The Forbidden City of Terry Gou

ElvaWSJ writes "Hon Hai churns out iPhones and Wiis, and provides a window into China's secretive world of outsourcing and manufacturing. With a work force of some 270,000 — about as big as the population of Newark, N.J. — the factory is a bustling testament to the ambition of Hon Hai's founder, Terry Gou. In an era when manufacturing has been defined by outsourcing, no one has done more to shift global electronics production to China. Little noticed by the wider world, Mr. Gou has turned his company into China's biggest exporter and the world's biggest contract manufacturer of electronics."

Comments

Ah, if only

[Stanistani]

Can I roam amongst the endless rows of bins filled with our disposable electronic baubles? Please?

And unlike so many other Chinese Manufacturers

[Marxist Hacker 42]

He's done so without attempting to poison or kill his own customers.

Re:And unlike so many other Chinese Manufacturers

[subl33t]

Yeah, just his employees.

Re:And unlike so many other Chinese Manufacturers

[Marxist Hacker 42]

Too bad unions are illegal in China. Unionization was what it took to change that in the United States.

Re:And unlike so many other Chinese Manufacturers

[plague3106]

I guess you didn't read the article.

They get paid $0.60 an hour (a lot in China), but they also get to live rent free, their food is subsidized, and they have free health care. They also get overtime pay and actually do get raises. I wouldn't mind that deal, if I were just starting out of high school and needed to work.

Re:And unlike so many other Chinese Manufacturers

[Marxist Hacker 42]

You fail to mention that EVERY ONE of those "American companies" buy parts from China- and it's the shoddy, non-unionized workmanship that is failing.

And that the Mattel recall (another American company that hired the Chinese toy company) also covered a heck of a lot more than one product- the recall was 5 PDF pages with pictures of hundreds of different products.

I wonder if the producer of all of those red & yellow Thomas the Tank Engines also killed himself? Or how about the Million Pounds of Fish intended for human consumption that was subject to an import alert this week?

Re:And unlike so many other Chinese Manufacturers

[p0tat03]

Hon Hai is known for paying above the regional average and maintaining safer than average working environments. A far cry from living in a comfortable bungalow in California, but it's certainly much better than the average treatment employees get in China.

Re:And unlike so many other Chinese Manufacturers

[quarmar]

$0.60 an hour is listed as minimum wage, not "a lot in China".

Re:And unlike so many other Chinese Manufacturers

[tgd]

Yeah because unions do so much to protect quality.

*rolls eyes*

Unions protect the people at the low end at the expense of the people at the high end. There's no reason to perform well because you won't be payed more for it. In fact, because its so hard to fire you, you barely have to perform at all.

Re:And unlike so many other Chinese Manufacturers

[CodeBuster]

They are not illegal in China (at least not the "official" ones), but the government controls all of them (in Soviet Russia the union controls you...or something like that) so the unions in China are more for keeping the workers in line than working on behalf of the workers. Why do you suppose that the only country where Walmart has not objected to unionization is China?

Re:And unlike so many other Chinese Manufacturers

[HungWeiLo]

I just got done talking with an uncle of mine who does a lot of business in China (he's pretty high up in an international engineering firm based in Hong Kong). He says that all the poisonings and shenanigans would not have gone on without the knowledge of their American clients (i.e. the CEOs who wanted to outsource to them in the first place). He says that, for example, extra lead levels in Mattel toys were most likely already known by the bosses in the U.S., and they were just betting that no one would find out (or that the cost of litigation is less than the cost of using materials with lower lead content). Cue the Fight Club quotes.

Re:And unlike so many other Chinese Manufacturers

[plague3106]

It works the same way in the US too; if I didn't have healthcare, dental, vision, and life insurances, a 401(k) plan, etc., I'd expect more hard cash too. Same goes for any lack of sick or vacation time. My various insurances limit what doctors / providers I can go to, how often I can go, if I need referals or not.

I can see how this setup would be useful for getting started; save the money you do make, since your basic needs are met. Once you save more, you can move on to better things.

I wasn't commenting on Ohio Arts or any other Chinese company; I don't know how good (or bad) they are to their employees. But this particular company seems to treat their employees better than others, so seems to be stepping in the right direction.

Worker conditions

[ktappe]

Note the interviewee who says that while the living conditions have improved since the BBC publicity last year (the "iPod slaves" story), he says the changes are "incomplete" and seemed afraid to go into more detail or give his full name. I really do wish that buying electronics wouldn't mean supporting companies whose workers have to live in slum conditions. But I really don't know what to do short of writing probably useless letters to Steve Jobs and Michael Dell.

Re:Worker conditions

[middlemen]

I really do wish that buying electronics wouldn't mean supporting companies whose workers have to live in slum conditions.

Ok, humanitarian perspective aside. Those workers are now able to provide a their families 2 square meals a day. If companies stop using them, then they go hungry, continue living in slums and you pay more for your beloved techno-gadgets. Right now they are better off than they were earlier and you are happier since you can have the privilege of using an iPod and listening to your choice of music on the go. See win-win scenario...

Re:Worker conditions

[maillemaker]

Something to consider here is that in many cases though the job conditions and pay looks terrible to /you/, the actual workers love it compared to what they had.

This is not to say that we nor they should be satisfied with their present lot in life, but rather to say that things are improving. Their economy is primitive by modern standards. It will grow, rapidly, and working conditions will improve - just like they did in our country.

The answer to helping these people advance is not to stop buying their products, which puts them right back where they were - with nothing. The answer is to continue to buy their products, which empowers them and gives them options.

Re:Worker conditions

[juuri]

Well he did say conditons have improved. This may not mean much to us, but it was already well known that foxconn had some of the best factory conditions in the entire industry over there. Do these conditions really meet what we would consider ideal? No, but an improvement is an improvement. I would submit that most Americans have no idea how bad factory work is, even without our own country. If you want to be truly disgusted by the treatment of workers and the quality of their environment take yourself to the nearest chicken factory or any other "plant" with is obviously skirting the edges of legality.

China moves slow traditionally but as they develop a real middle class, the lower class conditions will improve becaue of increased internal spending and more attitudes similiar to those in more developed nations.

Re:Worker conditions

[Marxist Hacker 42]

Easy- start buying the products that are $5000 instead of $500....that is, the ones that you can verify were made in the USA out of components created from raw materials in the USA.

Re:Worker conditions

[onkelonkel]

I remember my history teacher telling us about working conditions during industrial revolution times in England. Workers (some of them children as young as 6 years old) toiled from sunup to sundown six days a week in dirty noisy horribly dangerous factories for the lowest possible wages.

The point that stuck with me was that hordes of people flocked from the farms to the cities, because horrible as it may have seemed to us, it was still _better_ than the conditions they left behind. On the farms you toiled (men, women and children) from sunup to sundown 7 days a week. Conditions were no less dangerous; farm machines could kill you just as dead as machines in a factory. And on the farm if it didn't rain at the right time, or rained too much, or the bugs came your crop was wiped out and you starved. At least in the mills, as long as you could work you knew you were not going to starve. While "not starving to death" is a pretty minimum standard of living, it sure beats "maybe starving to death"

Re:Worker conditions

[iamacat]

Or you could consider that the US company could easily double their salary, reduce work week to, say, 60 hours and fix the most grievous safety hazards - all at the cost of cutting compensation of top executives by half. Just like we are prosecuting ordinary citizens for patronizing child prostitutes in Thailand, we should start going after companies (and their CEOs) that break US labor laws abroad. 5-7 bucks minimum wage per hour is not to expensive for a company, will help 3rd world countries stand up on their feet rather than being cheap slaves and will give US workers at least a slight chance to compete for jobs.

Re:Worker conditions

[xtracto]

Yeah, I always giggle when I read such kind of post in slashdot referring to the differences in pays of US compared to any other country... the article is actually quite good (yes, I read it /all/, until the paragraph when he says that he is looking for young successor before he gets too old to have good judgement), and the man and factory policies also seem quite nice.

My girlfriend works as a manufacturing Warehouse Manager for an international company in Mexico, she has a Master in Manufacturing and her pay is something like US $1,000 a month. She tells me about the conditions in the factory and the amounts workers get pay. To be payed US $300 a month for 6 day-8 hours/day work would seem ortrageous here in the UK, but for the living expenses in Mexico it is quite good. It might be wise to see comparisons such as the Big Mac Index if you want to know how good or bad you would live with certain salary.

Re:Worker conditions

[gstoddart]

Ok, humanitarian perspective aside. Those workers are now able to provide a their families 2 square meals a day. If companies stop using them, then they go hungry, continue living in slums and you pay more for your beloved techno-gadgets.

If they were actually all getting better standards of living, we wouldn't be objecting on humanitarian grounds. Yes, they get a better standard of living, we get products. Everyone wins. The fact that they do it for a fraction of what it would cost here, I guess one lives with because it's an actual opportunity for them and they get to move up the economic ladder. Such things are relative to where you live.

But, when one hears stories about what is outright slavery, workers not getting paid at all, and all of that stuff, then one tends to be a little more worried about how ethical these products are. There are regular stories about appalling things happening in Chinese factories, as well as a lot of shady dealings from sub-sub contractors who nobody seems to be accounting for (like, lead in kids toys for instance).

Personally, I would like a little more assurance that the products I'm buying which are made in China actually have a little fairer labour practice than the worst case we tend to hear about. And, I don't think it's too unrealistic to basically tell the companies using these manufacturers that they really need to be sure of such things. I don't begrudge the workers a chance to make a living -- but, I do expect the parent companies to do more than the most superficial due-diligence to Do The Right Thing.

This is an unfortunate side effect of outsourcing (well, one of many) -- you really have no assurances that the people making the stuff you buy aren't being subject to really awful conditions.

Cheers

Re:Worker conditions

[servognome]

Or you could consider that the US company could easily double their salary, reduce work week to, say, 60 hours and fix the most grievous safety hazards - all at the cost of cutting compensation of top executives by half.

Having worked with companies in China, I can say it's not that easy. Because labor costs are low, companies in asia simply throw people to solve problems rather than automating. They easily employ 10x the number of people to accomplish the same job. What would happen with a western style system is 1 person would have US style benefits running machines, and the other 9 would be unemployed.

Re:Worker conditions

[vidarh]

The US labor movement was one of the most militant in the world for decades, because the US government frequently murdered strikers.

US union members DIED by the dozen for our 8 hour working days.

In fact, May 1 as an international day for international labor demonstrations was a direct result of the US labor movements demonstrations for 8 hour working days and the resulting bloodshed.

I find it sad that so few Americans actually know anything about how the US used to be at the forefront of the fights for workers rights, and the large number of lives lost in fighting your government and industry to get the protections you have now. It is one of the things you truly have to be proud of, as it had a significant impact on labor movements worldwide and so directly affected workers rights throughout the industrialized world.

Re:Worker conditions

[iamacat]

If we actually passed laws requiring US based companies to pay 5-7 dollars to workers anywhere in the world, their only option would be to leave the US altogether.

Fine, as long as:

a) The company agrees to follow all Chinese laws and we agree to promptly extradite any executives residing in US to stand trial for any violations. I hear death penalty is common for stuff like environmental accidents and allowing employees to access information about Tinamenn square events through corporate intranet gets you sent to a re-education camp for a few years. Are you actually suggesting that a company should be allowed to avoid laws of ALL countries by shifting people and corporate registrations around?

and

b) The company goods are charged a non-punitive duty to compensate for the loss of tax income compared to a US company paying wages to american workers.

You go, Gou!

[aapold]

Now that Rupert Murdoch owns the WSJ, I would have expected headlines more in line with, say, the New York post.... you know, like....

Don't have a Gou, man!

Holy Gou!

Gouabunga!

Pass Gou, collect $200 (billion)

Is that to Gou?

The world's first living Simpson's episode

[krou]

FTA:

In addition to its dozens of assembly lines and dormitories, Longhua has a fire brigade, hospital and employee swimming pool, where Mr. Gou does early morning laps when he is there. Restaurants, banks, a grocery store and an Internet cafe line the company town's main drag. More than 500 monitors around the campus show exercise programs, worker-safety videos and company news produced by the in-house television network, Foxconn TV. Even the plant's manhole covers are stamped "Foxconn."

Is it just me, or could I replace "Longhua" with "Cypress Creek", "Mr. Gou" with Hank Scorpio, and "Foxconn" with "Globex Corporation", and we'd have the world's first living simulation of a Simpsons episode?

I've heard the Chinese were good at imitation, but this seems to be going just a bit too far ...

Is the work week same in China for overtime ?

[wikiliki]

TFA states that they can make even more with overtime. I always assume that means more than 40+ hours, and time and a half. But I'm am unfamiliar with other countries labor laws. Anyone know if this is the case ? If not, when do they get the overtime, and at what rate ?

Re:Is the work week same in China for overtime ?

[p0tat03]

I don't know about Shenzhen or most of the rest of China, but where I came from in Asia the work day is 6 days a week, 8-10 hours a day. Overtime is paid at par (i.e. there is no bonus), but people love it anyway. Workers in these factory-cities don't have much of a life besides making money and sending most of it back home - so an opportunity to make even more cash with time they wouldn't spent doing diddly squat anyways seems appealing.

Some companies pay out mid-year bonuses based on company performance. This can sometimes be worth up to 4 months of normal wages. It's a cultural thing that simply doesn't exist in North America, and it's like a little Christmas in the middle of the fiscal year.

Interesting Plant Layout...

[tgatliff]

Quite interesting that FoxComm has put all of its operations in one spot. This is something that US plants are not known for, and I suspect it is due to all types of single point failures such as power, water, and other facilities. One advantage of doing this, though, is that having all 270K of employees makes providing things such as hospitals and other ammenities. I wonder how much US manufactures thought about this in the early days... Meaning, why doesnt Boeing have their own hospital?

Re:Interesting Plant Layout...

[LynnwoodRooster]

We had those in the US at one time - they were called Company Towns.

Re:Interesting Plant Layout...

[paitre]

The did in the early days of American Manufacturing - Company Towns.
http://en.wikipedia.org/wiki/Company_town

Although here, they were more traditionally mining and refining businesses, not outright manufacturing.

Re:2 cents

[Anonymous Coward]

Exactly. I am also happy that kids in developing countries help keep the cost of our T-shirts, toys, and electronics down. If it weren't for those nimble little hands, I'd probably still be stuck with that bulky TV I traded for a nice flat screen last year.

Photos and another viewpoint

[The-Bus]

Wired had a great photo gallery of factories and assembly lines in China.

And here is a write-up about someone from Chumby Industries visiting Shenzhen to get their production line up-to-date. It's more about the area than anything about the factory.

National Chinese vs. Local Chinese

[xxxJonBoyxxx]

These factory towns are so supported by the local and national Chinese governments, that anything goes.

Often the national Chinese government wants to clamp down on the factories but can't because they lack the resources to do so and are opposed by the factory's home government. (Similar to the U.S. EPA vs. city governments bought and sold by the local factory.)

Also, since most of the Chinese government wants to have people working in these factories to keep their economy growing...

Actually, the Chinese government is now more concerned about making sure China builds out its white collar jobs more now; the factories are doing fine on their own.

We're back to the dark ages of the Industrial Revolution, but now it's government-enforced.

Even in the U.S., the government was quite active on the side of the factories during the Industrial Revolution - look up "strike riot united states" for taste of some of that.

Yay globalization!

As opposed to what? Living in mud huts making stone necklaces for each other?

Wow that rant went a lot of places, didn't it?

Yes, it kind of did. Maybe it's time to hit the books a little harder...

your history teacher was wrong

[rodentia]

The people had already flocked to the city because they had been evicted from their pastoral livelihood by the Enclosure Laws. The industrial revolution happened substantially due to the critical mass of effectively starved humans ready to make the toil economically and emotionally feasible.

And there were no machines on the farms until the late nineteenth century.

Bread only becomes critical on the farm when the cities find it necessary to keep their machine-minder's bellies full. I am not saying the expropriation of labor by capital is not essential. There is no interpretive value in pretending that it is something other than it is for the sake of whitewashing the motives of the haute bourgeoisie.

Re:your history teacher was wrong

[rcs1000]

"The people had already flocked to the city because they had been evicted from their pastoral livelihood by the Enclosure Laws. The industrial revolution happened substantially due to the critical mass of effectively starved humans ready to make the toil economically and emotionally feasible."

1. The Enclosure Laws were only in England. The Industrial Revolution happened all over Europe and the US.
2. Between 1500 and 1900, the agricultural output of England and Wales rose three-fold. Enclosure, while not nice for those who were dispossesed, allowed the agricultural revolution.
3. Even in England, life expectancy *rose very sharply* between 1700 and 1900 - if these were "effectively starved humans", why was life expectancy rising?

I'd rather automate

[Travoltus]

If Americans are barred from having manufacturing jobs (which sell to the US market), then hell, why should anyone?

Give us our jobs back or let the machines take over.

Re:I'd rather automate

[CodeBuster]

You are barred from having a manufacturing job not because of the Chinese but because of the federal minimum wage laws (among other economic conditions). In fact it is well known that labor organizations in the United States have long lobbied for the continuation of the minimum wage AND increases to the minimum wage, on account that they, "are looking out for the good of all workers" when in fact they are *hurting* the workers that are not part of their union with these minimum wage laws (and they know that full well...they just don't come out and admit it). If the minimum wage is high enough then the employer will prefer skilled union labor over less skilled non-union labor, not because he needs highly skilled workers for a particular job per se, but rather because it is illegal for him to hire lower skilled workers at a wage lower than the minimum for that job. If the employer is forced to pay the high minimum wage then the employer will prefer the higher skilled (and hopefully higher productivity) worker instead of taking on the lower skilled worker and training him. Thus, since the government of the United States has made it impossible for manufacturing jobs in this country to be competitive (they haven't completely killed it, there are still a few manufacturing jobs here and there in the US, but effectively they have killed the industry) the companies move the jobs to wherever they can be competitive. So it is not as simple as "give ust our jobs back or let the machines take over", but economics provides a satisfactory answer to your question (bitter though the pill might be). Another question that you might ask yourself is this, "If I could legally work for 10 cents per hour to compete with workers in China would I really want to do that?" The answer for most Americans is probably not so the question becomes academic even in the minimum wage barrier was removed.

Re:I guess it's ...

[flu1d]

I know that comment was probably meant as a joke but its probably a good idea just on a business standpoint. I don't see this Chinese economic train slowing down any time soon.

"Took our jobs"?

[toby]

No, suckers, you GAVE your jobs away by misunderstanding your place in the world. Good luck with that...

No joke, do it! Learning Chinese is easy...

[The Underwriter]

I've been teaching myself Mandarin Chinese for 6 months now. Some reasons why you should pick it up:

- It's way easier than Westerners make it out to be...similar sentence structure to English, and the verbs stay the same between different tenses. No conjugations, declinations, etc. In many regards it's much easier than "Romance" languages.

- You will be able to communicate with a quarter of the world's population.

- Though there are 13 different dialects of spoken Chinese, they all share the same writing system. You get to read and write 12 additional languages for free. Japanese uses many Chinese characters, too.

- Because it's so hyped as the world's most difficult language, your Western colleagues and employers will think you're a freakin genius. Imagine having "Fluent in Chinese" on your resume?

- Future study in languages more closely related to English will become comparatively easy. You'd be surprised how much French, Spanish, and German you already unknowingly speak on a daily basis.

- It's utterly fascinating to learn, especially the characters.

- If you can't beat 'em, join 'em.

If you want to get the hang of Mandarin Chinese quickly, Pimsleur is hands down the absolute best.

Re:No joke, do it! Learning Chinese is easy...

[nneonneo]

There are *far* more than 13 mainstream dialects of spoken Chinese. For the most part, you need to know Mandarin, and if you want to live in Hong Kong, Cantonese would be an asset. However, there are close to 30 mainstream dialects of Chinese (more, even, by some counts) -- one for each province. Better yet, counting regional dialects (which are different enough to be counted as dialects and not accents), there may be well over 100 dialects of Chinese. Learning Mandarin, though, gives you the ability to converse with about 95% of the mainland Chinese population more-or-less fluently. Tonality in Chinese is probably the hardest thing to learn. Grammar in Chinese is quite simple, as parent noted.

indentured servitude in china

[fliptout]

Really, these "amenities" are almost standard here in China. In many places that use unskilled labor, the workers live in a dormitory and have access to health care, ie shitty public hospitals or clinics.

They've got access to genuine 1960s era medical technology there, which I suppose is better than medical tech from the Qin dynasty that is available in the boondocks. That is, if people don't just watch you die.

Workers typical have access to low cost/free housing too, which consists of crappy temporary concrete buildings. I'm sure Chinese business owners have a paternal warm fuzzy when taking care of their workers, but don't let the the "spin" of how great the workers have it get to you. The conditions totally suck here.

The Chinese pride themselves on their ability to endure hardship, but the other side of the coin is that they are ignorant of what a better life is like AND they are fairly passive as a people. Change is going to be a long, frustrating progress here. Honestly, I don't think China would be progressing so fast if they weren't being given oodles of money on a silver platter.

Re:Total B.S.

[fliptout]

I just want to add that I have, unfortunately, seen the insides of three hospitals in China. The BeiDa University hospital at Xizhimen in Beijing, the military hospital for musculoskeletal injuries in Wuhan, and Beijing United Family hospital. The only hospital of those three I would ever want to end up again is the third, because it is for foreigners, and they charge foreign rates for service. Have you been in a Chinese hospital? Well, you too can experience the delight of paying to use the elevator despite having a serious knee injury (happened to me). Need to get an antibiotic injection? The public hospitals have older/less potent medicines. Instead of getting a one time injection, I had to go to the hospital for 45 minutes on three days and have an IV drip hooked up. Not to mention the insides of the public hospitals are not sanitary at all and quite dirty.

I'd say that life expectancy here is due to a mostly healthy diet (low sugar, saturated fat, plenty of vegetables) and lots of exercise. I'm curious how the CIA got the life expectancy statistic, because you cannot really trust the government here regarding any such statistics.

That all said, I still love living here, but offer me another silly rebuttal that is too academic, and I will be happy to blow it out of the water.