Apple is being practically held to ransom by three Taiwanese companies which dominate the manufacture of laptops, mobile phones and MP3 Players. Foxconn makes all Apple iPhones, Quanta is the largest manufacturer of laptops and makes 90% of Apple’s MacBooks while Pegatron makes some of Apple’s iPods, reports The Daily Telegraph.
But you may ask why are they holding Apple to ransom? The problem for Apple is that it has nowhere else to go for the manufacture of its products. But if it did, these companies are so big that they would simply go out and buy the competitor that Apple had chosen over them.
These Taiwanese businesses are very secretive but there are concerns that they bully employees, use child labour, implement long working hours and pay only very low wages.
Only last year a young 25 year old employee of Foxconn who was working on the Apple iPhone, committed suicide. It came after an iPhone prototype went missing on his watch. Before he jumped to his death from his apartment block, Sun Danyong sent a message to a friend saying he had been beaten by Foxconn security staff.
The news led to investigations by Apple’s management and executives flew out to review the case. China Labour Watch described Foxconn as “inhumane and militant” and while Apple are aware of the poor conditions people work in there’s ultimately not a lot they can do.
Many analysts say that rather than Apple holding any power here it’s these three businesses that have the upper hand. These companies are the only ones in the world capable of quickly mass producing Apple products of the right quality. There really are no other companies who could deliver the product on time and to the highest standard. One expert said that if Apple tried to move products away from Foxconn then Foxconn would simply buy whichever supplier Apple turned to.
Apple is aware of the way in which these companies treat their employees and the company’s 2010 Supplier Responsibility report listed the many concerns they have but if Apple wants to continue to mass produce these devices it looks like they have nowhere else to turn.
Meanwhile the relationship between these three businesses and Apple rivals in the electronics business is even more difficult. Apple still controls its own research and development and its suppliers make what they ask them to make. However, companies such as Dell, HP and Acer are in the hands of Quanta and Foxconn. A technology analyst at UBS, Edward Yen, said Dell et al “pretty much say to Quanta and Foxconn: “Show us what you’ve got””. Basically, it’s the suppliers who are coming up with the new technology – not Dell and HP.
Yen says it would be possible for a company like Apple to build up the capabilities of another supplier but he added it’s not something that could happen overnight – it going to take several years. Until that happens it looks like the poor treatment of workers in China is set to continue.
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Source: The Daily Telegraph (06.03.10)
Tags: mobile business phones
