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Chinese iPhone Factory Reduces Suicides, But Also Loses Profits Foxconn, Chinese Apple Supplier, Cleans Up Its Act, Now Needs to Make Money

The turnaround tale from suicides to smiles at Foxconn, Chinese iPhone maker is not over yet. Now they have to make a profit!

As Chinese and American political leaders meet in Washington today, consider this example of U.S.-Sino exchange that could become a model success story—but only if we can keep it in the public eye.

More than two years ago, we asked if you would pay an extra $58 for a U.S.-made iPod because working conditions were so terrible at Apple's Chinese suppliers that several workers committed suicide. Some reforms ensued after that, to the point where Wired was invited in for a photo tour of one of the largest suppliers, Foxconn, to see the worker dormitories and show that employees were not actually warehoused (anymore) like the products they build. Well today, Bloomberg Businessweek is reporting that Foxconn has cleaned up its act considerably under pressure from Apple.

"It more than doubled wages in Shenzhen last year and instituted a program it calls "Care-Love," Businessweek reports. Workers say they get company-sponsored trips to the beach, and an environment where they can actually meet each other and make friends, a major component of job satisfaction. They even describe themselves as happy.

The original suicides were, and still are, an appalling tragedy of global capitalism, but this turnaround offers some hope. Hope and a very pressing fear! Foxconn is now losing money. Businessweek:

Employee turnover and suicides are down—yet so are profits and the stock price of Hon Hai Precision Industry, the flagship of the Foxconn group... fourth-quarter earnings dropped 26 percent,... even as revenue jumped 56 percent... Foxconn International... reported a full-year net loss of $28 million on sales of $853 million.


Not good. If Foxconn can't make cheap iPhones and happy workers then this reform effort could become a case study in why not to reform, especially for other suppliers that aren't feeling the heat of a media spotlight.

Apple has to keep the pressure on Foxconn, as well as support them as they re-align their costs. Maybe, as we asked back in 2009, American consumers also need to step it up and pay a bit more to know our electronics aren't made with a misery discount.

Via Bloomberg Businessweek

Image: (cc) by Flickr user [cipher].

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