- China Business Blog - http://www.chinabusinessservices.com -

Apple Serves Up iPod Compliance Report

Corporate Social Responsibility has been a growing PR concern for multinationals operating in China. This has been due to concerns over the role of foreign investment in China, as well as politically-charged concerns in the US and EU about off-shoring of jobs, and the treatment of foreign workers.

I covered the problems of Apple recently (A Bad Apple in the CSR Barrel [1]?), and the company has now completed their investigation into allegations of bad practice at a facility making iPods in China.

Reuters reports that workers at the Foxconn-owned plant had been working longer hours than specified in the code of conduct, and that this was being corrected. Apple stated:

Playlistmag.com [2]adds that the investigation included interviews with 100 workers at the plant, as well as review of facilities, payroll and other records. Almost everything was said to be in compliance, though some workers’ dormitories are now going to be upgraded. To the surprise of some, the biggest grievance among workers was not that they were working too many hours, but that there was a “lack of overtime during non-peak periods”.

While this case may have been a storm in a tea cup (driven by some poor press reporting) it has served as a reminder that foreign companies operating in China should take care to ensure that they (or their contractors) comply with local laws (if not best practice), and that cutting costs (or corners) can be very costly in terms of global reputational damage and public relations.

As Dan Harris at China Law Blog [3]has commented, these increased risks may mean that there is now some “advantage to skipping the contract manufacturer and doing it directly”. It is likely that more companies (including Apple) will consider this approach now that China’s business environment is more sophisticated, as they have more operational experience, and as they have less appetite for risk to their brands.

See news sources: