital mobility across spaces of uneven
development (Harrison, 1997; Harvey, 2010). Within contemporary global supply
chains, scholars (Henderson and Nadvi, 2011; Sturgeon et al., 2011) highlight the power
asymmetry between buyers and contractors, in which giant retailers and branded
merchandisers play decisive roles in establishing and dominating global networks of
production and distribution. Under buyer-driven commodity chains, Lichtenstein
(2009) and Chan (2011) find that American retailers and branded merchandisers con-
stantly pressure factories as well as logistic service providers to lower costs and raise
efficiency and speed. ‘The determination of retailers to cut costs to the bare bone leaves
© 2013 John Wiley & Sons Ltd Politics of global production 101

little room for [China-based] contractors to maintain labour standards’ (Bonacich and
Hamilton, 2011: 225). The distinction between retailers and merchandisers in their
control over suppliers has become insignificant when ‘most global retailers have suc-
cessfully developed private-label (or store-label) programs, where they arrange with
manufacturers or contractors to produce their own label’ (Bonacich and Hamilton,
2011: 218). In the electronics industry, Lüthje (2006: 17–18) observes that brand-name
firms have focused on ‘product development, design, and marketing’, gaining a larger
share of the value created than hardware manufacturing, which is mostly outsourced
and performed by formally independent contractors. ‘Contract manufacturers’ have
emerged to provide final-assembly and value-added services to technology firms and
giant retailers (Starosta, 2010; Dedrick and Kraemer, 2011).
Asian contractors have been upgrading and growing in size and scale. Lee and
Gereffi (2013) explain the co-evolution process that capital concentration and consoli-
dation of branded smartphone leaders in China and other global supply bases has
advanced alongside the expansion of and innovation within their large assemblers,
notably Foxconn and Flextronics. Appelbaum (2008) finds that East Asian contractors,
ranging from footwear and garments to electronics, have been integrating vertically in
the supply chains. Starosta (2010) focuses on the rise of ‘highly concentrated global
contractors’ in the electronics industry, in which they serve multiple brand-name firms
in different product markets. Not only production tasks, but also inventory manage-
ment, are being increasingly undertaken by strategic factories, resulting in ever
stronger mutually dependent relations between buyers and suppliers. Giant manufac-
turers, rather than smaller workshops, are more able to ‘respond to shortening product
cycles and increasing product complexity’ (Starosta, 2010: 546). Nevertheless, Yue
Yuen, the world’s largest footwear producer, could only ‘pass on less than a third of the
cost increase to its customers’, including Nike, when ‘costs rose sharply’ (Appelbaum,
2008: 74). Hard bargaining by big buyers over costs and profits has kept a tight rein
over producers, frequently slashing profit margins.
In global outsourcing, electronics suppliers are compelled to compete against each
other to meet rigorous specifications of price, product quality and time-to-market,
generating wage pressure as well as health and safety hazards at the factory level while
shaving profit margins (Smith et al., 2006; Chen, 2011). Brown (2010) argues that ‘con-
tractor factories’ are often not provided with any financial support for corporate
responsibility programmes required by brands; ‘instead they face slashed profit
margins and additional costs that can be made up only by further squeezing their own
labor force’. High-tech commodity producers therefore ‘focus their labor concerns on
cost, availability, quality, and controllability’ to enhance profitability in the export
market (McKay, 2006: 42, italics original).
Workers’ adaptation, or resistance, to capitalist control has to be understood in this
new context of global production, in which concentration of capital at the country,
sectoral and/or firm level has reconfigured the class and labour politics. In her longi-
tudinal survey of world labour movements since 1870, Silver (2003) documents the rise
of new working class forces in sites of capital investment for the automobile industry
in the twentieth century. She defines ‘workplace bargaining power’ as the power that
‘accrues to workers who are enmeshed in tightly integrated production processes,
where a localised work stoppage in a key node can cause disruptions on a much wider
scale than the stoppage itself’ (Wright, 2000; Silver, 2003: 13). As a recent example,
Butollo and ten Brink (2012) and Hui and Chan (2012) reported the factory-wide strike
at an auto parts supplier in Nanhai, Guangdong, which paralysed Honda’s entire
supply chain in South China, resulting in wage hikes and increased worker participa-
tion in trade union elections. Periodic and limited worker victories aside, managerial
assault and/or state repression of labour protests are still commonplace.
A neoliberal state collaborates with private entrepreneurial elites by providing
infrastructural support and ensuring law and order, thereby facilitating capital accu-
mulation and economic growth. In China’s capitalist transformation, on the one hand,
the state has stimulated employment and industrial development through large-scale
financial investment and favourable policy implementation (Hung, 2009; Chu, 2010;
© 2013 John Wiley & Sons Ltd102 New Technology, Work and Employment

Naughton, 2010). On the other hand, it has severely restricted workers’ self-
organisation capacity and fragmented labour and citizenship rights among worker
subgroups, despite ongoing pro-labour legal reforms (Solinger, 1999; 2009; Perry, 2002;
Lee, 2007; 2010; Pun et al., 2010; Selden and Perry, 2010). In our sociological research,
we explore the dialectics of domination and labour resistance within the political
economy of global electronics production.
Global production and a new working class: Japan,
China, East Asia
Between 1990 and 2006, the expansion of intra-Asia trade accounted for about 40
percent of the total increase in world trade (Arrighi, 2009: 22). China’s growing domi-
nance has reshaped regional production networks previously dominated by Japan and
its former colonies Taiwan and South Korea. The rise of Japan and East Asian capitalism
in the 1950s and 1960s was integral to the Cold War geopolitical order. To contain the
spread of Communism and consolidate its global economic reach, the United States
provided military and economic resources to its ‘client states’, encouraged Taiwan and
South Korea to open up their markets to Japanese trade and investment, and fostered
the growth of a regional power centreed on Japan’s export-oriented industrialisation
(Evans, 1995: 47–60; Selden, 1997). Japanese firms received subsidised loans to create
new industries and exported finished products to Western markets. In the 1960s,
Toshiba, Hitachi, Panasonic, Sanyo, Ricoh, Mitsubishi, Casio and others moved to
Taiwan to start operations (Hamilton and Kao, 2011: 191–193). Similarly, Japanese
trading companies began sourcing garments and footwear from Taiwan, South Korea
and Hong Kong.
From the mid-1960s, IBM, the leader in business computing, shifted its labour-
intensive production from the United States and Europe to Asia in order to cut costs.
The microelectronics components of IBM System 360 computers were assembled by
workers in Japan and then Taiwan because ‘the cost of labour there was so low’ that it
was cheaper than automated production in New York (Ernst, 1997: 40). RCA, the
consumer electronics giant, swiftly moved to ‘take advantage of Taiwan’s cheap labour
and loose regulatory environment’ in the export-processing zones in the late 1960s (Ku,
2006; Ross, 2006: 243–244; Chen, 2011). Electronics assembly grew rapidly in Taiwan,
South Korea, Singapore and Hong Kong (‘the Asian Tigers’), and later Malaysia,
Thailand, Indonesia and India. In the early 1970s, the Philippines hosted manufactur-
ing plants for semiconductor firms such as Intel and Texas Instruments. In these newly
industrialising countries, most factory workers were young women migrants from the
countryside (Ong, [1987] 2010; Deyo, 1989; Koo, 2001; McKay, 2006).
In the late 1970s, China set up special economic zones to attract foreign capital and
boost exports as the means to integrate regional and global economies. The inflow of
overseas Chinese capital has long been significant, combined with growing capital
from Japan, the United States, Europe and other countries since the early 1990s (Huang,
2003). Hong Kong and Taiwanese entrepreneurs, ranging from low-end component
processing to sophisticated microchip assembly, invested in the Pearl River Delta and
the Greater Shanghai region (Leng, 2005). By the mid-1990s, Beijing’s Zhongguancun
Science Park and Shanghai’s Zhangjiang Hi-Tech Park became prominent technology
powerhouses, building on foundations of industrial development and local govern-
ment support (Segal, 2003; Zhou, 2008). Over two decades, the Chinese national
economy underwent a transformation from one based on heavy industry, with guar-
anteed lifetime employment and generous welfare for urban state sector workers, to
one that mainly relies on foreign and private investments and massive use of rural
migrant labourers in light of export-oriented industries (Friedman and Lee, 2010;
Kuruvilla et al., 2011).
Foxconn became China’s leading exporter in 2001 following the country’s accession
to the World Trade Organization and further liberalisation of international trade. It has
maintained this position ever since (Foxconn Technology Group, 2009: 6). Foxconn’s
© 2013 John Wiley & Sons Ltd Politics of global production 103

expansion is intertwined with the Chinese state’s development through market
reforms, and it has followed the national trajectory from coastal to inland locations in
recent years. The Chinese state attempted to rebalance the economy by initiating the ‘go
west’ project, through which financial capital and human resources were channelled to
central and western provinces (Goodman, 2004; McNally, 2004). Taking advantage of
lower wage levels, the strategy was designed to stimulate employment and promote
ethnic unity while obtaining foreign investment. Ross (2006: 218) concludes that in
Chengdu, Sichuan’s provincial city, ‘it was impossible not to come across evidence of
the state’s hand in the fostering of high-tech industry’.
The creation of a new industrial class by domestic and transnational capital, under
the auspices of the Chinese state at all levels, has paradoxically led to growing protest,
driven by multiple factors. Compared with older workers, this generation of employees
born since the 1980s has strong expectations of higher wages, better working conditions
and prospects for career advancement (Pun and Lu, 2010). From the mid-2000s, labour
shortages2have driven up wages and strengthened workers’ power in the market,
although wage gains resulting from higher state minimum wage levels and strike
victories have been undermined by inflation (Selden and Wu, 2011). Foxconn, not
unlike other foreign-invested factories, adjusts basic wages and recruits mostly teens
and young adults to run the assembly lines. ‘Over 85 percent of Foxconn’s employees
are rural migrant workers between 16 and 29 years old’, according to a senior human
resources manager in Shenzhen (Interview, 14 October 2011). By comparison, 2009
national data showed that 42 percent of rural migrants were between 16 and 25 years
old and another 20 percent were between 26 and 30 (China’s National Bureau of
Statistics, 2010).
In recent years, Foxconn has adapted to local labour market changes to employ more
male than female workers as fewer young women become available,3reversing the
historical pattern of a feminised workforce in electronics. Company statistics show that
male employees increased from 59 to 64 percent between 2009 and 2011 (Foxconn
Technology Group, 2012e: 12). This labour is employed in a production network in
which vertical integration, flexible coordination across different facilities and 24-hour
continuous assembly bolster its market competitiveness. It manufactures hardware
components and assembles for a very large number of global companies, with Apple
being its largest client (Chan, 2013).
The Apple–Foxconn business relationship
Apple, Foxconn and China’s workers are stakeholders in high-tech production, but
relations between them are highly unequal. Apple Computer (later Apple Inc.) was
incorporated in 1977 and is headquartered in Cupertino, California in Silicon Valley.
From the early years, it outsourced most component processing, assembly and pack-
aging to contractors. In 1981, Apple, which had initially produced its own computers,
started to contract offshore facilities in Singapore, along with onshore final-assembly
contractors, to ramp up upgraded Apple II personal computers (Ernst, 1997: 49–52). In
1982 Apple Computer President Mike Scott commented: ‘Our business was designing,
educating and marketing. I thought that Apple should do the least amount of work that
it could and . . . let the subcontractors have the problems’ (Ernst, 1997: 49). In the 1990s,
Apple, Lucent, Nortel, Alcatel and Ericsson ‘sold off most, if not all, of their in-house
manufacturing capacity—both at home and abroad—to a cadre of large and highly
capable US-based contract manufacturers, including Solectron, Flextronics, Jabil
Circuit, Celestica, and Sanmina-SCI’ (Sturgeon et al., 2011: 236). Today, Apple retains its
only Macintosh computer manufacturing complex in Cork, Ireland (Apple, 2013a).
If Apple’s competitive advantage lies in the combination of corporate leadership,
technological innovation, design and marketing (Lashinsky, 2012), its financial success
is inseparable from its globally dispersed network of efficient suppliers based mainly in
Asia. Pivotal to Apple’s growth is effective management of production by its suppliers,
including final assemblers. Apple’s 2012 annual report filed to the United States Secu-
rities and Exchange Commission describes a challenge to its highly profitable business:
© 2013 John Wiley & Sons Ltd104 New Technology, Work and Employment

Substantially all of the Company’s hardware products are manufactured by outsourcing partners
that are located primarily in Asia. A significant concentration of this manufacturing is currently
performed by a small number of outsourcing partners, often in single locations. Certain of these
outsourcing partners are the sole-sourced suppliers of components and manufacturers for many of
the Company’s products (Apple, 2012a: 7).
Apple identifies the concentration of its manufacturing base ‘in single locations’ and
in the hands of ‘a small number of outsourcing partners’ as a potential risk. However,
analysts observed that, ‘because of its volume’—and its ruthlessness—‘Apple gets big
discounts on parts, manufacturing capacity, and air freight’ (Satariano and Burrows,
2011). Group interviews with two mid-level production managers at Foxconn’s
Shenzhen industrial town reveal that during the 2008–09 global financial crisis,
Foxconn cut prices on components, such as connectors and printed circuit boards, and assembly, to
retain high-volume orders. Margins were cut. But the rock bottom line was kept, that is, Foxconn did
not report a loss on the iPhone contract. [How?] By charging a premium on customized engineering
service and quality assurance. The upgrading of the iPhones has in part relied on our senior product
engineers’ research analyses and constructive suggestions (Interviews, 10 November 2011; 19
November 2011).
In 2009, in the wake of recession, the Chinese government froze the minimum wage
across the country. Foxconn accommodated Apple’s and other corporate buyers’
squeeze while continuing to reduce labour expenditures, including cuts in wages
(mainly overtime premiums) and benefits (Interview, 9 November 2011).
Foxconn’s operating margins—the proportion of revenues remaining after paying
operating costs such as wages, raw materials and administrative expenses—has
declined steadily over the past six years, from 3.7 percent in the first quarter of 2007 to
a mere 1.5 percent in the third quarter of 2012, even as total revenues rose in the same
period with the expansion of orders (Figure 1).4By contrast, Apple’s operating margins
peaked at 39.3 percent in early 2012 from initial levels of 18.7 percent in 2007. The
changes indicate Apple’s increased ability to pressure Foxconn to accept lower margins
while acceding to Apple’s demands for technical changes and large orders. Foxconn’s
margins are constantly squeezed by technology giants including, but not limited to,
Apple. As Foxconn has been expanding its plants in interior China (and other coun-
tries), expansion costs and rising wages have further impacted revenues.
Twelve major business groups within Foxconn compete on ‘speed, quality, engineer-
ing service, efficiency and added value’ to maximise profits (Foxconn Technology
Group, 2009: 8). ‘Two “Apple business groups,” iDPBG [integrated Digital Product
Business Group] and iDSBG [innovation Digital System Business Group], are rising
stars in these past few years’, stated a Foxconn Chengdu production manager,
iDPBG was established in 2002. At the beginning, it was only a small business group handling
Apple’s contracts. We assembled Macs and shipped them to Apple retail stores in the United States
and elsewhere. Later we had more orders of Macs and iPods from Apple. In 2007, we began to
assemble the first-generation iPhone. From 2010, we also packed iPads, at the Shenzhen and new
Chengdu facilities (Interview, 6 March 2011).
iDPBG currently generates 20 to 25 percent of Foxconn’s business. To increase its
competitiveness, Foxconn Founder and CEO Terry Gou established iDSBG in 2010 when
the company won the iPad contracts. iDSBG now primarily manufactures Macs and
iPads, contributing 15 to 20 percent of company revenues. ‘Approximately 40 percent of
Foxconn revenues are from Apple, its biggest client’ (Interview, 10 March 2011).
Dedrick and Kraemer (2011: 303) find that computer companies currently ‘engage in
long-term relationships’ with their main contractors but sometimes shift contracts to
those who can offer better quality, lower cost or greater capabilities. Foxconn’s vice
president Cheng Tianzong told journalists, ‘Some major clients are very concerned
with the Foxconn employee suicides, but many of them are our long-term partners. So
it doesn’t affect Foxconn’s orders’ (quoted in Zhao, 2010). However, soon after the
spate of suicides at Foxconn’s facilities in spring 2010, Apple did ‘shift some iPhone and
iPad orders to Pegatron to diversify risks’, according to a Foxconn commodity manager
at Chengdu’s factory (Interview, 13 March 2011). Apple has tightened controls over
© 2013 John Wiley & Sons Ltd Politics of global production 105

Foxconn by splitting contracts with Taiwanese-owned Pegatron. This diversification
demonstrates the power asymmetries between Apple and its manufacturers as
Foxconn and others seek to retain market position as producers of the iPhone and iPad.
Apple (2013b) obtains products and services ‘within tight timeframes’ and ‘at a cost
that represents the best possible value’ to its customers and shareholders. Figure 2
shows the breakdown of value for the iPhone between Apple and its suppliers. Apple’s
strength is well illustrated by its ability to capture an extraordinary 58.5 percent of the
value of the iPhone despite the fact that manufacture of the product is entirely
outsourced. Particularly notable is that labour costs in China account for the smallest
share, only 1.8 percent or nearly US$10, of the US$549 retail price of the iPhone. This
ineluctable drive to reduce costs and maximise profits is the source of the pressure
placed on Chinese workers employed by Foxconn, many of them producing signature
Apple products. While Apple and Foxconn together squeeze Chinese workers and
demand 12-hour working days to meet demand, the costs of Chinese labour in pro-
cessing and assembly are virtually invisible in the larger success of Apple’s balance
sheets. Other major component providers (such as Samsung and LG) captured slightly
over 14 percent of the value of the iPhone. The cost of raw materials was just over
one-fifth of the total value (21.9 percent).
Representatives from Apple and other major clients regularly monitor onsite quality
processes and production time to market. A mid-level Foxconn production manager
recalled: ‘Since 2007, Apple has dispatched engineering managers to work at Foxconn’s
Longhua and Guanlan factories in Shenzhen to oversee our product development and
Source: From Q1 2007 to Q3 2011, see Bloomberg (2012); From Q4 2011 to Q3 2012,
see Wikinvest (2013) for Apple; From Q4 2011 to Q3 2012, see Foxconn Technology
Group (2012a; 2012b; 2012c; 2012d).
Figure 1: Operating margins: Apple and Foxconn compared, 2007–2012*
*Data from January 2007 to September 2012 were non-consolidated results for Foxconn.
Starting from Q4 2012, Foxconn announced consolidated results.
© 2013 John Wiley & Sons Ltd106 New Technology, Work and Employment

assembly work’ (Interview, 29 November 2011). A Foxconn human resources manager
provided this eyewitness account of Apple’s hands-on supervision:
When Apple CEO Steve Jobs decided to revamp the screen to strengthen the glass on iPhone four
weeks before it was scheduled to shelf in stores in June 2007, it required an assembly overhaul and
production speedup in the Longhua facility in Shenzhen. Naturally, Apple’s supplier code on
worker safety and workplace standards and China’s labour laws are all put aside. In July 2009, this
produced a suicide. When Sun Danyong, 25 years old, was held responsible for losing one of the
iPhone 4 prototypes, he jumped from the 12th floor to his death. Not only the short delivery
deadline but also Apple’s secretive culture and business approach, centered on creating great
surprise in the market and thereby adding sales value to its products, have sent extreme pressure all
the way down to its Chinese suppliers and workers (Interview, 7 March 2011).
Attention to procurement and production detail, including last-minute changes of
product design and tight control over prices, assures super-profits for Apple through
outsourcing. The purchasing and marketing policy adopted by Apple, the ‘chain driver’,
conflicts directly with its own supply-chain labour standards and the Chinese law.
Tracking demand worldwide, Apple adjusts production forecasts on a daily basis. As
Apple CEO Tim Cook puts it, ‘Nobody wants to buy sour milk’ (quoted in Satariano
and Burrows, 2011); ‘Inventory...isfundamentally evil. You want to manage it like
you’re in the dairy business: if it gets past its freshness date, you have a problem’
(quoted in Lashinsky, 2012: 95). Streamlining the global supply chain on the principle
of market efficiency and ‘competition against time’ is Apple’s goal.
Consequently, excessive overtime at final-assemblers and other suppliers is required
to meet increased work schedules. Two major sources of production-time pressure
commonly felt by factory and logistic workers are well documented by Apple.
The Company has historically experienced higher net sales in its first fiscal quarter [from September
to December] compared to other quarters in its fiscal year due in part to holiday seasonal demand.
Actual and anticipated timing of new product introductions by the Company can also significantly
impact the level of net sales experienced by the Company in any particular quarter (Apple, 2012a: 8).
In a rare moment of truth, Foxconn CEO’s Special Assistant Louis Woo, explained in
an April 2012 American media program the production pressures that Apple or Dell
apply:
Source: Adapted from Kraemer et al. (2011: 5).
Figure 2: Distribution of value for the iPhone, 2011
© 2013 John Wiley & Sons Ltd Politics of global production 107

The overtime problem—when a company like Apple or Dell needs to ramp up production by 20
percent for a new product launch, Foxconn has two choices: hire more workers or give the workers
you already have more hours. When demand is very high, it’s very difficult to suddenly hire 20
percent more people. Especially when you have a million workers—that would mean hiring 200,000
people at once (quoted in Marketplace, 2012).
The dominance of giant technology firms, notably Apple, in terms of price setting,
onsite production process surveillance, and timing of product delivery, has profound
consequences on labour processes. Foxconn’s competitive advantage, the basis for
securing contracts with Apple and other brand-name multinationals, hinges on its
ability to maintain flexibility. The mega factory has to reorganise its production lines,
staffing and logistics in a very short time to be demand-responsive. Whereas transna-
tional suppliers, such as Foxconn, have grown rapidly through ‘internal development
and acquisition’ (Sturgeon et al., 2011: 235), their drive for profits and higher positions
along the global value chains tend to go with the same pattern: the emergence of
powerful ‘market makers’, or leading firms, in their supply networks (Hamilton et al.,
2011). The results in competitive manufacturing have been coercive factory conditions
and, contentious labour relations, on the ground, to which we now turn.
Chinese workers’ collective actions
Foxconn not only has factory complexes in Shenzhen and all of the four major Chinese
municipalities of Beijing, Shanghai, Tianjin and Chongqing, but also in 15 provinces
throughout the country (Figure 3). Foxconn Taiyuan in north China’s Shanxi province,
with 80,000 workers, specialises in metal processing and assembly. It manufactures
iPhone casings and other components in the upstream supply chain and sends the
semi-finished products to a larger Foxconn Zhengzhou complex in adjacent Henan
province for final assembly. In 2012, the subtle shift in production requirements from
iPhone 4S to iPhone 5 and the speedup to meet Apple’s delivery time placed workers
under intense pressure. However, this tightly integrated production regime simulta-
neously provided workers with leverage, enabling them to demonstrate their collective
strength in the fight for their own interests.
Foxconn Taiyuan erupted in factory-wide protests on September 23–24, 2012. ‘At
about 11 p.m. on 23 September 2012’, a 20-year-old worker reported, ‘a number of
security officers severely beat two workers for failing to show their staff IDs. They
kicked them until they fell’ (Interview, 26 September 2012). At the male dormitory,
workers passing by were alerted by screams in the darkness. An eyewitness said, ‘We
cursed the security officers and demanded that they stop. There were more than thirty
of us so they ran away’ (Interview, 27 September 2012).
Soon after a squad of fifty company security officers marched to the dormitory,
infuriating the assembled workers. At midnight, tens of thousands of workers smashed
security offices, production facilities, shuttle buses, motorbikes, cars, shops and can-
teens in the factory complex. Others broke windows, demolished company fences and
pillaged factory supermarkets and convenience stores. Workers also overturned police
cars and set them ablaze. The company security chief used a patrol car public address
system to order the workers to end their ‘illegal activities’. The situation was getting out
of control as more workers joined the roaring crowd.
By around 3 a.m., senior government officials, riot police officers, special security
forces and medical staff were stationed at the factory. Workers used their cell phones to
send images to local media outlets in real time. Over the next two hours, the police
contained the labour unrest, detained the most defiant workers and took control of the
factory gates. The factory announced a special day off for all production workers, on
September 24, Monday. A 21-year-old worker recalled:
We demanded higher pay and better treatment. In my view, the protest was caused by very
unsatisfactory working conditions. It was merely sparked by the abuses of the security guards. Over
these past two months, we couldn’t even get paid leave when we were sick (Interview, 28 September
2012).
© 2013 John Wiley & Sons Ltd108 New Technology, Work and Employment

With global consumer demand for the new iPhone 5 at a peak, shipping delays were
a source of concern for Apple. On September 21, 2012 (eight months after iPhone 4S’s
China release), Apple launched the iPhone 5 and sold over five million units during
that weekend. CEO Tim Cook stated, ‘we are working hard to get an iPhone 5 into the
hands of every customer who wants one as quickly as possible’ (Apple, 2012b). The
ever-tightening shorter production cycle pressurises workers and managerial staff, so
that Foxconn Taiyuan workers could not even take one day off in a week, and the sick
were compelled to continue to work.
As justification for its use of paramilitary force, Foxconn blamed the workers, alleg-
ing that they were fighting among themselves. The company statement read:
A personal dispute between several employees escalated into an incident involving some 2,000
workers. The cause of this dispute is under investigation by local authorities and we are working
closely with them in this process, but it appears not to have been work-related (quoted in Nunns,
2012).
The underlying cause was that workers are subjected to an oppressive management
regime driving them to meet the extreme production demands (Ruggie, 2012).
Foxconn, Apple and many other multinational corporations, as well as the Chinese
Source: Foxconn Technology Group (2013a).
Figure 3: Foxconn locations in greater China
© 2013 John Wiley & Sons Ltd Politics of global production 109

government, have thus far shown little interest in understanding the direct relationship
between companies’ purchasing practices and labour problems in the workplace. ‘On
the factory floor’, an 18-year-old worker informed us, ‘the metal-processing section
supervisor’s attitude is very bad...We’re coerced to meet the extremely tight produc-
tion deadline’ (Interview, 29 September 2012). Foxconn leaders’ investigation of the
‘personal dispute’ necessitated turning their eyes away from shop floor conditions.
Less than two weeks later, on October 5, 2012, over 3,000 Foxconn Zhengzhou
workers protested collectively against unreasonably strict control over product quality
on the line at Zone K. From late September to early October 2012, consumers in the
United States and elsewhere complained about scratches on the casing of a particular
batch of the new iPhone 5, leading to product quality control investigations of final
assembly at the 160,000-strong Foxconn Zhengzhou plant. According to testimony, new
quality standards for not exceeding a 0.02 mm appearance defect in iPhone 5 were
contributing to workers suffering eye strain and headache. When workers were penal-
ised for not meeting the new standards, quarrels erupted between workers and quality
control team leaders on Friday afternoon, resulting in group fighting and injuries.
Production managers yelled at the assembly-line workers and threatened to fire them
if they did not ‘cooperate and concentrate at work’. Li Meixia (a pseudonym) posted
on her Sina microblog that she and her co-workers were angered and walked out of
the workshop. In response, another worker posted a statement, which was quickly
removed by October 6:
We had no holidays during the National Day celebrations and now we’re forced to fix the defective
products. The new requirement of a precision level [of iPhone 5 screen structure] measured in
two-hundredths of a millimeter cannot be detected by human eyes. We use microscopes to check the
product appearance. It’s impossibly strict.
In the case-manufacturing process, workers were also instructed to use protective
cases to prevent scratches of the ultra-thin iPhone 5, and close attention to the most
minute detail at the fast pace was and remains a major source of work stress, according
to testimony. The strike at one workshop eventually paralysed dozens of production
lines in Zones K and L. Senior managers threatened to fire the leading strikers and the
quality control team leaders, and demanded that night-shift workers adhere to strin-
gent quality standards. The brief strike did not win workers’ demand for reasonable
rest.
Given the nature of company unions (Traub-Merz, 2012) and strict corporate controls
over workers in both plant and dormitory, Foxconn workers at the Taiyuan and Zheng-
zhou factories have not organised across factories on a large scale in a coordinated
manner. However, workers were acquiring public communication skills and raising
their consciousness about the need for joint struggle to achieve basic rights. Soon after
the September 2012 protest, a 21-year-old high-school graduate with two years work
experience at Foxconn Taiyuan wrote an open letter to Foxconn CEO Terry Gou and
circulated it on weblogs (the following excerpt is translated by the authors):
A Letter to Foxconn CEO, Terry Gou
If you don’t wish to again be loudly woken at night from deep sleep,
If you don’t wish to constantly rush about again by airplane,
If you don’t wish to again be investigated by the Fair Labor Association,
If you don’t wish your company to again be called by people a sweatshop,
Please use the last bit of a humanitarian eye to observe us.
Please allow us the last bit of human self-esteem.
Don’t let your hired ruffians hunt for our bodies and belongings,
Don’t let your hired ruffians harass female workers,
Don’t let your lackeys take every worker for the enemy,
Don’t arbitrarily berate or, worse, beat workers for one little error.
In the densely populated factory-cum-dormitory setting, many rural migrant workers
as young as 16 or 17 years old, spoke of their involvement in collective labour protests
(Pun and Chan, 2013). If the language of strikes and worker participation is new for
some, it is not for others. The testimony of a teenage female worker at Foxconn’s
Shenzhen Longhua plant is illustrative:
© 2013 John Wiley & Sons Ltd110 New Technology, Work and Employment

I didn’t know that it was a strike. One day my co-workers stopped work, ran out of the workshop
and assembled on the grounds. I followed them. They had disputes over the under-reporting of
overtime hours and the resulting underpayment of overtime wages. After half a day, the human
resources managers agreed to look into the problems and promised to pay the back wages if there
was a company mistake. At night, in the dormitory, our ‘big sister’ explained to me that I had
participated in a strike (Interview, 15 October 2011)!
The wildcat strikes and labour protests at Foxconn form part of a broader spectrum of
labour action throughout China over recent decades (Pringle, 2013). The Taiyuan wor-
ker’s open letter to Foxconn CEO Terry Gou closes with the following paragraph:
You should understand that working in your factories,
workers live on the lowest level of Chinese society,
tolerating the highest work intensity,
earning the lowest pay,
accepting the strictest regulation,
and enduring discrimination everywhere.
Even though you are my boss, and I am a worker:
I have the right to speak to you on an equal footing.
The sense in which ‘right’ is used is not narrowly confined to that of legal right. Chinese
workers are demanding to bargain with their employers ‘on an equal footing’. They are
calling for dignified treatment and respect at work.
Conclusion
Marx and Engels ([1848] 2002: 223) analysed capital’s irresistible impulse to create new
markets globally. ‘All old-established national industries have been destroyed or are
daily being destroyed. They are dislodged by new industries...In place of the old
wants, satisfied by the productions of the country, we find new wants...’Production,
distribution and consumption must continue in perpetuity if profits are to be made and
capital accumulated. Barriers to trade at all levels have to be drastically reduced. In the
twenty-first century, consumer electronics has grown to become one of the leading
global industries, and Chinese labour is central to its development. An ever quicker
and newer product release, accompanied by shorter product finishing time, places new
pressures on outsourced factory workers in the Apple production network. At the
workplace level, very short delivery times imposed by Apple and other multinational
corporations make it difficult for suppliers to comply with legal overtime limits. Price
pressures lead firms to compromise workers’ health and safety and the provision of a
decent living wage. The absence of fundamental labour rights within the global pro-
duction regime driven by Apple and its principal supplier Foxconn have become a
central concern for Chinese rural migrant workers, who are at the core of the most
rapidly growing sector of the new industrial working class.
The integration of Asian manufacturers in global and regional production networks,
tight delivery schedules for coveted products and the growing shortage of young
workers as a result of China’s demographic changes have enhanced workers’ bargain-
ing power. The ascent of ‘global neoliberal capitalism’ has created ‘opportunities for
counter-organization’ (Evans, 2010: 352), as attested by the rise of transnational labour
movements and global anti-sweatshop campaigns. With workers aware of the oppor-
tunities presented by the demand by Apple and other technology giants to meet quotas
for new models and holiday season purchases, they have come together at the dormi-
tory, workshop or factory level to voice demands. Internet and social networking
technology enables workers to disseminate open letters and urgent appeals for support
(Qiu, 2009). The question remains whether workers will be able to win the right to
freedom of association and ultimately strengthen a nascent labour movement that is
capable of challenging the capitalist mode of production.
A historical counterweight to global capital, West and East, exists in workers’ and
civil society’s response. Under public pressure, in February 2013, Foxconn proclaimed
that workers would hold direct elections for union representatives. If implemented
fairly, and if the unions are organised to uphold the rights enshrined in the Chinese
© 2013 John Wiley & Sons Ltd Politics of global production 111

Trade Union Law, Labour Contract Law and the international labour conventions, this
would impact upon the balance of power between management and workers. At
present, the vast labour force at Foxconn and many workplaces are striving to expand
social and economic rights, bypassing the state- and management-controlled unions. A
new generation of workers, above all rural migrant workers, is standing up to defend
their dignity and rights. Workers’ direct actions have been perceived by political
leaders and elites as so threatening to social stability that government and employers
have been forced to grant certain policy concessions and propose higher minimum
wages. The Chinese state is also seeking to raise domestic consumption and hence
living standards, in part in major response to the struggle of aggrieved workers and
farmers (Hung, 2009; Carrillo and Goodman, 2012). Apple and Foxconn now find
themselves in a limelight that challenges their corporate images and symbolic capital,
hence requiring at least lip service in support of progressive labour policy reforms. If
the new generation of Chinese workers succeeds in building autonomous unions and
worker organisations, their struggles will shape the future of labour and democracy
not only in China but throughout the world.
Acknowledgements
We are very grateful to Phil Taylor, Debra Howcroft and four reviewers for their
insightful comments. We also thank the independent University Research Group
on Foxconn, SACOM (Students and Scholars Against Corporate Misbehavior),
GoodElectronics Network, Jeffery Hermanson, Gregory Fay, Chris Smith, Jos Gamble
and Sukhdev Johal. An earlier version of this paper was presented at the Center for East
Asian Studies in the University of Bristol on November 15, 2012, where Jenny Chan
enjoyed constructive discussions with Jeffrey Henderson and the seminar’s participants.
Notes
1. Foxconn’s parent corporation is Taipei-based Hon Hai Precision Industry Company. The trade
name Foxconn alludes to the corporation’s ability to produce electronic connectors at nimble
“fox-like” speed.
2. Gu and Cai (2011) conclude that Chinese fertility is presently 1.6 children per woman, down
from around 2.5 children per woman in the 1980s. In the next few years the number of young
labourers aged 20 to 24 years will peak. China’s 2010 Population Census, moreover, showed
that the age group 0–14 comprised 16.6 percent of the total population, down 6.29 percent
compared with the 2000 census data.
3. The National Bureau of Statistics has acknowledged that the gender imbalance had reached
119:100 in 2009 before dipping slightly to just under 118:100 in 2010. The 2011 data reported
117.78 baby boys for every 100 girls (China Daily, 2012).
4. Foxconn’s revenues or net sales increased from US$51.8 billion in 2007 (Foxconn Technology
Group, 2009: 11) to US$131 billion in 2012 (Foxconn Technology Group, 2013b). During the
same period, the net sales of Apple soared from US$24.6 billion (Apple, 2011: 24) to US$156.5
billion (Apple, 2012a: 24).
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