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Summary:

Factory shutdowns due to worker protest are becoming more common in China. Such an event could pose a serious risk for Apple should these kinds of riots or protests hit a factory producing critical parts for an iPhone 5 or the next iPad.

Foxconn, one of the reported CDMA Manufacturers

A riot broke out Sunday in one of the mammoth factories in China run by Foxconn, the contract manufacturer to Apple and other major consumer electronics companies. Forty people were hurt and the disturbance shut down the plant on Monday, bringing production at the factory to a halt, according to reports.

Apple might be Foxconn’s most famous customer, though it’s not clear that any iPhone 5 parts — whose production are critical to Apple right now — were produced at the site. One worker was quoted saying some iPhone parts came out of the plant in question, but Foxconn won’t confirm that.

But that doesn’t mean that Apple won’t or can’t be affected by work stoppages resulting from factory violence that’s increasingly popping up in China. The New York Times says this is part of a larger pattern at Chinese factories:

Disturbances at factories have become increasingly common in China, rights groups say, as laborers have begun to demand higher pay and better conditions.

Geoffrey Crothall, spokesman for the China Labor Bulletin, a nonprofit advocacy group in Hong Kong seeking collective bargaining and other protections for workers in mainland China, said workers in China had become increasingly emboldened.

“They’re more willing to stand up for their rights, to stand up to injustice,” he said.

From a business perspective, this hasn’t directly impacted Apple yet, but it’s very likely something Tim Cook is at least aware of. It could pose a serious risk for Apple should these kinds of riots or protests hit a factory that happened to be producing critical parts for an iPhone 5. Or the next iPad.

Apple has taken steps to address the poor working conditions and low pay that characterized some factories in China that produced iPhone and iPad parts. After initiating an outside audit of Foxconn and a few other of its largest manufacturing partners in the country earlier this year, Apple has pledged to help defray the costs of improving the working environment at Foxconn.

  1. Apple certainly says they’ve taken steps to improve working conditions in those factories. Whether they’ve actually had any effect remains to be seen:

    http://www.epi.org/blog/evidence-disturbing-working-conditions-iphone/

    Those workers want those jobs and they put up with a lot to keep those jobs in spite of all the hazards. The mere fact a riot is taking place at all should tell us things haven’t changed enough there, not yet.

  2. There are many questions that should be and will be asked about these riots, but Apple is not the only customer of Foxconn at may not be the only customer for this factory either. The anti-Japan riots have been front page news and have been raging across China for the last couple of weeks (or longer). it could be this incident was fueled by those ongoing issues, it could be due to many issues related to the conditions at the factory, sadly we will never know the real story or truth behind it.

    The best we can do is reflect as to why Foxconn’s working conditions are so bad and why it took so long for their customers (Apple, Dell, HP, etc.) to step in and make changes to the plants. Perhaps if their customers were willing to pay Foxconn more and insure that translated to employee pay, benefits and working conditions things would improve. Perhaps if consumers were will to have products built in the US or pay a little more for the latest must have gadget things would be better.

    These workers make so little in a month they will never be able to afford an iDevice, perhaps Apple could toss them a discount.

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