Apple's China supply chain exposed

Participants dressed up to represent Foxconn workers take part in a protest in mainland China. Manufacturing Apple’s iPod and other products in China has cost some workers their lives.

Kai Ryssdal: If you were asked to pick the iconic American company right now, right at the top of most lists would be Apple. Once a fringe, cultish computer company -- now maker of things that everybody wants.

It got that way with great design, an eye for perfection, and a whole lot of Chinese factory workers. Charles Duhigg has been writing about the economics of Apple's supply chain in the New York Times this week. In a story that went up online yesterday, he told the story of a 22-year-old man name Lai Xiaodong and the job Mr. Lai got at FoxConn, one of Apple's biggest suppliers.

Charles Duhigg: He was assigned to a room where they were sanding, polishing the iPad cases. As aluminum dust built up in the air from the polishing, it eventually got to a critical point where it exploded. Mr. Lai was killed along with three others, and dozens were injured.

Ryssdal: And the official response from Apple and from Foxconn on this was what?

Duhigg: Both of them said that they opened up investigations, although neither company has revealed any of the documents or any of the findings from when they sent folks in. Conditions in Chinese factories are harsh. They're much harsher than they are in, for instance, the United States or any Western nation. And when I talk to former Apple employees, what they say is that if Apple and Amazon and Dell and Hewlett-Packard, if they all came in and they insisted that conditions be improved to where there are no safety hazards, Chinese manufacturers would have to comply. But the problem is that right now there's not a lot of reward for doing so -- particularly when insisting upon changes would probably slow down the pace of innovation significantly and would very likely raise costs for a number of those companies.

Ryssdal: Let me explore that pace of innovation point because that is at the core of the article that came out yesterday and the one that came out over the weekend as well. And that is how quickly companies expect manufacturers to be able to turn to get what consumers want. And you tell a great story about the glass in the iPhone and when Steve Jobs said 'I want a glass screen, make it happen.'

Duhigg: Absolutely. And they were able to turn that around, overhaul their manufacturing process, and within 48 hours get these glass screens into workers' hands and start producing finished iPhones because there's this enormous flexibility. These factories can hire 3,000 people overnight. It's an amazing scale.

Ryssdal: Well here comes the look-in-the-mirror question because there is demand issue that's helping drive this whole thing.

Duhigg: Oh, there's huge demand. Right? We did a national poll as part of this story and we asked people, first of all, where do you think Apple products are made? Most people who responded didn't know that they were made overseas primarily or how much of them was made overseas. And then we asked: What's the worst thing that you know Apple? 57 percent of people couldn't think of anything negative about the company.

Ryssdal: Wow.

Duhigg: The No. 1 response at 14 percent was that their products are too expensive. Two percent of respondents mentioned overseas labor conditions.

Ryssdal: Play this out for me, then. If change is going to come, where is change going to come from?

Duhigg: Where change has to come from is it has to come from consumers starting to say, 'Listen, I really care about where my product comes from. I'm willing to pay more for it if it's built in a factory I can feel good about.' And more importantly, 'I'm willing to wait longer for a new version.' We live in a time when there's a brand-new device, it seems like, every couple of months. And they're amazing and wonderful -- but there's a price to that.

Ryssdal: Charles Duhigg writing in the New York Times with David Barboza about Apple and the iEconomy. Charles, thanks a lot.

Duhigg: Kai, thanks so much for having me.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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Robert Reich's follow up comments omit mention of the fact that America would not (rightfully) put up with the working conditions in China that permit the flexibility China offers. Reich's comments about education and infrastructure, although commendable, do not address the issue. Unless and until China offers OHSA -regulated work environment and American wage hour rules. America will not compete

Great story, except for the ending. Really, the notion that American consumers can or will be the solution to dangerous working conditions in China is ridiculous. Perhaps the Chinese workforce will rebel against this and force change there. A quicker solution, if we were a better country, would be regulation prohibiting the importation of products manufactured in excessively dangerous ways. Of course in the America of jungle capitalism, that won't happen.

Even though I'm a MAC lover I've been rethinking a purchase of a new iPad or iPhone. And then there was the ad from a new Chinese city in the United Hemispheres magazine I saw on my flight at Christmas. It was touting the growth of it's new metropolis due in part to 200,000 new jobs with Apple. I love good design but I love fair labor practices that this nation has fought for so hard even more.
I'm also willing to pay more for a product to keep the work here.

Good for you, Peggy! I have a 4 - 5 year old MAC but I don't use an iPad or iPhone. Let's face it that purchasing any electronics pretty much means you're sending money to China one way or the other. However, we can make a decision about the things we "want" versus the things we believe we need (which is also very subjective of course). In any case, I agree with your sentiments wholeheartedly and try to live those ideals to the extent that it is practical.

I agree with the premise that consumers have to drive change through their choices, after all these are the people who need jobs and an income in order to purchase these products. But it appears that people aren't acting in their own long-term interests. As the article illustrates, the majority of consumers don't even know where the product is made. Companies make things that people want to buy. If consumers understood this, they might take an interest in where and how their products were made. I can speak from first-hand experience, having managed many a production line in China as a Western engineer working for a Western consumer products firm.

So, I propose the following thought experiment: Apple continues to sell its current product, such as the iPhone 4S as it does at the moment. In parallel, Apple, being a leader, sets up a production line here in the US. The second iPhone, the exact same thing but made is the USA, will be sold once the US production line comes up to speed (likely a few months after the Chinese made phone comes on the market) at a price which reflects the true costs of making the device in a US factory. (Notwithstanding whether this is possible or not.. after all it's a thought experiment). Allow people to make the choice as to which iPhone they would rather own - the one made in the US (available later, at a greater cost) or the one made in China. I would argue that many Americans might even buy the US-made phone, but I believe that most American consumers are not interested in where their products are made and the ramifications it has on their own long-term employment prospects.

My point is that consumers don't take responsibility for the choices they make. They take little interest in where things are made, as the article points out. It is not an issue of right or wrong. Neither is it an issue of attempting to regulate how Chinese factories make products nor of trying to stop globalization of trade.

Sadly, I agree with your premise and supposition about the behavior of American consumers. The American buying public is both selfish and greedy (wanting to buy at the cheapest prices regardless of the impact to anyone) as well as short-sighted as you also point out. The erosion of manufacturing jobs is dismantling the infrastructure of the middle class and weakening the country as a whole, yet consumers blithely continue to purchase products made in China.

I do believe that it is ultimately the consumer who can make a difference. I look at labels all the time and try hard to make conscientious purchase decisions. My New Balance running shoes, for instance, are made in the US. There are products I simply won't buy because they're made in China. I write to companies telling them that I support their US-based manufacturing with my purchasing dollars. And, in some cases, there is little choice (try finding LED bulbs or CFL's not made in China ... I have at least one LED assembled in Mexico).

The sad fact is, that most Americans seem only to care about their own personal bottom line when it comes to their consumer choices. I find it ironic that people who can be so generous and caring at times of natural disasters and who claim to "support or troops" who are overseas supposedly fighting for democracy and freedom; turn a blind eye when exercising their most powerful weapon ... plunking down their dollars for Chinese made products.


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