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Running head: ETHICS BEHIND APPLE AND FOXCONN RELATIONSHIP

Ethics Behind Apple and Foxconn Relationship
Maryana Didovych
The College of Westchester

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ETHICS BEHIND APPLE AND FOXCONN RELATIONSHIP

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Abstract
This paper examines Apple, Inc.’s relationship with one of its biggest suppliers, Foxconn Technology Group. Recent growth in suicide incidents at Foxconn factories again caught media’s attention. Whether Apple’s decision to stay in business with Foxconn despite these incidents is ethical or not is examined using Traditional 5-Question approach. Contradictory evidence is also examined. Based on the result of 5-Question approach and reviewed evidence it can be concluded that Apple’s decision may indeed be unethical. Recently published evidence suggests Apple and Foxconn are addressing several issues, but close monitoring of the improvement process is required to ensure success.

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Ethics Behind Apple and Foxconn Relationship
One of the biggest suppliers and manufacturers of Apple Inc’s (Apple) products recently has been involved in scandals concerning working conditions of its factory workers. This company is called Foxconn Technology Group (Foxconn). It operates in more than 40 research and development centers as well as manufacturing facilities in Asia, Russia, Europe and the Americas. According to Pratap, Radhakrishnan and Dutta (2012), Foxconn is “the world’s biggest contract electronics manufacturer, taking in over 50% of global electronics’ manufacturing and service industry revenue. Its accumulated revenues for January to September 2010 reached NT$1.95 trillion (US$60.82 billion), up nearly 63% from its previous year—larger than some of the companies for which it manufactures products such as Microsoft and Nokia, by the rankings of the Global 500 companies” (p. 32). The same source reports that Apple’s earnings have also been growing and reported an increase in revenues by 52% comparing to 2009, one year before Foxconn’s issue generated public attention. Despite the growth in earnings for both companies, ethical performance towards stakeholders is not rated positively. Foxconn has been under media spotlight since the beginning of 2010 (Pratap et al., 2012). Concerns over poor working and living conditions for employees were triggered by frequent and growing numbers of suicide incidents of factory workers. Pratap et al. (2012) reports that Foxconn workers from different locations articulated that they are being treated worse than machines. The reason for such treatment is the difference in replacement cost: a worker can be replaced by another one at no cost but a machine has to be paid for in order to be replaced (Pratap et al., 2012, p. 33). Workers complained and continue to complain about the poor, military-like treatment by supervising staff as well as long hours that they are forced to work. On average Foxconn workers are said to work 174 regular hours per month and 80-100 hours

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overtime1 (Lee, 2011). Pratap et al. (2012) reports that workers are forced to work overtime as well as on weekends and are not able to use their paid days off benefits because of low salaries and threats of being fired. At Foxconn’s Indian factories, permanent status workers are often divided into grades, A, A+, B, C, or D, to save labor costs and divide employees among themselves even though everyone is capable of doing someone else’s job and often does. Employees in training or on temporary probation at these locations, before receiving regular employee status, often remain in the same beginner’s status for a long time, while receiving trainee or temporary probation worker’s salary (p. 33). Pratap et al. (2012) also reports that among issues voiced by workers was the issue of receiving less than adequate health care benefits and substandard medical care on factory premises. Additionally, employees reported...
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