China’s Powder Keg

Right off the bat I have to say that when it comes to appreciating the journalistic excellence of the New York Times I take a back seat to no one.  And I mean that; no one.

And I particularly love their ability to spot and write about a fascinating or late-breaking trend. 

That’s why this week’s incredibly detailed behind-the-scenes look at how America lost production of the Apple iPhone to China baffled me. 

It’s not that the story was not compelling.  And it’s not that it was not for truthful.   It’s just that for the first time since I can’t tell you when, a business story in the Times – and a monster of one at that – was downright inaccurate.  Seriously; just flat-out inaccurate and missed one of the most compelling aspects of the story.

Follow with me, OK?

The piece detailed how facile and quick-to-deploy the Chinese workforce is.  And it told the story of how not to long ago Steve Jobs gave his team at Apple six weeks to replace the cheap plastic facing on the front of the iPhone with lightweight, scratch-resistant glass; and how in the middle of the night the Chinese foremen were able to rouse a massive number of workers out of bed – workers who were living in state-funded dorms adjacent to the plant – issued them each a biscuit and a cup of tea and had them start working immediately on the newly engineered phones.

It’s a compelling, even fascinating story, and it’s certainly points out just how efficient and available China’s workers can be, as well as how inexpensive the human part of the whole supply-chain thing is behind the Great Wall.

The problem is, like I said, the story does not reflect the truth of the situation. 

The workers in the story, you see, were employed at a massive assembly firm known as Foxconn.  But Foxconn is actually more than a company.   It’s a city.  In fact, the dorms, the retail area and the network of assembly plants are known collectively as Foxconn City, a government supported community that employs some 230,000 low-paid Chinese laborers.   

And the reason the story is accurate without necessarily being truthful is that, yes, a year or so ago those workers did jump out of bed and start making iPhones in the middle of the night.  And yes, they continue to represent an amazing competitive advantage for the Chinese. 

But what the story didn’t tell you is that these same workers represent one of China’s greatest liabilities. 

What the story didn’t tell you is that those workers have recently become sick and tired of being treated like farm animals, tired of living stacked on top of one another like young calves ready to be turned into veal, and tired of working so hard for so long and yet somehow still remaining in debt to the company store.

And in particular, the story fails to bring front-and-center the fact that over the course of the past few weeks there has been a growing, and frankly disturbing trend among Chinese workers so desperate and so driven to the edge of reason by their slave-like conditions, they are now threatening suicide as a means of attempting to get higher wages.

Last week alone, 300 workers at one of Foxconn’s plants – this one assembling XBox video games – climbed up to the roof of the facility and threatened to jump en masse if they were not given more money.

Think about how desperate a man has to be to do that.

Yes, China has a competitive edge over us in many regards. 

Yes, it is indeed a problem that many U.S. manufacturing jobs are continuing to migrate overseas, particularly to China, and that many of our best high-tech R&D jobs are going with them. 

And yes, we need to do something to fix that, and sooner rather than later.

But don’t for a moment lose sight of the fact that China is sitting on a powder keg.  For all its commitment to engineering and supply chain infrastructure, it is still a manufacturing hub relying vastly, and in some ways exclusively, on dirt-cheap human labor. 

And make no mistake; the operative word in that phrase is “human.”

Because as China’s economy continues to grow, and the thinking, reasoning and intelligent human element in their manufacturing equation wakes up to the extent to which it’s being exploited – and more and more Chinese workers continue to realize the leverage they hold over manufacturers whose only big advantage is price – the competitive edge that country has over the U.S. will erode so fast it will make your head spin.

And shame on the New York Times for somehow forgetting to tell us that.


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