New York times publishes Chinese readers‘ thoughts on Apple/Foxconn stories

NY Times Caixin Screenshot

After Apple published their stellar Q4/2011 financial results, the New York Times used the opportunity to juxtapose them with two articles about worker conditions in China. Since the Times has partner magazines and newspapers all over the world, the article also ran in the Chinese daily business paper Caixin. As a follow-up on the stories, the Times now offers another article with reactions of Chinese readers, taken from the Chinese discussion platform Weibo.com

Unfortunately due to the NY Times paywall the articles will most likely vanish in the next couple of days. To preserve a discussion basis for the future and for my following thoughts, here are three example quotes from the Times‘ website

It’s ridiculous that the local government is trying to promote the city’s image while horrible accidents are still happening like this. If what is prohibited in the U.S. is highly protected here by the local authorities, we will never be treated with dignity 安吉丽娜朱莉的男朋友

Even though Apple should be ethically condemned, the key point is: whether the working conditions inside the factories are supervised by law. This (supervision) is the duty of judicial officers and labor unions. Now everything is driven only by G.D.P., so which government official would dare supervise those companies? They (the governments) have long reduced themselves to the servant of the giant enterprises. — Occasional Think

If the story is simply blaming Apple and Foxconn, then it is simplifying the problem. Other companies including HTC, Lenovo, HP and Sony, and their OEM (original equipment manufacturer) companies such as Wistron, Quanta and Inventec, share the same situation. Workers of small OEM enterprises are working in even harsher environments and having more overtime. The root is that they are unable to reach a higher position in the industry chain. Also, there are no effective labor organizations in those factories and the government tends to shield huge companies because of their profits. — Freestyle-coming

What stands out is that the Chinese are aware of their own strengths and weaknesses and that they know where their problems lie. And you can’t really blame the Times for publishing these comments and the articles just after Apple made their Q4/2011 financial results public. It’s not like we as bloggers don’t do the same, just from another angle.

What I personally don’t like is that articles like these by the Times lead nowhere. Because what’s the alternative to Apple having their products made abroad? Publishing an article telling the reader that every product contains crude oil or rare minerals would’ve been just as good. But since this is a given, what’s the buyer of Apple products to do? Almost every single thing on planet earth nowadays contains crude oil  – and cheap labor from China. So the only alternative is to not consume anything so nobody gets hurt, with the end result being a slowdown of the global economy, loss of jobs, deflation… you get it.

China’s only advantage still is cheap labor with bad working conditions and low security standards. You’d think they are alone in this, but this is a) nothing new and b) they aren’t the only ones using this advantage.

Just last week the UN published a paper on why Germany’s current low unemployment numbers are a result of drastically lowered wages. And because of the Euro and the monetary union with the Euro, other countries were allowed to import products from Germany at low prices, giving German companies an edge, cementing their lead in Europe. All the other countries in the European Union didn’t have a market in Germany and with that lost jobs.

The irony is that Germany’s people now have to lend money back to those countries to stabilize the currency, via loans by the German state, effectively privatizing the profits and socializing the losses. Again. Just like during the mortgage crisis two years ago.

The problem is that once China (or Germany, for that matter) improves wages or raises the security standards and working conditions, they lose this edge over other countries, losing jobs to other countries. Maybe even back to the US. If you were to pick what would you do? Get all the jobs to your own country by lowering standards, effectively gaining an edge, and later on being forced to lend money back to other countries, possibly losing it but maybe getting it back with interest or not doing so resulting in high unemployment, no income and maybe even social unrest among the huge workforce in China?

The only way for China to really improve their situation is following Germany’s lead by investing into research and development so that the corporate income can stay within their borders. Since China is still a communist country (at least in principle), corporate gains wouldn’t be privatized but rather socialized by definition.

To do so they have to keep their brightest minds within their borders, offering them basically the same amenities as overseas. And that’s what they are doing in boomtowns like Shanghai. They are effectively raising the quality of life in these cities by investing heavily in infrastructure, so their brightest minds will stay in the country.  China spent 9% of their GDP on infrastructure last year, the US 2.5% and they are trying to lower it even further. Europe on average spends 5%. It’s no wonder that Apple thinks their future boom market is going to be China. They understand what the Chinese Government is doing and that opening more and more flagship stores in Chinese „flagship cities“ is the thing to do.

Unfortunately this is a process that will take place over decades, if not centuries. Articles like the ones in the NY Times don’t reflect on this. What they basically do is make the reader feel bad – and then have them get back to their daily lives, feeling a little worse. More ironic yet is that the reader would feel even worse if he knew what the only way to improve the working conditions of the Chinese worker is, namely the US losing their edge in R&D and intellectual property and China maybe even getting ahead when it comes to inventions and the leading role in the world. Maybe not only when it comes to consumer products.

You have three guesses why president Obama recently said that the Pacific is the place to be for the US military, and why the region is a priority in the coming decades.

But hey – that would be the big picture, right?

via The Verge