Apple, H-P To Investigate Hon Hai

Apple Inc., Hewlett-Packard Co. and other electronics companies said they are examining the response by major supplier Hon Hai Precision Industry Co. to a wave of employee suicides that has drawn unprecedented scrutiny to the Asian manufacturing giant and highlighted the changing nature of China's manufacturing work force.

The tech companies' promises to investigate came before another Hon Hai worker died Wednesday night in an apparent suicide attempt and as the company's hard-charging chairman, Terry Gou, moved to contain the widening fallout from the spate of employee deaths.

Wednesday's incident, reported by state-run Xinhua news agency, marks the tenth time an employee at Hon Hai's sprawling Longhua complex in the southern city of Shenzhen has plunged to their death this year, most since April, with two more injured in failed attempts.

Earlier Wednesday, the normally secretive company gave a tour of Longhua, a walled-off complex with guarded gates and several hundred thousand workers, to a group of journalists, and announced plans to outfit worker dormitories with safety nets to prevent more workers from jumping to their deaths.

'These last two months, I've been afraid to answer the phone late at night or early in the morning, because we've been unable to prevent these incidents from happening,' the 59-year-old Mr. Gou told reporters at the Longhua campus, which has dozens of factory buildings and worker dormitories. He expressed 'regret' over the incidents, but defended Hon Hai's response. 'We need time. But we have confidence and strong determination' to address the problem, he said.

The statements Wednesday from Apple, H-P and others were the first public comment on the suicides by customers of Hon Hai, which also goes by the trade name Foxconn. The Taiwan-based company, which Mr. Gou founded in 1974, is the world's largest electronics contract manufacturer by revenue, assembling iPads and MacBooks for Apple as well as other gadgets and computers for brands like Dell Inc. and Nokia Corp.

'We are saddened and upset by the recent suicides at Foxconn,' Apple said, adding it had assigned a team to evaluate Hon Hai's efforts to address the suicides. The Cupertino, Calif., company said it is in contact with Hon Hai's senior management and 'we believe they are taking this matter very seriously.'

H-P, the world's biggest maker of personal computers, said it 'is investigating the Foxconn practices that may be associated with these tragic events.' A Dell spokesman said, 'any reports of poor working conditions in Dell's supply chain are investigated and, if warranted, appropriate action is taken.' Nokia said 'we have contacted Foxconn to ensure any issues are identified and addressed.'

The deaths at Hon Hai have defied simple explanation. The company and its affiliates employ some 820,000 workers throughout China, 450,000 of them at the main Longhua plant and nearby satellite facilities. Given China's overall suicide rate, the deaths aren't statistically exceptional, but the quick succession is unusual. Their pattern resembles what psychologists call a 'suicide cluster,' where one suicide triggers copycat acts -- often in schools or groups of young people.

Amid widening public concern, Chinese government officials have said they are looking into the deaths at Hon Hai. But so far authorities have suggested no wrongdoing by the company.

Labor rights activists say the deaths demonstrate problems with the way Hon Hai treats its staff. Workers are paid a base salary of 900 yuan a month, or about $132, the legal minimum wage, but most work overtime, which can pay 1.5 times or more the standard hourly rate. Critics say Hon Hai compels or allows employees to work more than the legal number of overtime hours, and that its military-style rigor and repetitive working conditions create excessive stress on workers.

Still, the labor activists say Hon Hai's conditions are better than those at many factories in China, and that conditions have been improving in recent years.

Hon Hai says its compensation and overtime practices follow local labor laws and the guidelines of the Electronic Industry Citizenship Coalition, a group that promotes a code of conduct for international supply chains. The company has launched a series of antisuicide measures, from establishing a suicide hotline to hiring academic experts and counselors to inviting a group of Buddhist monks to pray for the factory.

Li Qiang, executive director of China Labor Watch, a New York-based group, says another problem is that Hon Hai's Longhua plant has simply become too large. 'These young workers feel like there's no one caring for them,' he says. Hon Hai's methods have failed to keep up with changes among the migrant workers who staff coastal factories like Longhua, he says.

Mr. Li and other Chinese scholars and labor experts say workers from earlier generations, who hailed mainly from poor farms in China's hinterland, were accustomed to hard farm work and more single-mindedly focused on making money. Today's young workers are less firmly rooted and more aware of the chasm that separates their own arduous lives from the wealth and comfort of others in Chinese society.

'The migrant workers of this generation are so different from earlier generations,' says Li Guorui, a psychology professor at East China Normal University in Shanghai. ''Modern migrant workers live in an age where it easy to get information through mobile phones, the media and the Internet. It is easy for them to know the lives of youths of the same age.' Today's workers, he says, 'don't want to be a money-making machine.'

After 19-year-old Li Hai jumped to his death Tuesday from a fifth-floor window of a training center, police found a suicide note apologizing to his family. The note indicated that Mr. Li had 'lost confidence in his future,' and that 'his expectations of what he could do at work and for his family far outweighed what could be achieved,' the state-run Xinhua news agency reported, citing police.

While labor activists refer to Longhua as a sweatshop, it hardly has the look of Dickensian squalor the term connotes. On Wednesday, thousands of workers walked the tree-lined streets in colored uniforms bearing identification badges, while others ate in canteens boasting different regional cuisines.

The factory has a hospital and a bookstore amid the countless, squat factory buildings. A banner advertised a company karaoke contest. Liu Risheng, a 22-year-old employee who stood outside a cafeteria smoking a cigarette, said the pressure was manageable. 'People complain from time to time,' he said, but 'it doesn't affect me much.'

Hon Hai's culture is built around the personality of Mr. Gou, who started making television channel-changing knobs with a loan from his mother and built Hon Hai into a titan with more than $60 billion in revenue last year. Mr. Gou combines intense drive with a martial leadership style. In a rare interview in 2007 with The Wall Street Journal, he described Genghis Khan, the 13th-century Mongolian conqueror, as a personal hero, and said 'I hate that I [have] become famous.'

Hon Hai's missteps have worsened the bad publicity triggered by the suicide wave. Mr. Gou's announcement Wednesday that the company will install 1.5 million square meters of netting around its buildings in the next several weeks was ridiculed as a sign that it expects more jumpers. And the chairman was forced to publicly withdraw a letter to employees about the suicides the night before that was seen by some as insensitive.

Apple has been snared in controversy over Hon Hai before. Media reports of poor treatment of Longhua workers in 2006 prompted it to send a team to investigate. It found a handful of violations of its Supplier Code of Conduct, including workers exceeding its recommended 60-hour week, but said overall Hon Hai complied with its guidelines 'in the majority of areas.' Apple continues to inspect the plant regularly, as it does other suppliers.

Such audits generally involve visual checks of the facilities and interviews with employees that companies say are designed to keep them free from management intimidation. It would be extremely difficult for companies to extract Hon Hai from their supply chains, and so far none are suggesting that is under consideration. Some Chinese analysts say the troubles at Hon Hai illustrate a need for change in how factory workers are treated. Hon Hai 'is a microcosm of China's labor system,' said Guo Yuhua, a professor at Tsinghua University in Beijing.

Jason Dean / Ting-I Tsai/liuxuepaper/

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