Print 31 comment(s) - last by Gondor.. on Aug 9 at 10:35 AM

Apple isn't the only one

Apple, Inc. (AAPL) has been thoroughly scrutinized by everyone from semi-accurate monologists to writers for The New York Times for reported Chinese labor abuses.  Interest piqued after a string of suicides at a primarily Apple manufacturing plant in Shenzhen highlighted poor working conditions among employees.

Apple's own yearly audits acknowledge such issues -- such as occasional child labor violations.

But it's hardly alone.  Samsung Electronics Comp., Ltd. (KSC:005930), the world's top smartphone maker, is now being forced to answer similar tough questions. A report by the advocacy group China Labor Watch accused its supplier HEG Electronics of using child labor at a plant in Huizhou, China.

Samsung does perform regular audits of its Chinese suppliers, but the audits are subcontracted to local Chinese third-party firms, a practice some say opens the door for lies and corruption.  

In the wake of the recent allegations Samsung has promised a new audit of HEG, sending a team of its own South Korean employees over by the end of the week to inspect the plant.  Samsung writes:

Samsung Electronics has conducted two separate on-site inspections on HEG's working conditions this year but found no irregularities on those occasions.

A team of inspectors consisting of Samsung personnel from Korea headquarters will be dispatched to Huizhou, China on August 9, and it will immediately launch an investigation and take appropriate measures to correct any problems that may surface.

Samsung Electronics is a company held to the highest standards of working conditions and we try to maintain that at our facilities and the facilities of partner companies around the world. 

Galaxy S worker
Samsung is accused of using contractors who use child labor to manufacture
its smartphones and tablets. [Image Source: BGR]

While not exactly a surprise visit, this could force HEG to at least avoid the most flagrant of labor abuses (or as Antoine Dodson would say, time to "hide your kids").

In a way Samsung has benefited from secrecy.  The company does not publish the results of its internal labor audits, while Apple does.  Thus much of the criticism leveled at Apple has been due to that company's willingness to share just how sordid the dark side of Chinese manufacturers are.

In most cases these violations boil down to manufacturers cutting corners, looking to pad their profits by pushing employees to work conditions considered "inhumane" by American and European standards.  

Those issues aside, it cannot be discounted that the electronics manufacturing industry has been a boon to the Chinese economy, lifting millions of workers out of the respectively back-breaking work in the fields into easier, better-paying factory jobs.  

This is evidenced by the fact that even amid outrage from American advocacies regarding labor conditions, their virtually never a shortage of willing workers in China, given the fact that the alternatives  too the "rough" factory life are, in reality, often far worse.

Sources: China Labor Watch, The Verge

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stark realization
By chµck on 8/9/2012 1:07:39 AM , Rating: 2
in the US, it is unfathomable to consider child labor now, but only a few decades ago, it was typical for children to be found working in factories.

In some places in the world, children choose to work because the average family income is still so low that it is not feasible to sit tight till they all graduate from high school, college, graduate school.

We will know when this shift happens because the current governments will be phased out. I don't have the source, but studies show that once average family income rises above a certain level, the population of an area will change governments in order to accommodate their new standard of living.

Right now china is at a point where large groups of children are currently working jobs (that are still more skilled than some jobs here in america where you have to be 16+). That's all there is to it.

RE: stark realization
By kattanna on 8/9/2012 10:35:07 AM , Rating: 2
yeppers. all this is really is, once again, america trying to enforce its values on others.

while it appears nowadays we have chosen to deny our own children the opportunity to work and gain valuable skills, we should not be imposing our own short sighted ideals on others.

these people over there in china are usually choosing between back breaking labor all day in the fields or the relatively much easier task of working in a factory that raises even more money for their family.

Its only fair!
By mchentz on 8/8/2012 4:14:14 PM , Rating: 2
If Apple is going to be scrutinized so should Samsung.

regardless consumers are going to loose

Child labour
By wordsworm on 8/8/2012 9:30:14 PM , Rating: 2
I believe Nike is known for using child labour. I'd be surprised if anyone here doesn't have clothes in their closet/dresser that hasn't passed through the hands of a child.

We'll investigate...
By Beenthere on 8/8/2012 10:09:02 PM , Rating: 2
...and get our PR flaks on it to save face while we profit from slave labor. No changes planned to eliminate the use of slave labor at Samsung, Foxconn, etc. however.

Consumers have a voice. You CAN vote with your wallet . There is absolutely nothing made in a Chinese slave/sweatshop that the world needs that can't be made as well or better in the U.S., U.K. or some other civilized country paying proper compensation, produced in decent working conditions without human exploitation.

By aurareturn on 8/8/12, Rating: -1
RE: Samsung
By quiksilvr on 8/8/2012 3:55:39 PM , Rating: 2
I won't even say anything. Just watch this:

RE: Samsung
By aurareturn on 8/8/2012 4:00:21 PM , Rating: 1
It's not Apple's fault for the U.S. debt. Apple has almost single handily created a tech boom in the Valley again. There are thousands of startups creating thousands of jobs because of the Appstore model.

Why anyone wants Samsung to beat Apple is beyond me. I'd much rather have Apple as the monopoly than Samsung.

RE: Samsung
By aurareturn on 8/8/2012 4:03:13 PM , Rating: 1
For the record, I own a Samsung Galaxy Nexus. I'm not a fanboy of Apple. I use Windows 7 - not a Mac.

I just know that if Apple does well, it keeps more money here. And if Apple could penetrate other areas, even more money would be flowing back to the U.S.

RE: Samsung
By Solandri on 8/8/2012 4:24:51 PM , Rating: 2
Economics is all about trade. If you're only considering the flow of money, you're only seeing half the picture.

e.g. Say I have $200k in the bank. I buy a house for $200k cash. If I look only at the flow of money, I have lost $200k. Terrible isn't it?

But that ignores the house I got. If the house itself is worth less than $200k, then yes it is terrible. If the house is worth $200k, then I did ok. If the house is worth more than $200k, then I made out like a bandit. Enough so that it may actually be worth it to go into debt by borrowing another $200k to buy another house.

What's been happening with China the last decade has been that the U.S. has been making out like a bandit. China, in an attempt to accelerate its industrial development, has been deliberately underpricing its goods and labor. Consequently, for each $1 we send to China, we're getting substantially more than $1 of value worth of goods and services.

This overlooks extenuating factors like the loss of jobs and industrial espionage. But the point is, whether money goes to China or stays here is meaningless unless you consider the value you get in exchange for that money.

Remember, economics isn't a zero-sum game. Money isn't just swapped around between players. It can be created via increased productivity. If (hypothetically) we run a $100 billion trade deficit with China but the products we buy with that money results in a $200b net increase in GDP, then that's actually preferable to having $0 trade deficit but no net increase in GDP.

Given the high profit margin on Apple products, I'm very skeptical they help increase U.S. productivity more than cheap Chinese goods. The best products for increasing productivity tend to be useful ones with razor-thin profit margins, priced just above the cost to manufacture (or in China's case, below the real cost to manufacture). Remember, every dollar a person spends on an iPad is a dollar they don't have to spend on something else (or multiple something elses).

RE: Samsung
By someguy123 on 8/8/2012 5:24:58 PM , Rating: 2
Receiving seemingly good value products from China isn't going to help local income. You don't have unlimited funds to burn through, and having a mountain of perceptually high value products does not influence your income, nor can it be converted directly back into currency. At some point you're going to need to produce something, and we're clearly not going to be able to compete with razor thin, partially government subsidized margins, unless the population is willing to go down a bracket in general wealth.

RE: Samsung
By Solandri on 8/8/2012 7:46:24 PM , Rating: 2
Receiving seemingly good value products from China isn't going to help local income.

Your company needs to buy a managed router. You can buy the $1000 USA made one. Or you can buy the cheap $500 China made one, and have $500 left to spend on something else.

That's how it helps your local income. The trade deficit with China amounted to only $300 billion dollars in 2011 ($400b imports, $100b exports). Total trade deficit was about $700 billion ($2.2t / $1.5t). The U.S. GDP is a bit over $14 trillion.

So for every net $1 sent to China, we're spending $47 domestically. If eliminating that $1 sent to China results in domestic spending dropping to $45 due to decreased productivity, then it's a net negative effect on the economy. You'd be cutting off your nose to spite your face.

RE: Samsung
By someguy123 on 8/8/2012 10:16:18 PM , Rating: 2
That's assuming that China will never compete outside of random goods. We've already outsource practically all customer service to India, as well as bringing in Indian/Chinese workers overseas, causing the whole visa problem, and gradually China is increasing living conditions and schooling for its general population. Sooner or later they will be producing those goods and people who will be willing to work at similar competency while demanding lower pay. Where exactly do you go from there?

Working under the assumption that Asia is nothing more than cheap labor is what eventually allowed guys like Samsung to take over the market, and the reason why China's economy is skyrocketing.

RE: Samsung
By Reclaimer77 on 8/9/12, Rating: 0
RE: Samsung
By someguy123 on 8/9/2012 1:53:52 AM , Rating: 2
Enlighten me. I see the eurozone crumbling and trying to keep Greece from breaking out, the US economy the same as ever, while China's economy continues to grow. What exactly do you guys expect? For these people to just give us back our money for nothing?

RE: Samsung
By Gondor on 8/9/2012 10:35:10 AM , Rating: 2
Actually Greece should have never been allowed to join in the first place and should have gotten thrown out long time ago. Fiscal rules were set and they are not adhering to them ... the longer everyone else caters to those lazy Greek bums, the worse.

RE: Samsung
By name99 on 8/8/2012 5:29:38 PM , Rating: 2
Economics is NOT all about trade. There are substantial non-linear effects, spillovers, externalities and suchlike. To take one example, know-how breeds know-how, which is why we get extreme concentrations of industries in certain locations ---Detroit, Silicon Valley, LA, ... This has been studied in great depth by a branch of Economics known as the New Economic Geography, which has led to Nobel Prizes.

A simple-minded adding up of the costs of goods transacted in a trade, without taking into account these externalities, is a very short-sighted way to run a country. To take a different sort of example which should again resonate with readers, you can outsource PC development for thirty years, like MS did; but then one day you wake up and find that all your suppliers are shipping such crappy tablets that you have to (at great expense and with god knows what long term consequences) design and build your own.

RE: Samsung
By Reclaimer77 on 8/8/2012 5:48:30 PM , Rating: 2
Would you buy an iPad if it cost you $1,500? Just an honest yes or no.

RE: Samsung
By Solandri on 8/8/2012 7:51:08 PM , Rating: 2
Economics is NOT all about trade. There are substantial non-linear effects, spillovers, externalities and suchlike.

Exactly! So you can't just look at one number (trade deficit with China) and declare that it must be bad. It's a lot more complex than that.

I'm not saying trade with China is all roses and butterflies. I'm not saying trade with China must be good. I'm saying the mere fact that we're running a trade deficit with China is not an indication that it must be bad.

A simple-minded adding up of the costs of goods transacted in a trade, without taking into account these externalities, is a very short-sighted way to run a country.

And likewise, a simple-minded reading of just the trade deficit with a single country is a very short-sighted way to run a country.

RE: Samsung
By Kepler on 8/9/2012 12:21:36 AM , Rating: 2
Apple has 100+ billion sitting in accounts overseas. This doesn't help the US economy. Of course they have it over there because if they didn't, they'd probably only have 50, due to taxes.

I will admit that I don't care for Apple, but I can't blame them for keeping money overseas. Just don't think Apple doing well keeps money here, that is certainly not the case...well, not the whole case.

RE: Samsung
By Reclaimer77 on 8/8/2012 4:23:12 PM , Rating: 2
Why anyone wants Samsung to beat Apple is beyond me. I'd much rather have Apple as the monopoly than Samsung.

Nobody was talking about "beating Apple" until Apple started this holy Jihad in the courts over absurdity. Samsung makes stuff FOR Apple for christ sakes. They weren't blood enemies, they were partners.

The market is plenty big enough for multiple players, competition is a good thing. It's Apple that wants to ban and eliminate Samsung, not the other way around.

I'd much rather have Apple as the monopoly than Samsung.

Then you're an idiot. Nobody rational wants either to become a monopoly. I don't live in the "Valley", I could give a goddamn. It's not like iDevices are actually made in the USA anyway.

RE: Samsung
By name99 on 8/8/12, Rating: 0
RE: Samsung
By Reclaimer77 on 8/8/2012 5:46:00 PM , Rating: 2
Yeah I'm pretty sure they meant beat them in the market through competition, NOT in the courtroom. Are you serious?

RE: Samsung
By mondo1234 on 8/8/12, Rating: 0
RE: Samsung
By Rukkian on 8/8/2012 4:49:52 PM , Rating: 2
Or maybe people would just like neither side to "win" and actually compete where it counts for consumer - on the shelf, instead of on the bench.

I don't think most rationale (even most fanboys) want apple to go away, as it is much better when they push each other. We end up with better products at better prices.

The only people "winning" in the current environment is the lawyers, who are the last people I would want to win anything!

RE: Samsung
By aurareturn on 8/8/2012 3:57:16 PM , Rating: 1
FYI, I work in the silicon valley at a startup and I have my job because of the App Store that launched on the iPhone and overnight created thousands of jobs here.

RE: Samsung
By WalksTheWalk on 8/8/2012 4:11:14 PM , Rating: 2
To the article it sounds like Samsung is just as guilty as Apple (and many others) for allowing Chinese suppliers to get away with horrible labor practices.

To paraphrase, you're saying "Support Apple because they are both evil and Apple is somehow the lesser evil...and supporting Apple benefits me."

How about wanting a marketplace where decent labor practices are enforced and innovation/efficiency are driven through healthy competition?

RE: Samsung
By Schadenfroh on 8/8/2012 6:45:45 PM , Rating: 1
Samsung employs many Americans, possibly nearly as many as Apple given its diverse product portfolio.

Not to mention a number of Google employees that are working on Android...

RE: Samsung
By Reclaimer77 on 8/8/2012 7:04:54 PM , Rating: 1
Samsung directly employs some 250,000 people world wide. Apple? 65k (lawl). So yeah, it's pretty safe to say Samsung hires more Americans than Apple.

RE: Samsung
By aurareturn on 8/9/2012 5:05:16 AM , Rating: 1
Samsung's highest paying jobs are in Korea. Apple's highest paying jobs are in Cupertino - my backyard. How's this comparable?

RE: Samsung
By Reclaimer77 on 8/9/2012 9:48:01 AM , Rating: 2
Weak! That argument is SO weak. Apple indirectly employs some 200k Foxxconn workers in China who make a fraction of Americans. So come on, don't even go there.

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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