Apple in China: Core Problems?

Apple, the producer of iconic electronics such as the Mac, iPod, iPad and iPhone, likes to keep strict control over its design and manufacturing processes. New products are revealed to expectant, adoring audiences by the firm's chief executive, Steve Jobs. But in order to retain secrecy over what the firm is up to, Apple's corporate culture sometimes brings it into conflict with western notions of openness, decency and transparency.

Research illustrates how Apple is able to extract higher gross profit margins for its high-end iPods than other suppliers such as HP and Lenovo can for their notebook PCs. The reasons centre on Apple's control of its core software and the exclusivity of the design standards it places on suppliers. Many of the components used by a firm such as Apple are made and assembled into the final product by big multinational firms known as contract manufacturers (CM) or original design manufacturers (ODM). One of these firms is called Foxconn, a Taiwanese company which operates a number of 'super-factories' in south China.

Foxconn has been at the heart of reports concerning the alleged harsh treatment of workers. In 2009, a Foxconn employee working in logistics was accused of stealing a prototype of the iPhone. An investigation showed that the man had been beaten by security staff before leaping to his death from the 12th storey of his apartment building. Apple's own investigations have also found that key suppliers have been employing under-age workers.

A picture of wholesale abuse of human rights in firms contracted to Apple has emerged over recent years. Last month, a factory run by Wintek in the Chinese city of Suzhou, which produces devices for Apple and Nokia, was at the centre of a health row, when it emerged that 62 staff had been poisoned by n-hexane. This toxic chemical is used routinely in the technology industry. It can cause eyesight problems and muscular degeneration. Wintek say the majority of affected staff have returned to work.

CM and ODM firms based in China often operate from fortress-like compounds. Staff employed at these sites have little cause to leave these workplaces, as a whole range of support services is also provided. There are accommodation, banking, recreation and food services available. The idea is to keep tight control over whoever works in these places, with searches of staff on their way in and out of the compound.

This level of security allows technology firms to ensure that they have exclusive control of products and the components that comprise them. Apple, with their market-leading margins, do more than most to protect their designs. The size of the margins they enjoy are partly derived from the conditions endured by staff in locations such as Suzhou and Longhua in south China. Apple would point out that some of these abuses have been revealed as a result of their own investigations. Other organisations exist to report on human rights and ethics and our major corporations.

As consumers, we enjoy access to products with state-of-the-art technology features. Are the working conditions of labour used in their production a price worth paying? Are poor industrial practices a necessary evil, to be dealt with by engaging with these companies and their regulatory authorities? What role should we as consumers play in this problem?