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Foxconn symbolizes China economy’s wider structural problems and industrial unrest (1)

Posted by Author on June 2, 2010

By Craig Stephen, The Market Watch, May 31, 2010 –

HONG KONG (MarketWatch)When employees are asked to sign a pledge not to kill themselves (later retracted) and safety nets outside dormitories are erected to prevent suicide jumpers, something is badly wrong.

And this is not a Second World War concentration camp we’re talking about — rather, it’s a factory making some of the coolest brand-name gadgets in the twenty-first century.

The spate of suicides at Foxconn’s  (HK:2038 5.77, -0.08, -1.37%) mammoth industrial complex in Shenzhen, China has everyone looking to attribute blame, from the Taiwanese owner Hon Hai Precision Industry (HNHPF 8.39, -0.11, -1.26%) to the global brands such as Dell (DELL 13.11, +0.02, +0.15%) , Apple (AAPL 261.80, +0.97, +0.37%) and Nokia (NOK 10.10, +0.08, +0.80%) , which outsource their assembly there.

There is plenty of shame to go round. All have gone along with China’s economic model proscribed by the one-party state and the apparent productivity miracle. Economists generally like to describe the unbalanced growth or structural imbalances in China’s economy. Could it be much worse, and is the world’s factory workshop rotten at its core?

When I first visited Shenzhen a good sixteen years ago it was grey and drab with a few cars on the streets. Begging children clamped themselves to my legs to stop me walking.

Today, its population has soared to 17 million and its downtown roads are packed with cars and sport utility vehicles, while its hotels and shopping malls can match anything in Hong Kong.

But if you are a migrant factory worker living in a cramped dormitory, you are likely to have missed this progress. Migrants are locked out from enjoying health, education and housing benefits available to Shenzhen residents.

Foxconn stands out as the largest factory complex, with over 300,000 living and working in a city within a city. I doubt Mercer ranked this destination on its global quality of life index.

China’s wider problems

The dozen worker suicides this year have become a public relations nightmare not just for Foxconn and its clients, but also for the mainland government which sets the rules. Beijing would much rather see the spectacle of its glitzy Shanghai expo in the headlines instead of the international media focusing on the ugly underbelly of its economy.

When former Paramount leader Deng Xiaoping opened up socialist China to capitalism, he tried to juggle the contradictions with a new path, famously saying, “Poverty is not socialism. To be rich is glorious.” He also added: “Let some people get rich first.”

Eighteen years after Deng’s famous South China inspection tour, if he were alive today, he would surely recognize something has gone wrong. (to be cont’d)

Marketwatch.com

One Response to “Foxconn symbolizes China economy’s wider structural problems and industrial unrest (1)”

  1. This is truly ominous.

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