Foxconn riot in China

Tensions High In China's iPhone Factory After Massive Riot

Forbes,

28 September, 2012

Tensions remain high at Foxconn’s iPhone factory in northern China after a violent mass riot that workers said was sparked by poor work and living conditions. The riot, which has left 40 people injured and impacted about 2,000 workers, has highlighted the complex task facing Chinese manufacturers as they struggle to control costs amid a slowing economy and deal with a younger generation of Chinese workers who demand more comfortable lifestyles and are less willing than their parents to tolerate extremely hard working conditions.

Foxconn, the trading name for Taiwan-based Hon Hai Precision Industry Co., is Apple‘s largest contract manufacturer and has more than 1 million workers in China. The Taiyuan factory, which employs 79,000 people, resumed production Wednesday after shutting down temporarily due to the riot, Foxconn said in a statement this week. But tensions remained high as police officers still stood guard inside the plant wearing riot helmets, according to photos and tweets posted by employees on China’s microblogs.

The company didn’t specify the cause of the incident in the statement. But according to a news report by 21st Century Business Herald on Wednesday, employees said the riot turned from a personal dorm squabble into battles between police and about 2000 workers after the guards responded with excessive force.

They said pressures from working long hours on assembly lines, usually 10 to 12 hours per day, discontent about the crowded dorms and military-like discipline were all likely contributing factors to the violence.

Eight to 10 people share a single room, with as many as 30 rooms on each floor, workers said. The guards closely supervise the workers and have been known to bully workers for breaching the rules.

“The incident happened in the dormitories, not in [the] workplace. We need to look further into the real cause,” Hon Hai spokesman Louis Woo said after the riot.

Terry Gou, chairman of Hong Hai and a Forbes billionaire with a recent net worth of $6.3 billion, has already flown to Taiyuan to handle the incident, a report by China Times on Wednesday quoted a source as saying.

The news also comes as Apple announced that it sold more than 5 million new iPhones in its first weekend of the iPhone 5 and that demand for the phones outstripped the company’s supply. The company said it was able to fill a majority of pre-orders but that some will be delayed until October.

The incident has highlighted growing tension in China’s factories as companies struggle to meet worker demands for better compensation and work conditions while controlling costs amid a slowing economy. To combat rising costs and worker attrition, Hon Hai has been moving its factories inland, away from the more expensive Chinese coastline.

Hon Hai’s first-half profit rose 0.5% to $918 million from a year earlier, mainly because of deeper losses from its investment in Japanese handset maker Sharp. Its net margin fell to 1.4% in the second quarter from 1.5% in the first.

In recent years, Foxconn has drawn much public attention due to a series of suicides among young workers. These incidents have pushed the company to adopt preventive measures against such radical decisions.

Foxconn has defended the compensation level and work conditions at its factories. In August, Foxconn raised salaries by more than 16 percent at a Zhengzhou factory making iPhones after the U.S. Fair Labor Association said workers were working long hours and not paid overtime. Earlier this year, the company agreed to change its labor practices.

Many reports said factory riots are bound to recur as the docile first generation migrant workers have become more savvy about their rights and willing to stand up for them. The younger generation of workers, many of whom were born in the 1990s, are better educated and more plugged in.

An investigation by the U.S. Fair Labor Association in Foxconn’s Chinese plants in March pointed out the excessive overtime problems, health hazard and safety risks. The report also mentioned that doing precision work in quick repetition had discouraged workers from communication and thereby resulted in emotional problems, which may lead to eruption of certain issues in factories.

Analysts also worry that tensions may continue to swell in the factories, where shipping contracts are due and management seeks longer working days.