Sunday, October 12, 2014

iPhone 6 Sale Reveals Ignorance and Indifference in Action -- Part 2 of 2

Photo: Silicon Angle.

The other day, I discussed how Chinese immigrants standing in overnight lines for the iPhone 6 in New York unleashed considerable ignorance and hate by tech lovers and other observers.

Today, we look at another "hot topic" revolving around the iPhone 6 release: the so-called "bendgate". Some early iPhone 6 owners have complained that the cover of the iPhone 6 can be easily bent and damaged.

An investor, who describes himself as "head analyst for a boutique fund", published an article on the popular investment forum Seeking Alpha in which he discussed the potential harm to Apple's reputation if it does not get a handle on this iPhone 6 product quality issue. He goes on to write (emphasis is mine):
Apple is usually involved in every step of the production process, knows the costs of its components to the cent (and probably more accurately), and doesn't accept any negligence from its suppliers
I believe that as Apple grew in sales it became harder and harder to manage its supply chain, but if this issue turns out to be a result of Apple missing Hon-Hai negligence or careless workers, it is definitely something that needs to be fixed.
Apple "doesn't accept any negligence from its suppliers"? This may be accurate in reference to product quality, but how about suppliers' negligence toward workers' legal and human rights? Apple will go to the ends of the Earth to fix quality problems, but exploitation and abuse of workers making Apple products continues unabated year after year after year.

In September, China Labor Watch (where I work) published two reports (report 1, report 2) demonstrating a long list of labor violations at two major Chinese plants that produce Apple's iPhone 6 covers. Here is a full list of reports on factories producing Apple gadgets that have been found to have major labor violations.

What's more, the investor wants to push the blame for poor iPhone quality off onto "careless workers". The Chinese workers making these iPhone covers are doing so at the pace of some 60-90 phones/hour, 11 hours a day, six or seven days per week under unsafe conditions, unpermitted to speak, and all the while paid a pittance.

It tests the limits of ignorance and indifference to--as a cozy "head analyst for a boutique fund" in the U.S.--want to put the impetus for change on Chinese factory workers who are treated like cogs in a wheel.

What investors (and the U.S. and Chinese governments) should be telling Apple is that while its talking to its suppliers in China about iPhone 6 quality problems, Apple should offer a few more dollars to the workers who, for every phone, are currently making one or two cents while Apple rakes in $400-600. Said another way, while Apple makes a 60-70% profit off the cost of an iPhone 6, an iPhone 6 worker earns about 0.003% of the cost of the same phone. That's profit maximization, alright.


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