It is said that a company can’t succeed in a society that fails.
When you know there are people dying, who can be accounted for in terms of suicides in the supplier factories due to the stress of poor pay, overtime work, humiliations – all to produce our insatiable demand for gadgets – iphone, ipad, xbox, Kindle, Dell pc’s - then what will you do as a multi-billion dollar company to stop that – or do you even consider it your responsibility.
Can Apple, Microsoft, Amazon or Dell be absolved of their responsibility because this doesn’t come under their ‘jurisdiction’?
The question is not what Apple’s, HP’s or other companies supplier code of conduct expects its supply chain to do. The question is how does a company like Foxconn becomes a Fortune 500 company, when its demoralized workforce works 12 hours a day as a standard and barely makes enough to make its ends meet. MSCI rates it having a poor ESG record.
Gethin Chamberlain, in the article “Apple factories accused of exploiting Chinese workers” in The Gaurdian takes readers through the tour of Foxconn, the Chinese Electronic conglomerate where a number of workers committed suicides due to tough working conditions - like workers stepping out of line are allegedly humiliated in public. They are paid low salaries and are made to sign confession letters accepting their non -compliance with the strict company rules which includes not committing suicide.
This is a typical case of externalization of costs - one of the reasons we are able to get our gadgets at cheap prices is becasue Foxconn’s prices are the cheapest and externalizes those costs to its more than 500,000 workforce. I read somewhere - China is the biggest capitalistic country!
Geoffrey Heal, author of a recent book “When Principles Pay” and a professor at Columbia Business School, in a recent speech at Carnegie Council made it explicit that the usual practice in China is to maintain 2 or 3 account books – one is for the western investigators, second one for the tax authorities and the 3rd one is the real one with actual number of hours worked and wages paid.
Perhaps it’s what we call China’s culture - it’s seeing its industrial wave now and each one has to work hard to reach the level of ‘good life’. The 3 dimensions of the triple bottom line don’t go hand in hand here. Profits are no problem – that’s the reason businesses exist, environment is objective and measurable – once you know your impacts like the CO2 emissions, pollution etc. you can devise your strategies accordingly. But the social dimension is very subjective in nature – how do you know what the right wage should be?
How do you determine what the ideal working conditions must be? How do you take into account the local culture of the country? Do you barely comply with local dilapidated laws or do you practice ethics in bringing the reformed labor rights? How do you implement the most fair and equitable social conditions in your supply chain? Or rather, should you be even concerned and let suppliers handle such issues, which are practically beyond the control.
Will there be strong consumer reaction? We talk of corporate social responsibility, what about consumer social responsibility. If we expect Apple or other’s to change their supplier – it’s almost an impossibiity. Given the size, expertise, and unbeatable prices of Foxconn and looking at the stupendous demand for products – serious supply chain disruptions will erupt.
Fukushima showed the real importance of technology and the related social media in making it possible for the news to reach out to the world as well as searching for the survivors in the aftermath. People realized how important their smart phones played a part in their survival. Then, why don’t some tech companies understand their own importance or do they simply exist to provide the next toy every season.
It seems that companies do and can succeed in a failing society.