“This Whole System Seems Wrong” Felipe Montez and Concerns About the Global Supply Chain

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In 2003 Felipe Montez was hired to be a Purchasing Director and Product Designer for a Spanish electronics company. This company focused on supplying fashion-forward personal electronics (such as cell phones or MP3 players) and had built their reputation by quickly responding to trends in electronics while still maintaining a reasonable price point. In order to keep prices low and produce products quickly, the company outsourced certain elements of their production, most recently to factories in South China.

Until Felipe was hired, the company had a 27 year history of working with a distributor in Hong Kong, during which time no one from the Spanish headquarters had ever visited the actual Chinese factories where their goods were manufactured. Felipe had previous experience working in Asia, and decided to cut out the middle-man by working directly with the factories in China that supplied his company’s goods. Working directly with their factories eliminated the distributor’s mark-up (which was sometimes as high as 30%) and allowed for faster communication and delivery from the factory. On Felipe’s first trip to China he visited several factories. Conditions varied from one factory to another. A few of them were clean and very organized, but some facilities seemed more chaotic. Felipe was particularly concerned about the conditions in the factory that produced the majority of his company’s goods.

Many of the employees at this factory appeared to be very young (Felipe guessed they were 12-16 years old). In response to questions about the youth of the workers, the factory manager told Felipe that younger girls were valued for their precision work: they had small hands and could mount chips on motherboards very carefully. Although younger girls were slower than an assembly machine, the factory manager told Felipe they were cheaper to “run” and “maintain”. The young factory workers had to work for what the foreman claimed to be an 8-hour work...
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