The Csr of Foxcon
Business and Management
Submitted By jasonlee
Essay conclusion: Foxconn should keep its working schedules, basing on legal payments for overtime work.
Stakeholders’ concerns analysis framework:
What is worker’s priority factor to choose a job? For most low level education and training workers, the answer is a competitive and guaranteed salary. If you are an engineer, graduated from the best universities in China, like Peking University or Tsinghua University, you may want a job in Google for its flexible working schedule. But for most young Chinese, the labor-intensive industries are their main destinations.
Foxconn sank into the conservancy of intense working schedule, low salaries and continued employees suicide events. But it is still one of the most popular chooses in Shenzhen or Chongqing, for these young men from countryside. Why this contradiction happened and continued? Because compare with others labor-intensive factories, Foxconn has a good reputation of salaries paying. Delaying salaries and free overtime work are still common in others factories in Shenzhen and others cities.
The biggest difference between the salary increasing and work time reducing is that whether the change is good for every worker. Off course, salary increasing is acceptable for each employee, but reducing work time is not so. Some employees have stronger ambitions and willing to work more and earn more. So these different concerns must be respected and considered by the worker union to ask for more benefits from their managements.
Reducing work time would lighten the growing criticisms on Foxconn’s CSR issues. Compare with salaries increasing, which directly increase the cost, reducing work time has more indirect effects for Foxconn’s operation.
Except the cheap labor price, tax and tariff premiums, industrial clusters, the labor productivity is one of the most important factors brought China to the position of world’s factory. The traditional culture, religion factors, and the labor union power, these soft factors made Chinese workers an impressive image of “working hard and responsibly.” Although Thailand, Vietnam and Indonesia are becoming more and more important in global electronic components supply chains, China still has the strongest competitiveness in that supply chains. So Foxconn will face more challenges than increasing salary once it started to accept the worker’s requirements to reduce the work time, even consider the possibility of moving factories to South-east Asia
Also, it will greatly impact the supply chain in short term. If the work time reduced, Foxconn lower its capacity and should adjust its production planning, and then its suppliers, like LCD panel producers, chip producers would be forced to adjust their capacity. Those supply chains impact will be spread to upstream and downstream. Also, these workers in other companies will face a challenge of losing job and decreasing salaries. The external effect of reducing work time must be considered.
Someone might say that Foxconn could ask Apple to raise the purchase price to compensate its cost increasing. But, actually, Apple has much more negotiation power than Foxconn. And it will be even harder for these Foxconn managements to evaluate the impact and losses on reducing work time as an element to require apple’s compensation.
Shenzhen authority’s concerns
The Shenzhen authority faces more complicated situation in this reducing work time event. On the one hand, authority faces the pressure from the central government, national media and presses, once the right requirement action become strikes or parades, which are thought to violate the harmony society principle. On the other hand, the authority also faces big challenge that the other factories’ workers ask for the same work time reducing which will finally impact the whole manufacturing industry in Shenzhen.
The latter factor will weigh more in short term at the angle of the Shenzhen authority since its finance income is bond to the factories performance tightly. As we discussed in the “management’s concerns”, the authority must focus on the possibilities that the industry will lose its advantage of productivity and the threat that the local factories fall may bankrupt and these foreign invested enterprises, like Foxconn, may swift their factories to South-east Asia.
There are many other strategies that the government can use to ease the disputes. For instance, it can support some local career training schools or institutions to collaborate with Foxconn to provide some education programs for its young employees, establish a CSR benchmark of concerning the long-term development of employee in labor-intensive industry. Also, more entertainment facilities and activities can be provided.
As the most profitable enterprise in this planet, apple becomes the focus of customers, competitors, and NGOs. And recent years, the accuse of its sweatshop which led by different organizations, like FLA(Fair Labor Associate), never stopped.
Under those public relation pressures, Apple may require its suppliers to improve their CSR issues, but no evidences show that Apple will raise its purchase price to support such actions. On this supply chain, Apple is still the most powerful game player and rule maker.
As these facts and analysis, the worker time reducing is not so acceptable for these stakeholders, especially for Foxconn managements and Shenzhen authority. But Foxconn and Shenzhen authority still have many actions can do to relieve workers’ complains and improve its CSR issues.