Tuesday 21 July 2009

Trouble In Foxconn's Forbidden City

[Picture: A gatehouse in the Nanjing city walls]

From time to time people will ask me why exactly I blog anonymously, believe me when I say this has almost nothing to do with the Chinese government per se, and much more to do with trying to remain employable whilst speaking frankly about previous employers, especially when they include Foxconn. First off, whilst Foxconn have received a lot of bad press in the past, such as this story from the Daily Mail on work/living conditions at the Shenzhen plant, and the subsequent entirely justified outcry when Foxconn went after the Chinese journalists who also covered the story, they are actually quite a bit better than all the other fully certificated and inspected factories I saw during my time in China. Foxconn's Shenzhen factory is one of almost Dr. Evil mega-fortress proportions, the latest estimate of the workforce I heard whilst I was there was in excess of 300,000, with hundreds of new recruits arriving at the factory gates just outside my office every day. It was so big that I was assigned my own go-cart with driver to get around it, so it is quite possible that much went on that I was unaware of. That said, I find today's news of the suicide of an employee who lost a prototype sad but unsurprising.

Firstly, as perhaps the largest and most high-tech manufacturer operating in China, the company is subject to very high levels of corporate espionage. The high number of burglaries of Foxconn employee's residences I noted whilst I was there can perhaps be explained by Shenzhen's position as Crime City PRC, the company was the subject of numerous instances of trade-secret theft during my stay. The man who offered to share a taxi from Shenzhen airport and then promptly offered me a large amount of money for corporate documents certainly wasn't in town for the fresh air. As such the company is highly security conscious, and each employee is asked to sign a (perhaps unenforceable) non-disclosure agreement with strict and severe monetary penalties for non-compliance. All employees were told that possession of any unauthorised device onto which electronic information could be downloaded (including, ironically enough, the very iPods and MP3 players that are the factory's main product) would be grounds for instant dismissal. Cameras were also strictly prohibited, and this extended even to camera-phones (also a big Foxconn product).

Secondly, Foxconn's corporate structure is highly regimented. The most commonly used way to explain it amongst my colleagues was simply to describe each line-manager as a warlord manoeuvring for greater influence under the leadership of company president Terry Guo (郭台铭). As such even minor disobedience on the part of a subordinate brought high levels of pressure from the almost entirely Taiwanese upper-management. This extremely hierarchical structure is re-enforced from the very beginning of a mainland Chinese Foxconn worker's career by military-style drill (something that Taiwanese need not do, although most mainland Foxconn employees believe that this is simply how things are done in Taiwanese companies). One Taiwanese manager explained this to me in terms which could have come right out of the colonial play-book: "you have to shout orders at the mainlanders, you have to threaten them, it's what they are used to". My one brush with authority whilst I was there, a veritable chewing out I received for suggesting that I might help the publicity department improve the content on the lamentably bad Foxconn website during a particularly dry spell for my office, was simply a response to my infringement of this corporate warlordism.

My guess is that Sun Danyong (judging from his name probably a mainlander - most of the Taiwanese staff for some reason preferred to use their English names even in 100% Chinese-speaking offices) came up against the the heavy-handedness of the management as a result of his either accidental or intentional disposal of the prototype. This suicide has already led to calls for Apple to abandon Foxconn as a supplier, but this would be deeply wrong. You do not help 300,000 people by putting them out of work, you do not encourage better working conditions and practices by taking business away from what is probably among the most generous employers in Shenzhen and giving it to another China-based firm which may actually be worse. The people who work for Foxconn do so voluntarily, the workers are almost entirely fresh high-school and university graduates from provinces in the Chinese interior who send whatever money they can save to their families in an effort to improve their lot. They mainly look on the chance to work there as a great opportunity to gain experience - and many of them do gain valuable experience which they then take to other potentially better paying companies like Huawei.


C.A. Yeung said...

Thank you for a very well written post and for sharing your experience. I felt very sorry for the young lad who committed suicide. He seemed to be the victim of workplace bully, which is a typical sign of poor management culture.

Personally, I don’t like to work in Chinese-owned companies. It’s too much like a Chinese family where the patriarch has ultimate authority over everything and everyone. Nepotism is the name of the game. I am saying that from personal experience. I worked for around 2 years in a Chinese-owned company in HK. I didn’t enjoy it. I felt really vulnerable because I was never too sure who was related to whom. And the rules of the game seemed to be shifting all the time. I ended up doing most of the work in the office while getting the lowest pay and most of the blame. So yes, I understand how Chinese style of management can lead to this kind of workplace bully.

Gilman Grundy said...

I have to say that corporate culture at Foxconn is different to that of any other company I've worked at. Much of this may have been driven by the knowledge that the death of Terry Guo's brother and Terry's impending retirement was a big opportunity to which ever manager could make a name for himself - hence the total blasting of any subordinate who stepped out of line.

I didn't see any instances of nepotism whilst I was there, but there was a lot of politics. The biggest complicating factor was the Taiwan/mainland split - the Taiwanese looked down on the mainlanders, but the company's localisation strategy meant that they were steadily replacing the lower-ranking Taiwanese as they are cheaper to employ.

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Anonymous said...

Anybody want to talk about the "trapeze" nets in the Foxconn Shenzhen factory? Nets are hung in the atrium and stairwells, apparently the railing is not sufficient??? I was there several years ago, asked about the nets and of course get a smile and a nod and they play it off like they suddenly don't understand english. The Foxconn sales rep said "don't the workers look happy?". I sat up that night in my 5-star hotel room feeling rather disturbed and bit guilty that I was indirectly contributing to what can be best defined as indentured servants.

Work conditions like this are what drove the UAW to be formed, it's a shame the union took advantage of their power which ultimately led to their current decline.

Isn't it ironic that the Foxconn Factory in Shenzhen looks so similar in architecture to the old Ford Highland Park assembly plant which built Model T's???

Dr. Detroit

Anonymous said...

The heads of fox conn, and apple should be locked up. I am pretty sure they pushed Sun out the window and tried to make it look like a suicide.

Janet Barnes said...

I worked for a security contractor at the HP factory where Foxconn was the manufacturer and then for Foxconn itself when they moved to their own facility for a total of three years. The education I received was one that I think I could have lived without. The brutality, the disregard for human dignity, the abuse bordering on slavery, the unfair advantage taken of illegal immigrants the low pay, long hours, sudden and frequent layoffs, the abusive and profane language from supervisors.. all daily, hourly occurrences. The Chinese Have a different view of humanity than we do, theirs is completely utilitarian, elitist. In America all men are created equal. Make the world a better place: Build and buy American.