What's Behind the Foxconn Worker Riots? - Businessweek

What’s up with Foxconn? It was only earlier this year that they turned to a prominent labor-monitoring organization to carry out a review of factory conditions, in what seemed a real effort to clean up their troubled Chinese production facilities, which make Apple’s (AAPL) iPhone and iPad, as well as electronics products for other companies including Sony (SNE) and Nintendo. That followed several years of bad publicity related to a rash of worker suicides, factory accidents, and allegations of poor working conditions.

And in late August the Washington DC-based Fair Labor Association, which has been inspecting three of Foxconn’s Chinese factories, announced some progress. “The verification confirmed that Apple and Foxconn are ahead of schedule in improving the conditions under which some of the world’s most popular electronics are being made,” said Auret van Heerden, President and CEO of the Fair Labor Association, according to an August 21 press release.

Now come the September 23 worker riots at the company’s Taiyuan, Shanxi factory that employs 79,000. The turmoil forced Foxconn to shut production for a day earlier this week. That melee involved 2,000 workers with 40 hospitalized. And while initially the company blamed the extended brawl on a dormitory dispute between workers from two different provinces that got out of control, that version of events is being questioned.

Instead, tension between guards and workers, seems to have had a role in sparking the incident, says Geoffrey Crothall, research director at the Hong Kong-based China Labor Bulletin. “It just makes sense given what we know about the heavy-handed ways of the security apparatus at Foxconn. They have a longstanding reputation of being heavy-handed and harsh with workers,” says Crothall.

And recent reporting, including by a colleague at Bloomberg News on September 27, also showed the strained relationship. “The guards here use gangster style to manage,” said Fang Zhongyang, a 23-year-old worker from Henan province, speaking to a Bloomberg News reporter, from outside the factory campus gates. “We are not against following rules but you have to tell us why. They won’t explain things and we feel like we cannot communicate with them,” said Fang. “They are quite formidable,” said 25-year-old worker Gao Bo, who has worked at the factory for six months. “They watch quite closely and speak fiercely.”

Security guards wearing riot helmets and carrying plastic shields marched around the Taiyuan factory, Bloomberg News reported September 27.  “If there’s any truth to these allegations [involving guards], we’ll take severe action against any security guards, even though we don’t hire them directly,” Foxconn spokesman Louis Woo said on September 26. (He declined to say what products are made at the factory.)

So how to square the recent positive report of Foxconn factory improvement by the FLA and what’s happened in Taiyuan?

One possible explanation: while conditions may indeed have gotten better in the three facilities that Foxconn opened for inspection (those include their two Shenzhen factories, as well as another in Chengdu, Sichuan), that may not be the case for the rest of their Chinese facilities. Foxconn employs nearly a million workers in China and has been expanding into China’s interior, with factories in cities including Chongqing, Wuhan, Hubei, Zhengzhou, Henan, as well as Taiyuan.

“It is true that the situation seems to have improved for workers in Shenzhenâ€"wages have gone up there and working conditions seem to have improved. They seem to be changing that plant into one more focused on research and development and product development,” says Crothall. “But for product assembly, the bulk is now being done by the factories in the provinces,” which may not have seen similar improvements, he says. “And the provincial and municipal officials [across China] are falling backwards over themselves to attract Foxconn into their backyard, because it is such a large employer and tax payer.”

Another important factor: the rising rights awareness of a new, younger generation of Chinese workers. That’s helped drive a surge in protests across China, which have increased this year over 2011, by workers more aware and more assertive of their rights, says Crothall.

“They are better educated and have higher expectations about what work should involve,” he says. “And they have a greater sense of self worthâ€"they believe that they should be treated with dignity and self respect. And they will stand up to anyone that doesn’t treat them that way.”