The crisis in China could end badly for Apple
The crisis in China could end badly for Apple
2022.11.26 08:58
The crisis in China could end badly for Apple
Budrigannews.com – When violence broke out in Zhengzhou, China, toward the end of November, Xiao Han was just coming to the end of the week-long quarantine that marked the beginning of his current employment at the vast manufacturing complex known as iPhone City.
As a result of management’s desire to maintain production of Apple Inc. devices while containing a Covid-19 outbreak, a significant portion of the 200,000 employees had already endured weeks of forced isolation in filthy dormitories on meager food supplies. On November 23, hundreds of workers got into a physical altercation with riot police after discovering that they might not receive the wages they had been promised unless they stayed at their jobs through the Spring Festival and into mid-March.
Xiao says, “It was total chaos,” and that some of his coworkers were hurt in the fight.I had no idea things could get this bad.
Before the violence, Xiao describes a situation that had become unbearable.For more than a decade, the 30-year-old had assisted in the production of iPhones on Chinese assembly lines.He was a part of a group of workers who left iPhone City, the largest assembly facility for iPhones in the world, in October due to poor hygiene and deteriorating conditions.
Also at that time, workers and guards got into fights over living conditions and food shortages.In one instance, workers fled on foot and walked 25 miles home, giving up highly sought-after positions.However, Xiao came back in the middle of November, lured by special bonuses meant to reassure drained workers that things were getting better.
China’s Covid strategy is becoming increasingly futile, and the violence that reached its peak on November 23 demonstrated how inadequate that effort has been.The Chinese Communist Party has shown a willingness to go to great lengths to combat Covid throughout the pandemic. Foxconn Technology Group and Tesla Inc. were forced to isolate their facilities from the outside world and continue operating them as “closed-loop systems” as a result.
iPhone City is run independently by Foxconn, Apple’s primary manufacturing partner in Taiwan.According to a person familiar with the business who requested anonymity to discuss private matters, the company has acknowledged that it has made mistakes in managing the employees while blaming local officials for erratic policies that made meal delivery and maintenance nearly impossible.
Foxconn representatives and local government officials did not respond to requests for comment.Due to the prominence and size of the company, Foxconn’s issues have received the most attention. However, its difficulties suggest that others may be having even more difficulty adhering to China’s policies.Every company is now asking themselves, “Will that happen to me?” when they see cases like Foxconn’s. Alicia Garcia Herrero, Natixis’ chief Asia-Pacific economist, asserts: Any business that depends on manufacturing must think about other options. It will cost money, but it will be cheaper than relying solely on China and waiting for China to open up.
According to Herrero, the opening of China’s economy could still take a year to 18 months, and the government’s clear communication of its recovery strategy is essential.She thinks that China’s descriptions of its plans up to this point have been muddled, which could cause businesses to lose faith and accelerate plans to develop manufacturing capabilities elsewhere.She asserts that Beijing cannot assume that businesses will continue to manufacture in the country.
As Apple warned this month that shipments of its newest iPhones will be lower than anticipated heading into the peak holiday season, the Zhengzhou plant’s continued operation is crucial. The Zhengzhou plant produces approximately 80% of the latest iPhone 14 models. According to Morgan Stanley, the worst-case scenario is that the location might not ship any more iPhones this year. In a statement, an Apple spokesperson stated that Apple had employees working at its Zhengzhou facility and was “reviewing the situation and working closely with Foxconn to ensure that their employees’ concerns are addressed.”
Tim Cook, who advocated the advancement of Macintosh’s China production network before he took over as CEO from Steve Occupations in 2011, is creating choices.Assembly partners like Foxconn are beginning to use India as an export base and are producing more iPhone 14 models there than any other generation. Additionally, Foxconn is expanding in Thailand and Vietnam.That indicates that the Covid policies implemented by Chinese President Xi Jinping pose a threat to China’s economic expansion.
According to Herrero, “it’s very telling that a company like Foxconn is already moving into other countries.”
When Xiao arrived at iPhone City in July, he paid $50 per month to rent a room in a nearby town for a dozen square meters (about 130 square feet). Because Xiao had to walk more than 40 minutes to get to work, the location of the space made it affordable. Peeling protective plastic from display components for iPhones and other devices was his straightforward task.From the iPhone 5 to the iPhone 14, he worked 10 hours a day while production was ramping up for a new model.
Xiao heard rumors about Covid infections on the campus at the beginning of October.According to company announcements and campus workers, Foxconn asked employees to use designated routes for daily commutes and to avoid private gatherings. Yellow, two-meter-tall plastic barriers were erected along roads to provide workers with travel lanes between their dorms and the factory, but the restrictions were frequently broken. To enter a town that was adjacent to the compound, some of Xiao’s coworkers climbed around the barriers.
Covid’s spread into the compound, where groups of workers frequently share cramped living quarters, was not disclosed by Foxconn. However, according to a witness who requested anonymity due to the sensitive nature of the matter, on Oct. 19, it closed its worker cafeterias on orders from local authorities. Because of this, the business had to quickly find a new way to feed its workers.
Problems arose immediately as a result.Foxconn simply lacked the staff necessary to prepare and deliver food boxes daily.As a result, meals were primarily distributed as workers left the factory in the hopes that they would consume them in their dorm rooms. Many people were left with only bread and boxed milk when the cooked food frequently ran out.According to those who were present at the complex at the time, those who did not enter the factory because they were sick or quarantined in their rooms occasionally did not receive anything.
The food, which included fried bean sprouts, shredded potato, and rice, was of poor quality.According to Xiao, the boxes he received smelled, and the dishes frequently had a gooey substance on them.Instead, many workers prepared instant noodles.They began utilizing social media to share pictures of the company meals.
Zeng Guang, a 21-year-old factory worker who polished metal cases, claims that after being classified as having had close contact with a covid victim, he was left hungry in his dorm room for a day.He claims that that night, he became so hungry that he went to the entrance of his building to demand food from the guards.He remarks, “They were so afraid, as if I was wielding a knife.”
To be continued
