Foxconn Suicides

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Suicides at Foxconn
(A causal analysis)

MBAMGT-665
International & Cross-Cultural Management
Fall 2010

Contents

Introduction2
Wages and Working Hours2
Workers were kept uninformed about wage increase plan2
Basic wage is just slightly more than minimum wage and far below living wage2
Excessive overtime2
Deduction of overtime premium2
Frequent change of work shifts2
Management2
Punishments2
Extensive work pressure2
Reward system2
Trade Unions2
Health and Safety2
Student Workers2
Relocation Plans2
Social Factors2
Conclusion2
References2

Introduction
Foxconn Technology Group, a subsidy of the Hon Hai Precision Industries Ltd. is one of the world's largest electronics manufacturers. It ranks 112th among Global Fortune 500 Companies. Currently, Foxconn has a workforce of 900,000 workers all over China. The company plans to expand its workforce to 1.3 million people by the end of 2011 (Culpan, 2010). It manufactures hardware for a prestigious list of clients, including Apple, HP, Dell, Nokia and Nintendo. Despite the fall of profit margins over past few years, Foxconn’s business has been growing. This implies that Foxconn will keep lowering labor costs to maintain its competitiveness in the industry.

The recent uproar in media about Foxconn has not been because of its huge workforce or its profits. Rather, it is the seventeen young Foxconn workers who committed suicides between January and August 2010 that has brought into light the plight of frontline workers at Foxconn and other such factories. The suicide rate for China stands at 12 for every 100,000 people per year. With a workforce of 420,000 and 13 suicides this year, the suicide rate at Foxconn is approximately one-quarter the national average (Brook, 2010).

Profit maximization is the ultimate corporate principle, under which workers’ welfare is not given importance. Foxconn is known for its ability to cut costs by mass production, earning big profits for clients such as Cupertino, California-based Apple Inc. (Moore, 2010). Analysis of the social and working conditions at Foxconn revealed the fact that the militarized and alienating work environment at Foxconn is a result of capital’s persistent drive to lower assembly costs and the Asian subcontracting regime.

Initially, there was an argument over the causes of the suicides. The question was if Foxconn suicides were attributed to workers’ individual psychological issues or to deteriorating and inhumane working conditions at Foxconn. In response to the tragedies, Foxconn’s CEO Terry Gou Tai Ming commented that workers committed suicides in order to gain the huge amount of compensation offered by the company. He also attributed the suicides to workers’ personal problems, like debts and relationship. The company launched a series of actions to rescue its reputation. For example, they invited counselors to the factory, established the Employee Care Centre and hotline, organized day trip for workers, held an anti-suicide rally and made wage increase announcements. Foxconn even asked workers to sign a document pledging not to commit suicide, which included a clause that their families would not seek extra compensation above that required by the law, and would not try to damage company’s reputation (Tam&Mok, 2010). This clearly shows that Foxconn management intends to evade responsibility, pays no attention to the actual stress of workers resulting from its management methodology, and is only concerned about protecting its image.

Many undercover investigations have been conducted at Foxconn production facilities and workers been interviewed (Chan, 2010). There is a close relationship between low wage, excessive overtime work and harsh management. Lack of transparency between management and labor and absence of structural reform in the company’s management methodology are the two main flaws in the system. Foxconn's labor system is...
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