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The Agony And The Ecstasy Of Steve Jobs. Laugh Out Loud Insight On China’s Factories.

Posted in China Business

Just got back from watching Mike Daisey’s one man play, “The Agony and the Ecstasy of Steve Jobs” at the Seattle Repertory Theater.  It was an absolutely amazing show and I highly recommend it. It was hilarious, thought provoking and, near as I can tell, unfailingly accurate.  I cannot recommend it highly enough; it is truly a must-see.

To grossly summarize the play, Steve Jobs is an “asshole-visionary” who has done amazing things at Apple, but in doing so, willfully ignores how Foxconn, which makes “all of our shit” grossly mistreats its workers, some of whom are as young as twelve. Daisey spent weeks in Shenzhen talking with factory workers and factory owners there to gather up material for the play and what he describes completely jibes with what I have seen there.  His recounting of meetings with factory owners in conference rooms with business cards and interminably boring Powerpoint presentations definitely was totally spot-on and had me laughing so hard I could barely stop. As Daisey so aptly puts it, Powerpoint is to communicate with other people in the same room as us.

During the show, I thought often of the book, The China Price, by Alexandra Harney, which I have previously discussed here and in this post on the ten best books on China business.  If you watch this play or read that book, you are forced to conclude that factory life in China is mostly brutal and that Western notions of Corporate Social Responsibility (CSR) have had very little impact on that. Daisey talked a lot about how the Western media is failing to report what is really happening there because as he put it, governments seek to block information getting out because that works.

At one point in the play, Daisey referred to a Wired Magazine article, written soon after the Foxconn suicides, as having been written by “useful idiots.” My problem with applying that term to Westerners who are always so quick to whitewash what is really going on in China is that few of them are idiots. Rather, they are calculating businesspeople who have chosen to come down on the money side of the equation.

What do you think?

UPDATE: A number of commenters have rushed to defend Foxconn with the argument that it treats its workers better than many/most other companies in China. My response to that is that I do not believe Daisey would necessarily say otherwise. I think he focuses on Foxconn simply because it is so big and because it is so representative of what goes on in China’s factories.

A reader sent me a link to a just out PC Magazine article on Foxconn, entitled, “Foxconn Factories: How Bad Is It?” Pretty bad, according to the article.

I realize it is easy to criticize Foxconn without providing any solutions, but that is not the point of this post. My only goal with this post is to put out there the way things are so as to make it more difficult for people who should and do know better to act as though things are otherwise.

UPDATE:  3-18-2012  Turns out Daisey “stretched” the truth.  For a great post explaining how he did this and the effect of what he did, I recommend China Hearsay’s, “Would-be Apple Killer Mike Daisey Goes Down in Flames.

  • http://www.landedbook.com Christopher Dillon

    This is probably the Foxconn story that Daisey mentioned.
    http://www.businessweek.com/magazine/content/10_38/b4195058423479.htm
    Best
    Chris

  • Jake

    While I haven’t seen the Daisey performance, the notion that Foxconn exploits it workers and grossly mistreats them may be hard to sustain in the general context of manufacturing in China.
    Two questions:
    1. Does Daisey actually speak Chinese? 2. Has he lived there long enough to understand the complex life choices available to workers, including the pricing power now available to Chinese workers to change jobs?
    Apparently Daisey didn’t like the Wired piece because the images it conveys are sharply at odds with the stark, grimy ones he apparently hopes to evoke. The article also revealed that the Foxconn plant includes facilities for worker education, sports, and up-scale canteens. Could it be that among the employment possibilities available to undereducated youth in SE China that Foxconn is a decent alternative?
    http://gizmodo.com/#!5678732/exclusive-look-where-the-workers-who-made-your-iphone-sleep-at-night
    http://gizmodo.com/t/shenzhennotes
    Your readers may also find interesting a reply to the latest round of “evil Foxconn” press with a view from Guangzhou by an English teacher there.
    http://www.guardian.co.uk/theobserver/2011/may/08/letters-chinese-workers-not-exploited

  • ecodelta

    While profitable, a crime is business.

  • http://www.cleanpowerholdings.com Charlie Manger

    Important points raised, but I saw a citation that Foxconn’s suicide rate was actually lower per capita than the nationwide rate generally. That doesn’t mean the situation shouldn’t be improved at Foxconn, but it raised my curiosity about how bad it could be in the rest of the country.
    Our work is predominantly in rural China. We see first-hand the front line of development from China’s agrarian society to what comes next. And in many cases, the people who used to work in these mountainous areas left to take shoe factory jobs for RMB 2000/year according to our local sources. So the first evidence of change is actually that people are “not here” so much – and have left for the jobs in the factories.
    Now, however, we’re starting to see an interesting trend with people returning back to the countryside in cases where new investment in value-add businesses are being established. Using raw materials already available in these rural areas and then packaging/branding these, or processing to some degree and then packaging and reselling. With the workers leaving factories to come back to rural areas for new jobs – I’ve recently heard that factories are having trouble finding workers without raising pay and improving the working conditions on-site in those locations as well.
    Does anybody else see these things happening?

  • hanmeng

    My guess is Foxconn is probably better than average, but it’s targeted by the Chinese because it’s Taiwanese owned, and by Americans because it’s connected with a famous American brand. Otherwise, no one would care.

  • Steve Keith

    As you ponder this interesting essay, don’t forget that Foxconn is Taiwan owned, not that that makes much of a difference.

  • Twofish

    What’s fun is to talk to someone to one of the factory owners. They’ll tell you a story of “little emperors” that are spoiled rotten and will strike and quit at the drop of a hat, and won’t lift a finger to work overtime. One of them I talked to recently says that they are now much more likely to hire workers in their 30′s and 40′s because young people have no work ethic, and he is thinking about shutting down his factory because young people want so much money that he can’t make a profit.
    As far as the Foxconn suicides, the attitude is that if you have suicides among young people that don’t work for Foxconn, and they are skeptical that Foxconn really had anything to do with it.
    On the one hand you can argue that factory owners have a vested interest in whitewashing things, but on the other hand, you can also argue that labor activists have an interest in making the situation worse than it is. Having been to the factory floor, I think that the factory owners view on this is closer to reality. No one is chained to the factory floor, and the economy is growing fast enough so that people can (and in fact do) leave if the conditions are no good. Everytime, there is a major holiday everyone goes home, and a lot of them don’t come back.

  • http://VisionAndPsychosis.Net L K Tucker

    I have a psychology project about a little known problem discovered when it caused mental breaks for office workers forty years ago. The office cubicle was designed to stop the problem in offices by 1968. .
    Pictures and TV news video show this problem in the Foxconn city/factory.
    Each suicide should be investigated to determine if the work location allowed Subliminal Distraction exposure which would have influenced the worker leading to suicide.
    If this is the problem nothing Foxconn does will stop the suicides. Counseling and pledges won’t work because the worker is having a mental break when they commit suicide.

  • Twofish

    Also corporate inspections of Chinese factories *are* a joke, but they are a joke for reasons that are curious and somewhat amusing. Suppose you are a factory worker in Dongguan, your boss announces that at some point in the next view months, you are likely to have a corporate inspector from the US inspect the factory, and if the factory doesn’t pass inspections, the company will cancel the contracts and both the factory owner and the factory worker will be out of work.
    At this point the factory workers will do everything they can to make the factory owner look good. Even if the workers are annoyed at the owner, they are not going to complain in front of the inspector because if they do, the factory worker will be out of a job when the company cancels the contracts. Also, if you see any reporters lurking around the factory, you are going to be extremely uncooperative, because you lose if the factory gets shut down. If the factory owner really was mistreating you, then you’d leave and work for someone else. There’s not a shortage of jobs in Dongguan.
    Also, you have to think about the ethics of corporate social responsibility. Suppose you are a Western company and you shut down a factory because the corporate inspector has a bad report, you’ve just screwed over the workers far more throughly than anything the factory owner has done.

  • http://Http://fortune.com/apple20 Philip Elmer-DeWitt
  • Dan

    I was just in Dongguan last month visiting another factory and the owner was telling me how difficult it is getting to compete with Foxconn, as they have a big sign outside their factory advertising their starting salaries, which are significantly higher than most other factories pay.
    I also used to help manage a factory in Guangdong, and I can tell you our factory didn’t have nearly the nice worker facilities that Foxconn has.
    I think you really have to read these “Foxconn workers are abused” stories with a huge grain of salt; it is a competitive market for labor in China, and getting ever more so, and as such workers have an ever greater ability to go where the money and conditions are most favorable.

  • Twofish

    Someone else made the point about the Wired article being a “white wash” that I wanted to make. At this point, it’s almost like a conspiracy theory. We are sure that workers are being mistreated, we just can’t any evidence for it, so there must be this massive coverup.
    The last time I was in Dongguang, it was a Sunday, so I did a lot of shopping and I was in the malls where you had all of these migrant workers shopping for clothes, purses, cell phone accessories, and eating frozen yogurt and fried chicken.
    One curious thing is that the stereotype of migrant worker is some illiterate country bumpkin, when in fact most of the young migrants are ambitious and fashionable young people that wouldn’t be out of place in a suburban mall in the US.

  • Anon

    There was a short piece on the Atlantic (I think) blog a couple days ago–perhaps you saw it–about how much the iPad 2 would cost if it were made in the US vs. in China. A back of the envelope calculation, under the assumption that Apple would maintain the same 50%+ profit margin per unit sold, had the hypothetical “made in the USA” price at just under $1200, if I remember correctly, vs. the just under $800 that people pay now. The difference was, unsurprisingly, primarily in the cost of labor–under $2/hr. vs. over $30/hr. There was no mention of what was behind those $2/hr. labor costs, and at least part of the lesson, it seemed, was that this arrangement is actually a good thing since it shaves a few hund-o of the cost of an iPad.
    I’m not an economist, but I have read analyses by a number of economists who say that productivity gains have far outpaced the cost of labor in China. I may be an old fashioned bleeding heart–and I really don’t feel like elaborating on this–but I can’t help but believe that at least part of the reason for that disconnect is that there truly is something artificial and arguably unjust going on in China’s labor market. And, if that is the case, I also cannot help but believe that both multinational corporations and their consumers/shareholders are at least subconsciously complicit, if not explicitly supportive of the policies that accomplish the artificial and/or unjust end. The catchall justification? Low inflation, i.e., God forbid we have to pay more for all the crap we buy, or God forbid profit margins fall below 30%.
    I see something of a parallel in the US policy of propping up dictatorships in the Middle East. The rationale being, of course, “He may be a son of a bitch, but he’s our son of a bitch,” i.e., our foreign policy in the region would be much more challenging if these countries operated according to the will of their people. So, for the sake of added US political convenience, millions of people have lived for decades under oppressive dictatorships that typically did not enjoy popular support. We see how that’s worked out.
    That may be unfair, to the extent that we had no choice but to deal with the regimes as we found them, but it does raise an ethical dilemma, to the extent that we became attached/addicted to the simplicity with which those regimes operated and contributed to their maintenance of power through unjust means. A government that gives expression to popular will, but that may often be anti-US/anti-Israeli? Or an oppressive regime that we can more or less manipulate with weapons and petro-dollars?
    Re China: A trading partner that permits labor costs to rise along with productivity gains, leading to higher inflation or lower profit margins in line with market circumstances? Or a trading partner in which millions of young people will never really know life outside the factory gates, but that can provide iPads for under $1,000 at 50% profit margins? I don’t think this arrangement is going to end well either, and, in fact, I’ve heard some valid arguments from intelligent people that it was a contributing factor in the whirlwind that created the global financial crisis, and that it continues to hinder economic rebalancing to this day.

  • Jake

    I saw this in DC at the Wooly Mammoth Theatre Company and I too loved it. It is funny and insightful and, most importantly, it makes you think. I do not necessarily disagree with all of the comments from people defending Foxconn, but they do all seem to be from people who are more worried about having their assumptions and their lives challenged than from people who are interested in real analysis and discussion.

  • Jake

    For what it’s worth, during the early 1970s I worked two summers in what was at that time the largest tire factory in the world, in Topeka, Kansas. The vast factory was an inhumane space, filled with noise, chemical smells, and during the second shift (3 p.m.-11 p.m.) intense (>90 degrees F.) heat. Workers had to stand all day and face a relentless pace to keep up or risk being hectored by abusive management, and many of my older colleagues suffered from a variety of work-related health issues.
    As a summer employee, who replaced workers on vacation, I was constantly pressured (but gladly accepted) much overtime, and routinely worked two shifts to make extra money. I didn’t see any Mike Daiseys come to Topeka to lament our pitiful plight, but since we weren’t in a foreign country I suppose we weren’t exotic enough subjects for misplaced guilt.

  • Twofish

    Manger: With the workers leaving factories to come back to rural areas for new jobs – I’ve recently heard that factories are having trouble finding workers without raising pay and improving the working conditions on-site in those locations as well.
    Seeing this as well. One big issue is that exports are increasingly less important to the Chinese economy and once are putting together a factory to supply to the domestic market rather than to international markets, then southern Guangdong is a dreadful place to put a factory.
    One other thing that surprised me when I went to one of these factories is how difficult it is to reorient an export based factory for domestic production. The problem is that if you are putting together consumer products for the US, then you make deals either directly or indirectly with Walmart and Target and then you have a distribution chain. Domestic Chinese supply chains are much more fragmented so if you have a Chinese factory that is producing for the US, it’s not clear who you talk to if you want to target local markets.

  • allroads

    Dan.
    What I find so interesting about the Apple issues is how the stories always are about Foxconn when it is actually Wintek that is perhaps the biggest violator in the Apple supply chain. With their apex violation being the nHexane exposure that put 130 line workers in the hospital for neurological disorders (some were apparently paralyzed / some have not recovered) nearly 2 years ago.
    Apple, in its responsibility report, says that it learned of the issue in Jan 2010, but if you search nHexane and Nokia, you will find a Nokia report that says they audited Wintek in June 2009 after hearing about illnesses on site due to nHexane.
    As for the other comments about conspiracies, blowing things out of proportion, or that “everyone is doing it”… everyone needs their defenses I guess, but Apple needs to make changes in their supply chain by either improving their audit /compliance systems or finding new vendors. China is their largest market, and another problem like the one at Wintek could very quickly turn consumer sentiment away from Apple products in China.

  • James G

    A lot of te factory work is just repetitve stuff. I don’t know about Foxconn in particular but a former neighbor was an employee of a athletic apparel factory. She was young and left because it was boring and unglamourous. Were the hours overly long? In our perspective, yes. Also maybe to a tier 1 or 2 city’s residents it might seem an onerous amount of time, but if you are from the countryside, you are used to an agrarian schedule, and the idea of having a lot of leisure hours off work mainly appeals to those who have money and disposition to spend $$$ during their leisure hours.
    BTW, this neighbor was living with 3 other girls splitting a one bedroom for 1300 RMB a month in Shanghai, this was round 2004, Pudong riverside or there abouts. Not unlike young people in NY or DC working doubles waiting tables 12 or more hours a day and living jungled up trying to make it.
    That said, children should be in school, and the health abuses of Chinese factories cannot be denied. I suggest reading not only the China Price, but also the history of labor organization and industrial industry in Latin America as a good frame of reference. You’ll notice that many of these factory workers are young women. To find the really terrible jobs, find where the young men work.
    Not trying to be a relativist, but this is my pov. Definitely a tough equation to balance, between compassion for the workers and the current environment in CHina.

  • Eli

    I like how so many people rush in to defend China’s factories when Dan’s post does not really criticize them or act as though there is some better solution. The way I read this post is that it is only asking us to at least not ignore the fact that there is a problem because if we ignore it, we doom things to never changing. All those who have rushed in are doing worse than just ignoring it, they are papering it over. Is it too much to ask that we all open our eyes and not act like everything is great? Would even that cause some of you to fear some decline in your business or your reputation or your self-defined moral standards?

  • Uncle B

    China: Net creditor nation. U.S.A. largest debtor nation in all the history of the world! China: forging ahead, with all of Asia in strong support, even buying petroleum products in Yuan from Siberia now, opening all of Siberia’s immense natural resources to China, for Yuan, not U.S. dollar exchange! U.S.A. manipulating U.S. dollar furiously, trying desperately to avoid over-inflation and still pay its interest on debts to remain solvent, even refused loans by China recently, treasuries lost ratings, now down to AAA, not good at all! Recovery from recent banking fiasco shaky to say the least, facing possibility of another more severe recession, depression. China fights off inflation, has highest employment ever, does not depend on sales to America at all! Sells world-wide! Americans do however depend on cheaper goods from China just to get by! U.S. dollar losing purchasing power as we speak! some think it will be worth Zimbabwe dollars soon, even! Yuan very strong, growing purchasing power, drives gasoline prices at the pumps in U.S. cities skyward, even as U.S. dollar loses power. scary days for Americans ahead, China “Too big to fail!”now.

  • Paul

    I’m not here to defend Foxconn, but it seems that Mike Daisey grossly exaggerates the circumstances. While working conditions might not be on par with the U.S. yet, I still doubt Foxconn hires 12 year olds to work in its factories. Mike Daisey doesn’t speak Mandarin himself and probably doesn’t know a great many people really connected to Foxconn.
    Everybody who is doing business in China knows that it is unrealistic for him to have just gone to the factory and interviewed the workers. So where does his insight come from? Meeting somebody from a third rate Foxconn supplier doesn’t count as investigation and can hardly be applied to the company as a whole.

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