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Tech

Apple is All the Rage in China

Anticipating the iPhone 4S turns into widespread rioting in China.

On January 11, the night before the iPhone 4s finally went on sale in Beijing, a crowd began to form at Beijing’s upscale Sanlitun shopping development, outside one of the country’s five (genuine) Apple stores. But the police decided the waiting throng was too big to conduct a safe and orderly sale, and disbanded the event.

The roughly 500 people who assembled were not happy. Eggs were thrown. Shouting ensued. It looked like early 21st century tech ennui in the style of angry post-Soviet-esque bank runs. Or as the popular photojournalist Li Feng wrote on his blog, “It reminds me of scenes from a film about early 20th century revolution.”

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There was another disorienting angle too: the mob was made up mainly of outsourced labor, many of them migrant workers working for shrewd cellphone resellers. “Those recruited by scalpers were particularly angry,” reported the Times’ Sharon LaFraniere. “Some said the store’s closure meant that they would get only 10 renminbi, meant as a food allowance, after standing in line all night in freezing temperatures.” In China, it’s easy to outsource not just manufacturing but consumption too.

iPad “riot,” May 2011

“Why does Apple wants to do whatever it wants?” a shopper asked a reporter from Xinhua, China’s state-run news service. “It seems like they [salespeople] want to put the customers under their complete control.”

In spite of the store closing, the iPhone 4s sold out in China in that first day. And after the incident in Beijing, Apple announced that it would suspend sales of iPhones at all stores in Beijing and Shanghai “for the time being” to ensure safety. In the same month that it released new standards for worker safety, the computer giant was also looking out for the safety of its buyers.

The rage was tame compared to what happened when Apple released the iPad 2 in May: violence broke out then, leaving the Sanlitun store’s glass door shattered, and blood on the ground. The zeal for the gadget underscores its scarcity in China, which also effects the price: if the scalpers’ guys had managed to get in, they would have paid considerably more for the tablet than their American counterparts – 4,988RMB ($790) versus $649 in the U.S. for the 16 MB model without a contract, (the 32GB and 64GB models go for 5,888RMB and 6,788RMB, respectively).

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But that’s far better than the secondary market — catering to executives, moguls, government officials — where the tablet has been going for upwards of $850. The discovery last year of fake Apple Stores in the southwest city of Kunming said a lot about China’s culture of piracy, but also a lot about the globalization of the Apple obsession, the spread of the cult of Jobs.

Amid all of the sidelong glances and recriminations being cast at Apple these days, a result of similar exposés on the labor abuses by its contractors in China, conducted by This American Life and the New York Times, it was easy to miss the excitement that the company had actually created in China. Especially easy because the rage had almost nothing to do with how the phone was made at such blistering speeds and low costs but rather why it is made that way.

The particular details – a shortage of iPhones in the country where they’re made, the excitement over iPhones among the booming middle class, and the rage of migrant workers paid a pittance to buy them – look ironic in context of the other end of the supply chain. In the south, other migrant workers are paid $22 a day to make the phones – and to make many many other things, for companies like HP, Dell, Samsung, and Motorola – in conditions that most people in the West would find objectionable, and that in some cases have been illegal.

Mike Daisey’s appearance on This American Life, adapted from his monologue “The Agony and the Ecstasy of Steve Jobs,” and a series in the New York Times on the “iEconomy,” aren’t the only things that have reignited controversy over Foxconn, Apple’s largest supplier. It’s the threat of suicide protests at its factories (notwithstanding a recent agreement between workers and the company), set against the backdrop of untold numbers of strikes and protests at factories (and sometimes, at affluent shopping centers) around the country. There is, for the first time in awhile, open talk of revolution around China, at least until Beijing’s Internet censors get to it.

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What globalization giveth in millions of jobs it also taketh away: the global downturn has cooled China’s economy, putting strains on urban and factory workers, when it isn’t sending them back to the countryside. “There is no future for young workers,” said Li Yuan Feng, a labor activist, during protests in Guangdong province last summer. “They can’t live a decent life in the city, and they can’t afford to send money home either. It’s modern-day slavery.” During protests in the factory city of Xintang, over conditions at a toxic denim plant, word spread that policemen beat a pregnant woman who ran a fruit stall. Echoes of the Tunisian fruit seller who burned himself and incited the Arab Spring were too obvious to mention. Rioters responded by burning down the police headquarters. And police responded by kidnapping protesters.

Like the regional practice of blacklisting “troublemaker” workers from factory jobs, detainment has become a popular tool among authorities for derailing popular unrest. As the police headquarters burned in Xintang, protesters in the city of Lichuan stormed government headquarters to protest the death of a legislator, Ran Jianxin, who had been investigating accusations of corruption in a city-backed land deal. Ran died while being interrogated by the police or prosecutors on June 4, the 22-year anniversary of the Chinese government’s most infamous crackdown.

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Report from PBS NewsHour, June 30, 2011.
Guangzhou riot, 2011

Factory wages simply can’t rise fast enough to meet the growing expectations for human rights and justice. And, of course, for ownership of things like cars, washing machines, and a brand new iPhone. Mix those with inflation, corruption and brutality, and a greater awareness of labor laws, and you add more wood to China’s tinder-box. This is an “election” year in China, meaning that new leaders are being installed at the top, and they’re keen not to see their reputation tarnished or their power threatened. They’ll do just about anything to prevent chaos, even if that means closing an Apple Store

Apple – or it’s PR team, to be specific – is also looking on edge. Two weeks ago, Apple’s Tim Cook emailed his employees to reaffirm the company’s commitment to responsibility (“…cases of underage labor were down sharply from last year. We found no underage workers at our final assembly suppliers, and we will not rest until the number is zero everywhere.”). And he released a 27-page report about the company’s supply chain. Apple found that 62 percent of the 229 facilities that it was involved with were not in compliance with Apple’s 60-hour maximum working week policy. Also:

  • some suppliers were practicing discriminatory screenings for medical conditions or pregnancy;
  • 112 facilities were not properly storing, moving or handling hazardous chemicals;
  • nearly a third of its suppliers didn’t abide by Apple’s standards on wages and benefits;
  • five facilities employed underage workers

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(See more numbers at ProPublica)

Apple also announced it was joining the Fair Labor Association, a group founded by Bill Clinton that already works with companies like Nike and Nestle that want to ensure their products aren’t being made by the crippled hands of 14-year-olds working 12 hour days. That makes Apple, remarkably, the first company to join the FLA from the consumer electronics industry.

Apple’s decision may not exactly signal a “Nike” moment in electronics manufacturing (Nike made a strong effort to clean up its factories after it was found using sweatshop labor in the 1990s), because the problems are more fundamental than oversight and transparency, but many see it as the first big step for an industry that has been called, in a new report by the research firm Oekom, the most labor-abusing industry in the world. Tracking how products are made and at what costs is expected to become increasingly difficult as multinational companies source more jobs in poorer countries like Cambodia, Vietnam, and Bangladesh. And, thanks to recent political reforms, Myanmar.

Ling Hui Ping, a teenager on the iPhone line, “has one dream,” journalist Jordan Pouille reported in 2010: to collect enough money to start a small business in his home town. “‘Probably, a phone shop.’”

And then there’s all that urgent demand, from Columbus to Chengdu. As Richard Locke writes in Boston Review, the way gadgets are made has much to do with the feverish way they are bought, discarded, then replaced with the next, better version. In the case of cell phones, brands are looking at a consumer turnover that’s shrunk to a mere eight months. That’s meant more “flexible” manufacturing practices, which, writes Locke, “place a greater burden on the workers assembling the products.”

In other words, our desire for the latest model creates enormous volatility in consumer markets that can only be managed through a set of business practices that inevitably leads to excess working hours, low wages, and unhealthy working conditions for millions, who are often women migrant workers.

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This is how Mike Daisey describes the most common dubious practice in Chinese factories, what Apple calls “excessive overtime,” a phenomenon that is certainly not limited to Apple products:

Sometimes, when there’s a hot new gadget coming out. You know what the f— I’m talking about. Sometimes it pegs up to 16 hours a day, and it just sits there… month after month after month, straight sixteens.

Demand for new gadgets is accelerating, especially in China. As the Beijing incident demonstrated, Apple simply can’t keep up with a feverish demand for its phones among the country’s well-heeled consumers, demand that is second only to the United States. (China accounts for a whopping 16 percent of the company’s revenue last quarter – around $13 billion in 2011, up from $3 billion a year earlier) .“We didn’t bet high enough,” Apple CEO Tim Cook said of the iPhone shortage. The “response to our products has been off the charts.”

Also off the charts, the ones in Apple’s new report, are the exact suppliers the company found to be violating its labor and environmental rules (In another document, Apple has listed its suppliers for the first time). The FLA said also that it would not name violators among Apple’s supply chain that it finds on random audits, as it does with other companies. Mike Daisey responded, to the This American Life blog: “If Apple would spend less energy finessing its public image, and instead apply its efforts to real transparency and accountability, it could be a true leader for the electronics industry. Apple today is still saying what it said yesterday: trust us, we know best, there’s nothing to worry about. They have not earned the trust they are asking for.”

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Xintang riot, June 2011 (AFP / Getty).

But is that kind of trust a serious concern for Apple’s users, the die-hard fans and the newcomers, the developed-worlders and the newly wealthy consumers angling for an iPhone in a Beijing gray market? A Change.org petition started last week, which calls for Apple to protect Chinese workers, makes two requests of the company: ensure that new product launches – when most factory accidents occur – are conducted more safely, and publish the results of the Fair Labor Association’s monitoring, including the names and particular violations of the suppliers. The petition already has 127,000 signatures.

Apple, of course, is not the only questionable party in the manufacturing game. Nearly every large consumer company makes things in China, or in other countries where cheap labor keeps prices low. Even if it doesn’t instill a sense of guilt among consumers, the job-exporting by these companies serves as a reminder that American manufacturing isn’t coming back home. Apple may be singled out for its sheer stature, but also because it embodies the global equation of cheap labor like few other companies do. And if you’re looking for a vivid symbolic linkage between the developed and developing world, you couldn’t do much better than a universally-craved iPhone. By buying it in droves, Americans have indirectly made it possible for Chinese to buy it in droves too. Along with piles of cash (and piles of debt), the West has also exported to China a massive economic boost, and a fevered consumerism. Also, jobs. Not necessarily intellectual property, or high-tech research, and certainly not labor standards, but lots of jobs.

“All I Need,” Radiohead, 2008.

Now cue the theme of inequity and the wealth gap, heard from Wall Street to Guangzhou. “If the Occupy people really want to make a point about the 1 percent, then lay off Oakland and go for the real money down in Silicon Valley,” said Willy Brown, the former San Francisco mayor, in December. “The only thing those cats down at Apple are exporting are our jobs. Then they have the nerve to ask for tax breaks, and Washington obliges.”

“If Occupy wants to make a real statement, it ought to pick on a real target,” he said. “But then, it might prove a bit embarrassing. From what I’ve seen, half those Occu-cats have iPhones and iPads.”

Brown wasn’t just invoking the ironies of modern day protest. He was observing, at a slant, what’s sad-funny about globalization. The iPhone 4S and its rough debut bring something else to China: a handy symbol of the trade-offs involved. Getting one however will require a lot of cash and a bit of shoving.